After voting last year to deny funds to US carriers or internet service providers that buy components from China's Huawei and ZTE, the FCC this week outlined a reimbursement plan for carriers that had equipment from either company installed before the crackdown.
The FCC will make a $1.9 billion fund available to “providers of advanced communications services with ten million or fewer customers” to cover the cost of removing, replacing, and disposing of Huawei and ZTE hardware and services obtained prior to June 30, 2020. These smaller telecoms can apply for the program from Oct. 29, 2021, through Jan. 14, 2022.
The US government has been tangling with Chinese equipment makers for several years, citing national security concerns. Though there's no evidence of Huawei and ZTE using their equipment for nefarious purposes, and both companies deny any wrongdoing, the concern is that the Chinese government could compel both firms to spy on American targets.
Downhill for China's Big Brands
The FCC "rip and replace" fund rollout comes at a pivotal point. The adoption of 5G mobile networks has required some hefty network upgrades, and Huawei and ZTE could have supplied some of that equipment, gained a critical foothold in the US telecom infrastructure, and made a pretty penny in the process.
And this is only one way the brands are being cut out of the US market. Notably, Huawei also lost the ability to sell phones running Google’s Android operating system after the Trump administration banned US companies from doing business with Huawei without government approval. It also had its access to chips made with US technology limited, though Qualcomm did receive an exception for supplying some 4G phone chips to Huawei.
The moves cut off both firms from lucrative US contracts, but it may not be the end of the world for them. Huawei still managed to outsell Samsung and become the top smartphone vendor worldwide in Q2 2020, and it trailed Samsung by a narrow margin in Q2 2021, according to data from Canalys. Huawei’s also looking ahead to launching 6G in 2030.