Huawei, ZTE are security threats, says US FCCApprox Read Time: 5 minutes
- The US Federal Communications Commission (FCC) has designated Huawei Technologies Co. and ZTE Corp. as national security threats, a step toward driving the Chinese manufacturers from the U.S. market.
- The FCC has claimed that both companies have close ties to the Chinese Communist Party and both companies are broadly subject to Chinese law obligating them to cooperate with the country’s intelligence services.
- The action means money from US federal subsidies used by many small rural carriers may no longer be used to buy or maintain equipment produced by the companies.
About: Huawei and ZTE
- Huawei is the world’s largest maker of telecom equipment and the second largest maker of mobile phone parts.
- The company has been at the forefront of innovation that has allowed many companies in developing and as well as developed economies to build large telecom infrastructure at very low costs.
- On the other hand, ZTE, another Chinese vendor, has tied up with several big corporations to manufacture their patented equipment in China at very low costs.
- Apart from hardware, Huawei has also been trying to make get into the software and operating systems (OS) industry. In May this year, the company launched a mobile OS called Harmony OS, which it said could rival Google and Apple’s OS.
Related moves in India:
BSNL and MTNL cancel 4G tender:
- Meanwhile, in India, Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telecom Nigam Limited (MTNL) have cancelled tender inviting bids from companies for supply of equipment for upgrading its network to 4G.
- The move is seen as aimed at keeping away Huawei and ZTE Corporation of China away from the project and stopping them from expanding footprints in India’s telecom sector.
- The decision by the two state-owned telecommunication service providers comes amid the continuing military stand-off between India and China along their disputed boundary in eastern Ladakh.
Impact of any ban by India on Huawei and ZTE:
- The US FCC’s decision to classify Huawei and ZTE as national security could be followed by similar, if not the same action, by India.
- Over the years, Huawei has acquired nearly 25 % of the total telecom equipment market in India.
- While Bharti Airtel uses up to 30 % Chinese telecom equipment, including Huawei’s for its networks, Vodafone Idea uses as much as 40 %.
- So far, private telecom operators have neither been officially or unofficially told to discontinue using Chinese telecom equipment.
- The private telecom operators have, however, warned of huge economic costs if such a ban is put in place, as a ban could mean an increase of up to 30 % in cost of telecom equipment across the board.