The Federal Communications Commission voted unanimously on Tuesday to remove and replace network equipment used by small telecommunications companies made by Huawei and ZTE in parts of the United States, CNBC reported. Both Chinese manufacturers are considered national security risks. The cost of the program is $1.9 billion.
Rural operators use network equipment to receive subsidized funds from the Universal Service Fund (USF) administered by the FCC to help build their networks. USF The funds come from fees charged to the customers of the major U.S. telecommunications companies and are collected on a quarterly basis. While the goal of the program is to provide everyone in the country with access to the Internet, Americans living in rural areas benefit the most.
Following the addition of Huawei to the U.S. Entity List in May 2019, the company lost access to U.S. supply chains, including Google, and the FCC banned state-subsidized operators from buying network equipment from Huawei and ZTE. It also barred rural carriers from using USF funds to service Huawei and ZTE equipment already in place.
The FCC calculated in 2019 that it would take roughly $1.9 billion and two years to remove the offending network equipment that rural carriers use on their 3G and 4G networks. To be eligible for some of the $1.9 billion in funding, U.S. telcos must have no more than 10 million customers. This expands the number of carriers that can get the money, as an earlier version of the order capped subscribers at 2 million.
June 30, 2020 Enterprises that currently meet the customer threshold and purchase network equipment from Huawei or ZTE can apply for reimbursement of replacement costs. Glenn Schloss, Huawei's U.S. vice president, said the company was on track to become the world's largest smartphone maker before the U.S. ban, but was "disappointed" by the vote.
Schloss said in a statement that the FCC plan was "an impractical attempt to fix what wasn't broken." He continued: "The FCC's move will only create a huge challenge for operators in the most remote areas of the United States to provide the same high level and quality of service to customers without disruption." Schloss added that the federal The Communications Commission is "using policy to make geopolitical statements."
After selling its Honor division for about $15 billion, Huawei is now expected to drop to seventh place, rather than lead the world in smartphone shipments . By breaking away from Huawei, Honor is no longer subject to the same restrictions as Huawei, and the Honor 50 series returns to the Google ecosystem and Google Mobile Services.
Huawei remains the world's largest network provider
US officials worry that Chinese manufacturers such as Huawei and ZTE have ties to the People's Republic of China. Meanwhile, there have been long-standing rumors of backdoors in products, including mobile phones, made by the two companies that collect sensitive information on behalf of the PLA. Both Huawei and ZTE have repeatedly denied the allegation.
During the Trump administration's four-year term, efforts were made to dissuade U.S. allies from using Huawei's network equipment to build 5G networks in these countries. Huawei had hoped that Biden's U.S. presidential election would result in the removal of Huawei from the entity list and a change in reverse export rules to prevent chips from receiving cutting-edge chips from the manufacturer. That did not happen, however, and President Biden does not appear to have plans to make any changes to current policies.
Although its position in the smartphone industry has dropped significantly, Huawei remains the world's largest supplier of network equipment.
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