Court rules that FCC can block subsidized purchase of Huawei's 5G networking gear in the U.S.
Bloomberg reported on Friday that a three-judge federal appeals court in New Orleans, including two judges appointed by former President Donald Trump, agreed with a 2019 FCC ruling blocking Chinese networking firm Huawei from using taxpayer funds to subsidize the purchase of its 5G networking gear. The funds are supposed to be used for U.S. broadband development.
Appellate court rules that the FCC can block subsidized
purchases of Huawei networking equipment because it is a national security
threat in the U.S.
The FCC blocked Huawei from receiving subsidized funds
because its networking equipment is open to attacks from hackers and is tied
too closely to Chinese military intelligence. The FCC also banned the use of
subsidized funds to buy 5G networking gear from Huawei after determining that
the world's number one network supplier was a national security threat in the
U.S.
Huawei argued in its 61-page filing that the FCC, in
blocking the use of subsidized funds to purchase Huawei's 5G gear, was
replacing the State Department or other such agencies in making a decision
against using such funds to purchase Huawei manufactured equipment. Trump
appointee U.S. Circuit Judge Stuart Kyle Duncan wrote, "If we were
convinced that the FCC is here acting as 'a sort of junior-varsity' State
Department, we would set the rule aside. But no such skullduggery is afoot.
Assessing security risks to telecom networks falls in the FCC’s
wheelhouse."
Huawei also argued that the FCC intruded on the president's
right to make national security determinations, and skipped required steps in
the federal decision-making process. But those comments could not persuade the
appellate court to override the original decision.
As a result of the ban, Huawei says that the FCC's ruling
branded the company and drove away customers worried about using 5G technology
opposed by the Trump administration. Additionally, the FCC's determination
about Huawei being a national security threat in the U.S. came after similar
assessments about Huawei were made in the U.K., Japan, Australia and New
Zealand.
The FCC said that it came to the conclusion that Huawei's
lower costs were outweighed by its threat to U.S. security. During oral
arguments, the appellate judges pressured Huawei to reveal why it wouldn't
eliminate the rumored backdoors that reportedly allow the company to spy on
American citizens and companies.
Last Tuesday, the FCC broadened the ban to include
surveillance cameras made by Huawei and four other Chinese electronics
companies. The U.S. originally placed the company on the Entity List in May
2019 which prevented the firm from accessing the U.S. supply chain that it
spent $18 billion on just the year before. It also blocked Huawei from using
Google Mobile Services which forced Huawei to create its own Harmony OS
operating system.
Honor's latest models, the 50 and 50 Pro, use the Google
Mobile Services version of Android including Google apps
The following year, the U.S. changed an export rule that
blocked global foundries from shipping to Huawei any chips produced using
American technology without a license from the Commerce Department. Without
these actions from the U.S., Huawei would easily have been the largest
smartphone manufacturer in the world by now.
Instead, we could see Huawei drop down to the seventh
position this year especially after it ended up selling its Honor sub-brand to
a consortium for a price believed to be in the neighborhood of more than $15
billion. Huawei did this in order to free up Honor from having to deal with the
U.S. bans because of its connection to Huawei.
Now that Huawei and Honor have divorced, the latter is no
longer banned from using the Google ecosystem. That is why Honor's latest
models, the 50 and 50 Pro, will include the Google Mobile Services version of
Android and feature Google's Android apps.
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