In a unanimous vote, the Federal Communications Commission has moved to block United States telecoms from using critical federal funds to buy Huawei equipment.
Under the new rule adopted by the commission, wireless carriers can’t use money from the Universal Service Fund (USF) to make purchases from companies deemed national security threats. The fund provides billions of dollars in subsidies for companies to offer wireless service around the country. Through the vote, the FCC has initially named two Chinese telecommunications companies as national security threats: Huawei and ZTE.
“Given the threats posed by Huawei and ZTE to America’s security and our 5G future,” FCC chairman Ajit Pai said, “this FCC will not sit idly by and hope for the best.”
The decision is a significant problem for Huawei, which has faced scrutiny for its relationship with the Chinese government. American lawmakers and intelligence officials have said the company could be used as a tool of espionage. (Huawei has maintained that it hasn’t, and would not, do anything improper.)
The Trump administration has already taken action against Huawei, moving to block United States businesses from working with the company. That move has been repeatedly pushed back and is now set to go into effect in February.
In a statement, a Huawei spokesperson said the FCC had designated the company a national security threat “based on selective information, innuendo, and mistaken assumptions.”
“Huawei believes this order is unlawful as the FCC has singled out Huawei based on national security, but it provides no evidence that Huawei poses a security risk,” the spokesperson said in the statement.
The FCC’s plan to block USF funds has already raised concerns among rural wireless carriers that have said that Huawei provides affordable equipment that they rely on. But the FCC is also poised to go further: the commission voted to consider a proposal that would require wireless carriers that use Huawei equipment to fully remove it from their networks. The Rural Wireless Association, a group of rural wireless businesses, has said the costs to make that change “are significant across the board.