Huawei to sue over FCC restrictions on USF spending: report

court decision
If the reported lawsuit happens, it would not be the first time Huawei took legal action against the United States for imposing restrictions on its telecom gear. (Getty Images)

Huawei is preparing to launch a legal battle against a recent Federal Communications Commission ruling that bars U.S. carriers from using government subsidies to purchase the Chinese vendor’s telecom equipment or services, according to a Wall Street Journal report.

Huawei intends to file a lawsuit challenging that decision this week in the Fifth Circuit Court of Appeals in New Orleans, announcing the move at a press conference at its Shenzhen headquarters, sources familiar with the matter told the WSJ.

Huawei did not immediately respond to FierceWireless request for comment.

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RELATED: FCC bans use of USF funds for Huawei, ZTE equipment

The FCC voted unanimously on Nov. 22 ban Universal Service Fund (USF) dollars for telecom gear from vendors that pose national security risks, specifically calling out Huawei and fellow Chinese vendor ZTE as companies subject to the rule.

In its response to the FCC ruling, Huawei previously released a statement that in part said: “Huawei believes this order is unlawful as the FCC has singled out Huawei based on national security, but it provides no evidence that Huawei poses a security risk. Instead, the FCC simply assumes, based on a mistaken view of Chinese law, that Huawei might come under Chinese government control."

The government’s USF provides about $8.5 billion in annual subsidies for broadband deployment primarily in underserved areas, and carriers impacted by the ruling are mainly smaller rural providers.

The U.S. previously flagged Huawei as a national security risk, asserting the vendor could be used to spy for the Chinese government. The U.S. has also actively campaigned for allies around the world to keep Huawei out of 5G networks. Huawei has continuously denied all allegations, and in its earlier statement criticized the FCC’s method of designating it a security threat.  

“The FCC’s process for labeling Huawei a security threat violates bedrock principles of due process, and is based on nothing more than irrational speculation and innuendo,” Huawei’s statement said.

FCC Chairman Ajit Pai in his prepared remarks during the commission vote said the actions were taken “based on evidence in the record, as well as longstanding concerns from the executive and legislative branches about the national security threats posed by certain foreign communications equipment manufacturers, most particularly Huawei and ZTE.”

RELATED: Rural carriers get another 90-day extension to work with Huawei

“These concerns are by no means hypothetical,” continued Pai. “This summer, for example, an independent cybersecurity firm found that over half of the Huawei firmware images they analyzed had at least one potential backdoor, and that each Huawei device they tested had an average of 102 known vulnerabilities."

Huawei for its part called the actions “unwarranted,” saying it “will have profound negative effects on connectivity for Americans in rural and underserved areas across the United States.”

At its November meeting, the FCC also adopted a Further Notice of Proposed Rulemaking that proposes a process for removal and replacement of Huawei gear that already exists within U.S. networks.

If Huawei’s reported lawsuit happens, it would not be the first time Huawei took legal action against the United States for imposing restrictions on its telecom gear. In March, Huawei filed a lawsuit in Texas against the U.S. government, challenging a section of the recent National Defense Authorization Act (NDAA) that banned federal agencies from Huawei products. 

In that case, Huawei sought a declaratory judgment, asserting the law’s restrictions targeting Huawei are unconstitutional, and requested a permanent injunction.

As in the FCC ruling, ZTE was also singled out by the NDAA, which was signed into law in August 2018.

ZTE has not released a statement in response to the recent FCC decision or responded to questions about whether it intends to fight the ban.  

Huawei is also at the center of U.S.-China trade tensions and in May was essentially blacklisted by the U.S. Department of Commerce from sourcing certain U.S.-made technology without government approval. One day ahead of the FCC decision, Reuters reported that the U.S. had started granting licenses to some companies, including Microsoft, to export certain software and components to Huawei.  

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