Last month, the Federal Communications Commission voted unanimously to prevent U.S. companies from using a federal fund called Universal Service Fund (USF) to buy equipment from Huawei Technologies Co. Huawei is a Chinese telecommunications technology manufacturer who has been the subject of ongoing national security concerns. Huawei has been on a trade blacklist, also called the “Entity List,” since May. The technology produced by Huawei was originally meant to be used in the creation of 5G networks in the rural parts of the country.
In addition to this ruling, the FCC has also planned a vote on a second ban which may require mobile network companies to remove the Huawei technology they have already installed. The federal government has stated an intent to prevent the companies from using technology that is considered a threat to national security, no matter where the funding came from.
These bans could cause serious problems for mobile carriers like T-Mobile, Sprint, and AT&T who are advertising and marketing their 5G network plans. This could be particularly problematic for T-Mobile and Sprint who are facing a lawsuit against their intended merger and have been using the promise of building 5G networks to negotiate with the states suing them. The FCC’s chairman made a statement that there is an upcoming proposal to create $9 billion in funding over the next ten years to aid in 5G coverage in rural areas.
Huawei filed a petition for review last week in the Fifth Circuit Court of Appeals in New Orleans to challenge the FCC’s ruling. Huawei maintains that it is not a threat to national security and that the FCC is basing its actions on inaccurate information. Huawei says that the FCC ruling “exceeds the agency’s statutory authority and violates federal law, the Constitution, and other laws,” as well as violating their due process. The petition asks the court to rule the FCC’s decision unlawful.
Song Liuping, Huawei’s Chief Legal Officer, stated at a news conference that the ban “does not solve cyber security challenges,” and that “this decision, just like the entity list in May, is based on politics, not security.” He stated that the FCC has not provided any evidence that Huawei poses a threat to national security. According to Song the proceeds of the sale of technology to American rural carriers are small compared to the value of goods Huawei has received from the U.S., which he says totals $11 billion.
The FCC and the federal government believe that Huawei poses a threat to national security due to its connection with the Chinese government and military. The FCC cites Chinese laws that require companies like Huawei to aid in intelligence operations. The FCC believes, therefore, that the technology intended for use in the 5G networks could be repurposed by the Chinese government for espionage. Huawei was placed on the blacklist after it had been brought up on criminal charges for theft of trade secrets, bank fraud, and violating the U.S. sanctions on Iran. The ban is also part of a larger trade war and general growing tensions between China and the U.S. Similar concerns have been expressed about Chinese made drones which were being used by the Department of the Interior.
Glen Nager, Huawei’s lead counsel, says that the FCC doesn’t have the authority to make national security judgments and therefore it cannot prevent companies from using the USF to purchase Huawei technology for national security reasons. Former FCC senior adviser Gigi Sohn was quoted saying, “The FCC has enormous latitude when it comes to public safety and national security,” and expressed her doubts about Huawei’s chances of success in its appeal.