Equipment From Huawei And ZTE May Completely Disappear In The US When This Executive Order Is Issued

Huawei and ZTE may have another difficult year regarding the development of their market in the US in 2019 when Mr. President Donald Trump has planned to give an executive order to ban US firms from purchasing telecom equipment manufactured by these two Chinese tech companies.

This will be Trump’s latest step to reduce the influence of Huawei and ZTE on the US market. Up to now, they have been two of the largest network equipment providers in China. However, the US is always so suspicious of their equipment being spying on Americans.

Citing many sources, the US government has considered the executive order for over 8 months and expected its issuance at the beginning of January 2019. And then, the Commerce Department will have the responsibility to prohibit US companies from purchasing equipment made by foreign telecommunications manufacturers which can cause harm to the national security. The sources were revealed by the administration and the telecommunications industry.

Although the US government doesn’t name ZTE or Huawei, it is likely that these two Chinese companies will be constrained from developing and expanding their own equipment in the country. According to the sources, the final text of the order has not been available.

The executive order reminds of the International Emergency Economic Powers Act, in which the US President will have the authority to adjust commerce in case of the emergencies that can endanger the US.

This issue has gained a lot of interests when wireless carriers in the US have searched for partners to develop 5G wireless networks next years. Before the order, a defense policy bill was issued in August to require the US government not to using equipment from Huawei and ZTE.

These tech giants gave no comment about it; however, they had declared not to spy on the US by their equipment.

The first time the Wall Street Journal revealed the order was from the beginning of May. At that time, it was being considered, but until now, it hasn’t ever officially issued.

Huawei and ZTE have been the primary providers of many US’s rural operators, and that’s why these operators don’t want to cut the made-in-China equipment pursuant to the executive order. There has been no confirmation about whether the operators could be legally compelled to do that or not.

Some of the big wireless companies in the US have reduced its partnership with Huawei; however, small rural carriers often have tended to purchase switches and other devices from Huawei and ZTE due to their lower prices.

One of the pieces of evidence showing Huawei’s importance towards small carriers is that one of the Rural Wireless Association’s directors belongs to Vice-president for sales of Huawei Tech, USA, William Levy.

Members of the RWA include carriers who own less than 100,000 subscribers. The statistics being filed to the Federal Communications Commission on December 2018 stated that 25% of those have equipped with equipment from Huawei and ZTE.

As RWA general counsel, Caressa Bennet said that its members couldn’t be allowed to use or buy Huawei and ZTE equipment in the future. As a result, they would have to spend from $ 80 crore to $100 crore altering all of the equipment.

In April, the Federal Communications Commission (FCC) approved a regulation to ban the US companies from exporting the tech products to ZTE, Huawei and other companies that could cause harms to the national security in the US.

It is likely that US carriers will have to stop using and replace the equipment in use which is made by Huawei and ZTE and pose some security risks if the FCC requires.