US FCC designates Huawei, ZTE as national security threats

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. However, the Trump administration has reportedly been holding talks with USA 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. Huawei and ZTE have repeatedly rejected these claims.

The decision was also based on security vulnerabilities and risks known to affect both ZTE and Huawei equipment, with the directors of all six top USA intelligence agencies (DNI, CIA, NSA, DIA, FBI, and NGA) urging against purchasing services and equipment from Huawei and ZTE in February 2018.

In April, the FCC said it may shut down USA operations of three state-controlled Chinese telecommunications companies.

This is considered a huge step toward protecting the USA communications networks from security risks and it comes after the US government agency banned the use of universal service support for purchasing services and equipment from companies deemed to be national security threats in November 2019. The Federal Communications Commission is the United States agency that regulates all communications technology.

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"Both companies have close ties to the Chinese Communist Party and China's military apparatus", FCC chair Ajit Pai said in a statement, "and both companies are broadly subject to Chinese law obligating them to cooperate with the country's intelligence services".

Huawei and ZTE were "initially designated" as security threats at the time, but the formal process of assigning them that status has taken place in the intervening months, resulting in today's declaration. The Trump administration also added Huawei to its trade blacklist a year ago.

In May 2019, US President Donald Trump signed an executive order declaring a national emergency and barring US companies from using telecommunications equipment made by companies posing a national security risk.

In May 2019, the FCC voted to deny another state-owned Chinese telecommunications company, China Mobile Ltd, the right to provide U.S. services, citing risks that the Chinese government could use the company to conduct espionage against the USA government.

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