Appeals court upholds FCC subsidy ban on Huawei purchases

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NEW ORLEANS (AP) – A federal appeals court on Friday declined to hear Chinese tech giant Huawei’s motion to repeal a rule preventing rural phone operators from using government funds to purchase its devices for national security reasons.

The 5th District Court of Appeals ruled that the Federal Communications Commission was in its full power and jurisdiction to prohibit the rule that Universal Service Fund grant recipients purchase equipment or services from companies operating as national Security risks apply.

The three-person panel also dismissed a claim by Huawei Technologies Ltd. back, the FCC lacks the expertise to classify the company’s equipment as a security risk to the US telecommunications infrastructure.

“The assessment of security risks for telecommunications networks falls in the wheelhouse of the FCC,” wrote the judges in a 60-page report and rejected any suggestion that it was a kind of “junior university” agency for national security matters.

Huawei did not immediately respond to the verdict.

The Trump administration imposed a series of sanctions on Huawei, claiming it could not be trusted not to spy on Beijing because Chinese law required it to do so. Huawei says it is employee, not state owned, and denies it could facilitate Chinese espionage.

Huawei sued the FCC in late 2019 after the agency voted to stop rural airlines from using government subsidies to buy equipment from Huawei or its Chinese rival ZTE Corp. At the time, the company called the decision “based on politics, not security”. It alleged the FCC had exceeded its powers by making national security judgments.

Friday’s decision was in line with a longstanding tradition of US courts not to question government rulings on national security.

Huawei’s US sales plummeted after a congressional panel warned in 2012 that the company and ZTE were security risks and urged wireless carriers to avoid them. In May 2019, the Trump administration tightened the noose by blocking access to U.S. technology and components, including semiconductors and Google’s popular cellular services.



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