Huawei has argued that the Federal Communications Commission (FCC) cannot force US carriers to remove its equipment from their networks, and can only reimburse those that voluntarily choose to do so.
The filing [PDF] made by the Chinese giant to the FCC is yet another salvo in the ongoing fight for Huawei’s survival in the US carrier market. Although Huawei has never really had much of a foothold with the main carriers (AT&T, Verizon Wireless, T-Mobile, and Dish Wireless), the company previously enjoyed a degree of popularity with smaller networks serving rural areas.
In November 2019, the FCC issued a prohibition against rural carriers using federal subsidies to acquire new equipment from so-called high-risk vendors, including Huawei. The following February, the Senate unanimously passed legislation that allocated $1bn to rip and replace existing hardware. This pot was expanded to $1.9bn last December as part of the second stimulus bill, passed during the final months of the Trump US presidency.
The groundwork for these actions came in May 2019, when Trump issued an executive order giving the Secretary of Commerce powers to intervene in transactions that pose “an unacceptable risk” to US national security. Around the same time, the Trump administration also placed Huawei on an entity list, limiting its access to US components and technologies, and preventing it from producing consumer and carrier hardware on its previous scales.
In its filing, Huawei argued the FCC lacked the authority to mandate the removal of equipment. Such powers, it said, come from Congress. Neither the Secure Networks Act, nor the second stimulus bill (known formally as the Consolidated Appropriations Act 2021), contains such authorisation. Rather, they just put the cash on the table.
Other carriers and industry trade associations also made comments to the FCC on the matter, raising arguments on the basis that the allocated funds are unlikely to be sufficient to cover the scope of replacing existing equipment.
In its reply to the commission [PDF], the Rural Wireless Association argued that Congress needs to allocate more money, especially after the FCC proposed changing the eligibility criteria to include carriers with under 10 million subscribers.
“Eligible participants are charged with removing all Huawei and ZTE equipment to secure their networks. However, there will likely not be sufficient funds for every Reimbursement Program applicant, including eligible RWA members who participated in the FCC’s initial data collection process,” it said.
The Register has contacted Huawei for comment. The company strenuously maintains it is not a security threat, and operates independently from the Chinese government.
It’s unlikely we’ll see a reversal by the Biden administration from the Trump administration’s stance on Huawei. This is one of those rare topics where both parties are in alignment. Lobbying efforts against governments perceived as too gentle with Huawei (including the UK) have come from both sides of the aisle. Appropriations bills designed to remove Huawei’s presence from the US telco market have enjoyed the enthusiasm of both Republicans and Democrats.
Huawei is gradually placing less and less emphasis on carrier sales, in part due to supply chain difficulties (uncertainty over its access to chips was the primary reason for its UK ban) and shrinking access to foreign markets.
Instead, the company has committed to focusing more on cloud and software products, which are less dependent on a steady access to parts, as well as niche industrial telecommunications sales (private networks to the mining sector, for example).
On the consumer front, it’s a similar story. Huawei is placing less emphasis on smartphone sales, with PCs and lifestyle products (headphones, speakers, wearables, and so on) filling the gap. ®