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FCC might make more drastic moves to block HUAWEI in US

The FCC is mulling the idea of removing access to a government subsidy should a mobile service use Chinese (read: HUAWEI) equipment.

Published onMarch 26, 2018

The HUAWEI logo.
  • Sources tell The Wall Street Journal that the FCC is contemplating removing a valuable government subsidy from mobile services, should they elect to use Chinese equipment.
  • Although HUAWEI equipment only represents one percent of the equipment used in American mobile services, it’s clear the discussion is focused on HUAWEI.
  • If this comes to pass, it would be another setback in a long line of setbacks when it comes to HUAWEI gaining a foothold in the United States.

Huawei was looking to expand its footprint in America this year, but each time it tries to make something happen, its plans get squashed. First, it was the accusations that the company is a spying backdoor for China, then there was the loss of its exclusive deal with AT&T, and then Best Buy announced it was pulling all HUAWEI phones from its shelves.

Now, according to The Wall Street Journal, the FCC is contemplating drafting a proposal which would prevent any mobile providers from receiving a valuable government subsidy, should those providers use Chinese equipment. Since HUAWEI is one of the leading Chinese providers of such equipment (along with ZTE), the law seems to be mostly directed at HUAWEI.

The Universal Service Fund is a government program that incentivizes mobile companies to expand services to rural areas of the United States, where mobile data is often slow, unreliable, or simply non-existent. If this proposal were to be officially drafted, it would lead companies to avoid using HUAWEI equipment to keep that subsidy intact. It would be highly unlikely that a company would forego the subsidy to use HUAWEI equipment.

However, this proposal has not been submitted and no firm date is set for it to be unveiled. It could be that the FCC is simply discussing this and it never comes to pass. But with the heat on HUAWEI right now, and with even the President of the United States stepping in when it comes to matters involving Chinese technology, it is certainly possible that it could be drafted and then enacted.

HUAWEI drives rivals crazy by parking P20 ads outside Apple, Samsung stores
huawei advertising truck

As an example of how strongly the government feels about China, and indirectly how it feels about HUAWEI, FBI director Christopher Wray said the government remains “deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don’t share our values to gain positions of power inside our telecommunications networks.”

We’ll have to wait to see if Richard Yu will make a statement on this development, as he’s done a few times in the past when it comes to the wall separating HUAWEI from gaining a U.S. foothold.

NEXT: Is HUAWEI prepping the world’s first smartphone with 512GB storage?

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