A move by the Federal Communications Commission to block rural telecommunications carriers from purchasing products from Huawei Technologies Co. would drive up costs for U.S. consumers, the Chinese firm charged in a recent federal filing.
The FCC is in the midst of reviewing a rule that would bar carriers that buy equipment or services from Huawei or fellow Chinese firm ZTE Inc. from tapping into the Universal Service Fund, which provides subsidies that help rural carriers expand. The rule is one of a slew of pending actions by the Trump administration that could impact smaller providers.
Huawei says the rule would ultimately harm U.S. consumers and the rural providers who rely on the company for low-cost equipment.
“Allowing Huawei to compete freely could yield savings of at least $20 billion in building U.S. mobile infrastructure between 2017 and 2020, which would likely be passed to consumers,” outside attorneys for the company wrote in a filing with the FCC made public on Tuesday.
Huawei argued that other equipment suppliers will profit in the concentrated U.S. market and use the earnings to compete more effectively in foreign countries, ultimately driving innovation out of the country.
Industry experts say rural telecommunications carriers relying on the Universal Service Fund could suffer under the rule, particularly if they are required to retire existing Huawei equipment. The company said some providers would forfeit the subsidies if forced to replace their network.
“These high costs, which would particularly harm Americans in remote and low-income areas, cannot be justified by the supposed national security benefits of the proposed rule, because these are speculative,” the lawyers wrote.
Both ZTE and Huawei have long faced scrutiny from U.S. officials for their ties to the Chinese government. In its filings, Huawei said its U.S. business has been hampered because of “unfounded allegations and suspicions.”
“The reality is that it is an independent, privately-owned business that is no more subject to the control of the Chinese government than American companies are controlled by the U.S. government,” the Huawei attorneys wrote.
The company charged that the FCC rule goes beyond the authority of the independent agency because evaluating national security concerns isn’t part of the Universal Service Fund’s mission.
The Trump administration and Congress are taking a number of steps designed to hinder the U.S operations of both Huawei and ZTE.
The Pentagon has banned the sale of products from either company on U.S. military bases. The Commerce Department, which imposed a seven year sales ban on ZTE, agreed to lift it if the firm paid a $1.4 billion fine and overhauled its management team.
The Senate is trying to overturn that decision and included a provision to reimpose the ban in a recently passed defense policy bill.
