Federal Government Cracks Down on Huawei

A group of bipartisan senators sent a letter to President Trump asking him to stop issuing licenses to American companies involved with Huawei Technologies Co. This is the latest in escalating concerns security tied to telecommunications equipment manufactured by Chinese corporations. The letter urged for the administration to use a set of specific criteria to decide which licenses could compromise national security.

The Trump administration said that it has started to process the backlog of license requests, which have been building up over the last six months, ever since Huawei was placed on a trade blacklist. The blacklist prevents companies on the list from receiving U.S. goods, without a specific license. A count from last week estimated that about 75 licenses had been approved, while another 75 will be denied. The Senators’ letter insists that congressional leaders be told before any licenses are issued to U.S. firms to do business with Huawei. The approved licenses will allow Huawei to participate in certain exchanges that will aid in U.S. rural network operators.

The licenses are approved by an interagency review process that involves the Defense, State Energy, and Commerce departments. The Commerce Department made a statement that the licenses being issued are for “specific activities which do not pose a significant risk to the national security or foreign policy interests of the United States.”

The controversy culminated in a ruling on Friday by the Federal Communications Commission, which voted unanimously to ban U.S. telecom companies from making purchases from Huawei and ZTE, another Chinese telecom, through the Universal Service Fund. USF is a billion-dollar federal fund that is designed to provide monetary aid to companies for providing wireless services throughout the U.S. The new ruling more broadly prevents wireless carriers from buying equipment from any company that has been declared a threat to national security. Fear that Huawei’s relationship with the Chinese government could lead to the company’s technology being used for espionage has been the main source of concern, despite the company’s insistence that they would not participate in such activity.

Huawei says that the FCC is working off of misinformation and bad assumptions and that the agency’s ban is unlawful. The effects of this ruling include a further push to stop U.S. companies from working with Huawei outside of the scope of the USF. Current estimates suggest this ban will go into effect in February, although this ban has been consistently delayed.

The FCC vote creates a whiplash for rural wireless carriers, who thought they were being granted an exception to the ban. The vote could cause serious repercussions for the carriers, who rely on their working relationship with Huawei to provide more affordable equipment to hard-to-supply areas with the benefit of USF.  FCC Commissioner Brendan Carr said, “if equipment poses a threat, it is not enough to stop subsidizing it,” to explain why the FCC is already considering a second ban, which will require the rural wireless carriers to remove any of the existing Huawei technology from their network.