The Federal Communications Commission designated Huawei Technologies Co. and ZTE Corp.as national security threats, a step toward driving the Chinese manufacturers from the US market where small rural carriers rely on their cheap network equipment.
"With today's Orders, and based on the overwhelming weight of evidence, the Bureau has designated Huawei and ZTE as national security risks to America's communications networks-and to our 5G future", FCC Chairman Ajit Pai said in the release. Federal agencies and lawmakers have long claimed that because the tech giants are subject to Chinese law, they could be obligated to "cooperate with the country's intelligence services", Pai said.
Huawei has been repeatedly banned and blacklisted by the U.S. government, which has also pressured allies including the United Kingdom and Germany to bar the market-dominating Chinese firm from their nascent 5G infrastructure. "We are sending a clear message: the USA government, and this @FCC in particular, can not and will not allow the Chinese Communist Party to exploit vulnerabilities in USA communications networks".
Huawei and ZTE did not immediately respond to requests for comment but have previously sharply criticized the FCC's actions.
In November of a year ago, the FCC announced that companies deemed a national security threat would be ineligible to receive any money from the Universal Service Fund. The $8.5 billion fund is the FCC's main way of purchasing and subsidizing equipment and services to improve connectivity across the country.
FCC Commissioner Geoffrey Starks said "untrustworthy equipment" remains in place in US networks and said the US Congress must allocate funding for replacements. However, the Trump administration has reportedly been holding talks with United States tech and private equity firms in an effort to wrest dominance of the new technology out of Beijing's control, floating possibilities including a government-backed consortium buying a controlling stake in Nokia or Ericsson - the two non-Chinese companies rounding out the top four 5G providers.