Huawei sues FCC over unconstitutional ban on the use of federal subsidies

Huawei has sued the Federal Communications Commission (FCC) in the Fifth Circuit Court in New Orleans, seeking to overturn a ban on carriers from using money from the Universal Service Fund (USF) to buy equipment from Huawei and ZTE.

The United States (US) FCC designated the company as a security threat and moved to bar it from a government subsidy.

The FCC last month unanimously voted to designate Huawei Technologies and peer ZTE Corp as national security risks, barring their US rural carrier customers from tapping an $8.5 billion government fund to purchase Huawei or ZTE telecommunications equipment.

According to the FCC, the fact that these companies had ties with China's government and military apparatus, and Chinese laws requiring such companies to assist the Chinese government with intelligence activities, posed a risk to US national security. It also voted to propose requiring carriers remove and replace equipment from Huawei and ZTE in existing networks.

US President Donald Trump had placed Huawei on the country's trade blacklist in May, citing national security concerns, following which companies were banned from supplying Huawei with US components without special licenses.

The move came after criminal charges were brought against Huawei alleging theft of trade secrets, bank fraud and violation of US sanctions against Iran. It has also sought to convince allies to ban it from the 5G networks over spying fears - increasing tension with Beijing amid a trade war.

Huawei's Chief Legal Officer Song Liuping said at a news conference at the firm's headquarters in Shenzhen that banning a company like Huawei, just because it started in China does not solve cyber security challenges. According to him the FCC has not provided evidence to show Huawei is a security threat and that the decision is based on politics, not security.

The FCC rule according to Karl Song, Vice President of Huawei's Corporate Communications department, would threaten improving connectivity in rural America, and would cost hundreds of millions of dollars and even force some small carriers to go bankrupt.

According to sources, the United States is now considering means of stopping more foreign shipments of products with US technology to Huawei.