Thursday, 19 April 2018 05:53

Huawei cutting back US sales efforts; rural subsidies blocked Featured

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Chinese telecommunications companies Huawei and ZTE will not receive any subsidies from the Universal Service Fund that the US uses to subsidise equipment bought by rural and small carriers, and Huwaei is reportedly cutting back US sales efforts as a result.

The US Federal Communications Commission, which last month announced a formal plan to block the subsidies, decided on Tuesday to go ahead with the plan, despite objections from the Rural Wireless Association, a body that represents rural wireless ISPs that offer home or mobile Internet service and have fewer than 100,000 subscribers.

In a statement, the FCC said: "Threats to the nation’s communications infrastructure from certain equipment providers have been a longstanding concern of those in both the executive branch and Congress.

"While the FCC alone can’t safeguard our networks from these threats, it does have an important role to play in addressing this problem.

"Specifically, as the steward of the USF, the FCC has a responsibility to ensure that the money in the fund — which comes from fees paid by American consumers and businesses on their phone bills — is not spent on equipment or services from suppliers that raise national security concerns."

The same day, at a meeting with analysts in Shenzhen, Huawei indicated that it would be reducing its sales push in the US, according to a report in The New York Times.

Five American employees, including William Plummer, who was tasked with lobbying the US Government, were said to have been laid off last week, the NYT said, quoting sources.

It added that the company was cutting back on its political outreach in the US, which could bring to an end its decade-long efforts to convince the US Government that it has no ties to the Chinese Government.

iTWire contacted Huawei for comment and a company spokesperson responded: "Like every company, we continually evaluate our organisation and align our resources to support our business strategy and objectives. Any changes to staffing size or structure are simply a reflection of standard business optimisation."

The NYT report said one indication of the way Huawei was cutting off communications with the US Government was the fact that it did not respond to a request for comment on the security flaws found in Intel processors.

Eric Xu, Huawei's deputy chairman, was quoted as telling the meeting in Shenzhen: “Some things cannot change their course according to our wishes. With some things, when you let them go, you actually feel more at ease.”

ZTE, meanwhile, has been banned from buying components from US suppliers for seven years while the UK has warned against the use of ZTE equipment in its telecommunications infrastructure.

The NYT report said company executives at the Shenzhen meeting underlined the growth opportunities in Europe and Asia, and also outlined plans to help factories, governments and police through the use of artificial intelligence and cloud computing.

The US began its efforts to force Huawei out of local contracts after a 2012 Congressional report alleged the company was a threat to national security, with a warning that Beijing could use its equipment for state-sponsored spying or cyber attacks.

In December, President Donald Trump signed a bill to ban Huawei and ZTE equipment from nuclear weapons systems in the US Defence Department. Last month, Trump also banned a takeover of US processor maker Qualcomm by Singapore-based Broadcom because of national security concerns; Huawei's ties to Broadcom were mentioned as a concern.

In the most recent US move against Huawei, multinational electronics corporation Best Buy said it would no longer stock the company's smartphones.

This comes after AT&T in January cancelled a deal to start selling Huawei smartphones on its plans and Verizon took the company's devices off its shelves.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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