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Huawei has warned the U.S. Federal Communications Commission (FCC) that its order to shut down government funding for Huawei and its Chinese stablemate ZTE will damage result in all Americans paying higher prices for 5G, and will also damage critical services in rural areas, including “schools, hospitals, and libraries.” The FCC voted unanimously on November 22 to prevent rural carriers—the only U.S. networks persisting with Chinese equipment—from accessing $8.5 billion in federal subsidies to do so. The FCC also seems likely to mandate the rip and replacement of existing Chinese equipment within those networks next year.
The major U.S. carriers do now use Huawei or ZTE equipment given the “national security threat” designation of the two companies by Washington. But the challenge in servicing America’s vast rural interior has thus far avoided any such prohibition. In a statement sent to the media, Huawei slammed the move, accusing the FCC of targeting the company “based on selective information, innuendo, and mistaken assumptions,” and warning that the unwarranted decision “will have profound negative effects on connectivity for Americans in rural and underserved areas.”
Any move to rip and replace Chinese equipment could cost as much as $2 billion to put into effect, damaging Huawei, removing its last bastion of U.S. revenues. The twice-extended blacklist exemption was primarily targeted at the maintenance and servicing of this network equipment. “Given the threats posed by Huawei and ZTE to America’s security and our 5G future,” FCC Chairman Ajit Pai insisted after the vote, “this FCC will not sit idly by and hope for the best. This is not a political issue.”
In taking its decision, the FCC has referenced the allegation that Chinese tech giants are subject to Chinese national security laws that mandate collaboration with defence and intelligence agencies and could lead to security compromises and interference at the behest of Beijing. Huawei claims the decision is “unlawful—based on a mistaken view of Chinese law, that it might come under Chinese government control.”
Watching on the sidelines will be Huawei’s major 5G networking competitors, Nokia and Ericsson, who will be the beneficiaries of any rip and replace and who will be expected to pick up the supplier slack for the dozen or so rural carriers who will need to look elsewhere for alternatives to Chinese equipment. This is the “reduced competition” that Huawei claims will raise prices and reduce levels of service.
Huawei says that it has remained “open to engaging with the U.S. government” to adhere to any form of agreed security testing regime. It has also lobbied hard for a level playing field,” whereby all network equipment manufacturers are subject to the same regulations. It claims the U.S. government will not engage in talks. “Huawei would welcome the opportunity to work with the FCC and other U.S. government authorities to ensure that these best practices are incorporated fully—to the ultimate benefit of U.S. commerce and consumers.”
The FCC should “rethink its profoundly mistaken order,” Huawei signed off its polemic, with its “labelling of Huawei as a security threat violating bedrock principles of due process—the FCC is aware of best practices that could actually improve U.S. network security without unlawfully and irrationally targeting Huawei.”
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November 23, 2019 at 01:55PM
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