The US Federal Communications Commission (FCC) is planning to impose more restrictions on Huawei and ZTE, which would lead to more losses in US business for both firms.
The FCC plans to prohibit companies receiving government funding from purchasing equipment or services from the Chinese tech firms Huawei and ZTE. The proposal was announced by the FCC on Monday and it will be put into vote in November.
The FCC announcement is part of the US government's initiative to place restrictions to impede the worldwide expansion of Huawei, which is currently the largest telecommunications equipment manufacturer and one of the leading smartphone brands. It is also the leading company in 5G technology while ZTE is a much smaller player in telecoms equipment and smartphone sectors.
According to FCC chairman Ajit Pai, Huawei and ZTE pose a security threat to US communications networks because they have to follow Chinese law, which he argued requires them to comply with requests from the country's intelligence services.
Pai pointed out an op-ed for The Wall Street Journal: "That means China could compel Huawei to spy on American individuals and businesses." He added that if a 5G network using Huawei equipment was operating in proximity to a US military site or other sensitive location, "Beijing could demand the installation of a 'back door' to allow secret access to the network, insert malware or viruses, and receive all kinds of information — without Americans ever knowing."
Pai also mentioned that while the US has already severely restricted the Chinese companies' presence in major US networks, dozens of small, rural US networks currently use Huawei and ZTE technology.
He said that aside from the restrictions, the FCC will also examine in November a proposal to remove and replace such equipment. He added: "We'll seek public input on how big this 'rip and replace' program needs to be and how best to finance it."
