It’s been a rough 2018 for Huawei, and we’re not even a full quarter in yet. First AT&T, then Verizon, and most recently BestBuy have all canceled deals to carry Huawei phones in their stores, an arrangement the Chinese phone maker desperately needed as it seeks to gain traction in the US.
Now, it seems the FCC is trying to undercut any support Huawei was hoping to get by proposing a rule that, according to the Wall Street Journal, would limit or eliminate subsidies for companies found using Huawei or any other Chinese companies’ networking equipment.
This ban would block carriers who might want to purchase Huawei equipment (which is often less expensive than gear from other outlets) from drawing on the annual $8 billion Universal Service fund, a program that gives funding to organizations that provide cellular and internet coverage for rural and low-income users.
While the proposed plan isn’t official yet, the Journal says the FCC could announce regulations as early as Monday.
Globally, Huawei is the largest vendor of networking equipment, with yearly sales in excess of $60 billion. However, Dell’Oro Group analyst Stefan Pongratz says “Huawei gear makes up less than one percent of the wireless equipment in U.S. networks.”
The proposed regulation would be another step taken by the government to keep Chinese companies from gaining traction in the US. If left unchecked, the US government fears Huawei could potentially endanger national security.
A similar line of reasoning was used by President Trump who recently stepped in to block the potential purchase of Qualcomm by Singaporean semi-conductor company Broadcom. Despite the fact that Singapore is not part of China, and that Broadcom CEO pledged to move the company’s headquarters back to the US if the deal was approved, US officials feared that the turmoil caused Broadcom’s buyout would allow networking companies like Huawei would rush in and fill the void and let China pull ahead of the US in the race to build new 5G networks.
If the FCC’s new ruling gets put in place, US wireless carriers would likely have to rely on networking tech from Ericsson or Nokia, which in case you hadn’t noticed aren’t exactly American companies, either.
If none of this makes sense to you, just know that you’re not the only one. Recent government regulations like Trump’s new steel tariffs, the blocking of the Broadcom-Qualcomm deal, and others seem to be largely driven by a weird mix of xenophobia and American protectionism. This sentiment is especially true when it comes Huawei, which the US government has accused of spying on Americans for the Chinese government, but has yet to provide evidence of such activity.