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Chinese telecom giant Huawei is the world’s largest telecom supplier and second largest smartphone manufacturer. Due to the company’s cozy relationship with the Chinese government, there is an international concern that Huawei will use deployed equipment to spy on other countries and companies. The U.S. banned government agencies from purchasing Huawei networking equipment in 2012 to address the espionage concerns.
The Chinese government has invested billions in the equipment manufacturer. American officials’ concerns that newly manufactured products might be compromised with Chinese government access to data or surveillance escalated after China published cybersecurity laws in 2017. While Chinese companies were only required to cooperate with law enforcement on national security matters before, the new laws compel corporations to assist in offensive intelligence operations.
The National Defense Authorization Act, passed by Congress last August, allows the Secretary of Defense to limit companies, including contractors, from supplying equipment to the federal government if they have ties to the Chinese government. The company has filed suit against the U.S. government over the law.
Further tightening the restrictions, President Trump signed an executive order banning Huawei equipment from U.S. communication networks on May 15. In compliance with the executive order, the Commerce Department placed Huawei and 70 of its affiliates on a list of dubious actors that are believed to undermine American national security or foreign policy interests.
Adding Huawei and its affiliates to the U.S. Department of Commerce’s Entity List in mid-May prompted numerous tech firms to cut ties with the company. For example, Google blocked select Android services, and FedEx diverted packages headed to the telecom giant. ARM suspended business with Huawei, as did Intel and Qualcomm.
After an outcry from businesses, the U.S. Commerce Department issued a 90-day temporary license allowing Huawei to buy U.S.-made goods to maintain existing telecommunications networks and provide software updates to its existing mobile phones. Companies like Panasonic and Microsoft chose not to resume efforts with the deadline looming, so the move already restricted Huawei’s access to Google apps and other vital technology. But the decision created a watershed of events affecting far more than technology companies.
A growing list of international companies and organizations are severing ties with the Chinese telecom giant in response to the trade blacklist. Huawei is barred from participating in the WiFi Alliance, which governs the technology standards used for connectivity. The SD Association also ejected Huawei from participation in the governing body for mobile storage standards. While the organizations’ distancing doesn’t prevent the Chinese telecom giant from using the tech, it can no longer help shape the future of these technologies.
The new trade restrictions in the United States also caused the Institute of Electrical and Electronics Engineers to block Huawei employees from being reviewers or editors for its peer-review process. The U.S. government regulations restrict Huawei and its employees from participating in certain activities that are not generally open to the public. Huawei continues to have member-level access, including voting rights and publication efforts. The move created considerable backlash because the IEEE has a longstanding non-political stance on global issues.
The combination of restrictions effectively bans Huawei from supplying low-cost equipment to any U.S. communication network, leaving dozens of rural cell service providers in a pinch. Small wireless providers in rural areas of Kentucky, Tennessee, Colorado, Kansas, Nebraska, Wyoming and South Dakota, Utah, and Idaho testified to the FCC a year ago that a ban on Huawei could effectively bankrupt them. Without those small telecom companies, rural customers across the U.S. could lose access to cell service.
The small wireless companies built their business model on the inexpensive equipment from Huawei because American and European technology is much more expensive. These small telecom companies now face billions of dollars in costs to rip out and replace everything they’ve already installed or watch their business fold. Proposed legislation from Congress offers to alleviate some of the financial burdens for small providers, but the $700 million relief proposal doesn’t come close to reimbursing the cost of compliance with the ban.
But the risks for American telecommunications are significant and only get higher as 5G installations hit full swing. For example, a rogue manufacturer could exert control over the superfast networks necessary to enable self-driving cars and power the Internet of Things. If the data passing over the network is somehow compromised, it could severely handicap the technology infrastructure in the U.S.
Major service providers typically avoid serving small, rural populations because of the infrastructure cost. But T-Mobile and Sprint agreed to provide 5G service to 90% of the nationwide rural communities within six years if the FCC grants their request to merge.
Huawei’s alleged disregard for law appears to be a pattern, and the potential for sabotage of companies and countries is enormous. Just this year, the Justice Department indicted the company on 23 counts of alleged theft of intellectual property, obstruction of justice, and wire fraud related to its alleged evasion of US sanctions against Iran. Those charges join the ones filed by federal prosecutors in Brooklyn and Seattle who separately charged the company with multiple counts of fraud and conspiracy, theft of trade secrets, and obstruction of justice.
Although many people believe the escalation of trade wars is responsible for the recent ban, officials in the United States have longstanding concerns about potential spying by Huawei.
Megan Southard is a writer, mom, technology enthusiast, and movie junkie. She dreads the day her kids have to explain gadgets to her and is old enough to say, "I was the remote for our TV growing up."
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