The Federal Communications Commission (FCC) is mulling new rules to make it harder for smaller US operators to buy equipment from Chinese vendors such as Huawei, which is facing increasing opposition in the country.
Sources told The Wall Street Journal (WSJ) the FCC is preparing a proposal which would limit subsidies it provides for smaller and rural carriers if those operators use equipment from Huawei and other Chinese vendors including ZTE.
In effect, the FCC would block these operators from accessing its Universal Service Fund, a government-backed pot worth $8 billion per year established to assist companies offering broadband services in rural areas and those providing affordable mobile plans to low-income users.
WSJ reported the proposal is designed to restrict all Chinese vendors from benefitting from subsidies and the FCC could unveil the proposal as early as today (26 March). Conversely, it could also delay or shelve the plan.
Huawei has long targeted smaller and rural operators to boost its networks business in the US, after the company was more or less blocked from providing equipment to the country’s tier-1 operators by the government.
The move comes as the government continues its campaign against Chinese vendors (and Huawei in particular) amid concerns over national security.
Huawei was blocked from securing a partnership to sell its phones via US operator AT&T earlier in the year, while US retailer Best Buy also reportedly plans to stop selling its handsets in stores. Government officials have also reportedly told US companies to cut ties with Huawei, as well as proposing the state stop using equipment from Chinese vendors.
Last week, President Donald Trump also signed an order threatening tariffs on up to $60 billion worth of Chinese imports, primarily in the technology sector.
Huawei has constantly denied it is a threat.
The FCC’s proposal took shape after government officials reportedly sent a letter to FCC chairman Ajit Pai at the end of 2017 asking the regulator to start gathering information about the potential threat Huawei and other Chinese vendors pose.
In a letter to lawmakers last week, Pai said he intends “to take proactive steps to help ensure the integrity of the communications supply chain in the US in the near future”.