HUAWEI, alongside fellow Chinese telecom equipment manufacture ZTE, were classified as a national security threat back in June last year over alleged ties with the Chinese government and risks of potentially compromising the country’s critical communications infrastructure. Following the designation, the US lawmakers backed a sum of $1.9 billion that would go towards replacing HUAWEI and ZTE’s telecom gear. Now, HUAWEI has legally challenged the status of being labeled a ‘national security threat’ by the FCC.
HUAWEI says FCC's action was arbitrary, capricious and abuse of discretion
As per a Reuters report, the lawsuit filed in the US Court of Appeals for the Fifth Circuit argues that FCC’s move was ‘arbitrary, capricious, and an abuse of discretion’, and that it was not backed by substantial evidence. The company further claimed that the FCC’s order violates federal law and the constitution.
“Last year the FCC issued a final designation identifying Huawei as a national security threat based on a substantial body of evidence developed by the FCC and numerous U.S. national security agencies. We will continue to defend that decision,” an FCC spokesperson was quoted as saying by The Wall Street Journal.
To recall, the US FCC rejected a petition filed by HUAWEI back in December, asking the agency to reconsider its decision. To recall, after being classified as a national security threat, US companies were prohibited from using money from the multi-billion Universal Service Fund for purchasing telecom gear from the company. On a related note, a similar petition filed by ZTE was also rejected in the same month.
US FCC rejected HUAWEI's petition to reconsider its stance in December
In addition to being designated as a security threat by US FCC, the company has also been put on the commerce department’s Entity List, a move that prevents US companies from trading with HUAWEI without obtaining a license to do so. Additionally, the company has been put on a military blacklist as well over alleged ties with the Chinese military.
Being put on the Entity List proved to be a fortune-altering decision for HUAWEI, as the company lost its license to ship Google services such as Gmail, Maps, and Google Play services on its smartphones. With customers outside the Chinese market unwilling to buy HUAWEI (and Honor) phones without essential Google services, a massive decline for the company’s phone business followed, and eventually forced it to sell the Honor sub-brand to a government-backed consortium.