US Considers To Ban Huawei, ZTE Equipment For Rural Carriers

The U.S. Federal Communications Commission (FCC) is set to bar all carriers benefiting from its Universal Service Fund (USF) to use any Huawei (SHE: 002502) or ZTE (SHE: 000063) equipment.

What Happened

The FCC Chairman Ajit Pai issued a two-part proposal on Monday.

The draft proposal suggests barring communications companies from using any support they receive as part of the USF to purchase equipment or services from any company the commission deems to be a “national security threat.” This includes Chinese companies like Huawei and ZTE, among others.

The draft further proposes requiring the carriers to replace the equipment and services they are already using from these companies. The commission will provide financial assistance for this transition to “more trusted suppliers.”

The rural carriers were in talks with Nokia NOK and Ericsson ERIC to replace Huawei in June, but didn’t get assurance on financial support from the FCC, according to Reuters.

Huawei and other Chinese companies have been facing increased sanctions in the U.S. as part of the ongoing trade war between the two countries.

What’s Next

The FCC will vote on Pai’s proposal on Nov. 19. Officials from both countries have said that they are close to finalizing phase one of the trade deal. US President Donald Trump and his Chinese counterpart Xi Jinping are expected to sign a trade deal in Santiago, Chile, at the Asia Pacific Economic Forum (APEC) between Nov. 11 to Nov. 17, before this vote.