The Federal Communications Commission (FCC) has officially designated Huawei and ZTE as national security threats, marking a significant escalation in tensions between Washington and Beijing.
Although successive U.S. administrations have long warned about risks associated with Chinese telecommunications vendors and advised carriers to avoid their equipment, this is the first time the FCC has formally labeled these firms as national security threats.
In an official statement, FCC Chairman Ajit Pai said:
“With today’s Orders, and based on the overwhelming weight of evidence, the Bureau has designated Huawei and ZTE as national security risks to America’s communications networks—and to our 5G future. Both companies have close ties to the Chinese Communist Party and China’s military apparatus, and both companies are broadly subject to Chinese law obligating them to cooperate with the country’s intelligence services.
The Bureau also took into account the findings and actions of Congress, the Executive Branch, the intelligence community, our allies, and communications service providers in other countries. We cannot and will not allow the Chinese Communist Party to exploit network vulnerabilities and compromise our critical communications infrastructure. Today’s action will also protect the FCC’s Universal Service Fund—money that comes from fees paid by American consumers and businesses on their phone bill—from being used to underwrite these suppliers, which threaten our national security.”
The Trump administration took a firmer stance against Chinese vendors and urged U.S. allies to exclude Huawei equipment from their networks. Australia responded early by banning Huawei from its 5G rollout and, according to reports, later experienced economic and cyber tensions that some attribute to Beijing’s response.
The United Kingdom, after a multi-year security review, permitted limited use of Huawei gear earlier in the year despite warnings from U.S. officials. That decision provoked substantial criticism from Members of Parliament and civil society groups concerned about human rights and security. Prime Minister Boris Johnson has since instructed ministers to draw up plans to remove Huawei equipment from national 5G networks entirely by 2023.
U.S. restrictions have affected nearly every segment of Huawei’s business. Addition to the U.S. Department of Commerce’s Entity List has barred most American firms from supplying Huawei without special permission, constraining supply chains and access to crucial components and technologies.
Huawei’s smartphone division has been hit particularly hard. While the company continues to innovate in hardware and performance, sanctions have prevented new phones from shipping with Google services and apps, reducing their appeal to consumers outside China.
The impact extends beyond Huawei. Heightened trade restrictions and sanctions reverberate across global supply chains and affect many companies, not only the targeted firms. Security concerns must be balanced against these economic consequences.
Within the United States, few major carriers used Huawei equipment because of long-standing uncertainty and regulatory pressure. Those that did are typically smaller, rural operators that chose Huawei for cost-effective solutions. Under the FCC’s new orders, those operators must remove and replace Huawei and ZTE hardware. The FCC has pledged to reimburse eligible providers, but equipment replacement is time-consuming and operationally complex, and it occurs in an already competitive telecommunications market.
(Photo by Nathy dog on Unsplash)
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