WASHINGTON • The US Federal Communications Commission (FCC) designated Huawei Technologies Co Ltd and ZTE Corp as national security threats, a step toward driving the Chinese manufacturers from the US market where small rural carriers rely on their cheap network equipment.
The action means money from the federal subsidies used by many small rural carriers may no longer be used to buy or maintain equipment produced by the companies, the FCC said in a news release.
“Both Huawei and ZTE have close ties to the Chinese Communist Party and China’s military apparatus,” FCC Chairman Ajit Pai said on Twitter. “We are sending a clear message: The US government, and this @FCC in particular, cannot and will not allow the Chinese Communist Party to exploit vulnerabilities in the US communications networks.”
The FCC has increasingly scrutinised Chinese companies as tensions grow between Beijing and Washington over trade, the coronavirus and security issues. The agency is considering banning three Chinese telephone companies, and last year barred China Mobile Ltd from entering the US market.
The US contends that Huawei’s equipment could be used by China for spying. The company has repeatedly denied that it poses any security risk and insists that it is independent of the Beijing government.
“Barring US operators from purchasing Huawei and ZTE equipment will not improve US’ Internet security, but will severely impact Internet services especially to rural and underdeveloped areas,” China’s Foreign Ministry spokesman Zhao Lijian said yesterday. Huawei and ZTE declined to comment.
Tuesday’s action formalises a proposal the FCC adopted in November.
The designation means service will suffer as small carriers shut down parts of their network because they cannot use subsidy funds for maintenance or replacement parts, said Carri Bennet, general counsel of the Rural Wireless Association that represents carriers with fewer than 100,000 subscribers.
“This is not good,” Bennet said in an interview. “They’re in a bind. They don’t have cash to keep the networks afloat.”
About three or four dozen rural carriers accept the subsidy and use equipment from Huawei or ZTE, the FCC estimated last year. — Bloomberg