FCC Chairman Ajit Pai has announced that the agency will move forward to vote an order, which will ban carriers from using federal subsidies to buy services or equipment from Huawei and ZTE. Huawei and ZTE are the two most prominent Chinese telecommunication providers in the region. This is supposed to mark both companies as national security threats. This will also ban them from participating in an $8.5 billion Universal Service Fund. The decision is said to be an outcome of ongoing US-China trade war. The politicians of Capitol Hill committee are scrutinizing several American companies for doing business with China. Federal Communications Committee has informed that voting will start on 19 November.
According to this proposal, telecom firms will not be allowed to purchase equipment from any company, which poses a national security threat, using subsidy from Universal Fund Service. This can go into effect within the 30 days of voting. If Huawei or ZTE contests it can go up to 120 days. FCC Chairman has said that Chinese equipment is a major security threat. He has urged US firms to replace Huawei and ZTE equipment. FCC has planned to reimburse US carriers who are replacing their equipment. FCC has denied that the decision was taken under the influence of US china trade tension. The officials said that they acted upon the assertions made by the intelligence agencies. Security agencies said that Chinese telecom firms could be a major carrier of surveillance. They also claimed that Huawei and ZTE have been backed by Chinese security agencies. However, Huawei has denied the allegations.
The government of the United States has already banned Huawei and ZTE from the federal procurement process. The company has also been hit hard by the additional sanction that banned it from purchasing any US technology or equipment without seeking approval. The authorities have cut off its consumer tech business from Google’s Android ecosystem. This came as a major blow for the telecom company. Well despite the restrictions, Huawei has reported quite good sales growth, which might be frustrating for US officials.