In a major move, the US Federal Communications Commission (FCC) has declared Chinese tech giants Huawei and ZTE 'national security threats' to America.
The classification marks a big blow to the companies, known particularly for providing consumer tech and telecom gear, and comes a day after India banned 59 Chinese applications that were deemed 'prejudicial to state security.'
Companies posing risk to America's communications networks
A few hours ago, Ajit Pai, the Chairman of the FCC, issued a statement declaring Huawei and ZTE as well as their parent companies, affiliates, and subsidiaries as companies posing a security threat to the US.
The FCC's Public Safety and Homeland and Security Bureau emphasized that the decision is a step geared towards protecting America's communications networks and 5G future from security risks.
Pai stated that "both companies have close ties to the Chinese Communist Party and China's military apparatus, and both companies are broadly subject to Chinese law, which obligates them to cooperate with the country's intelligence services," thereby posing a security threat.
He added the decision has been taken considering inputs from Congress, Executive Branch, intelligence community, allies, and communications service providers in other countries.
With this designation, FCC is effectively barring US telcos from using the government's subsidy money, channeled through the $8.3 bn Universal Service Fund, for dealing with Huawei or ZTE.
The regulator has explicitly said that the money from the fund can "no longer be used to purchase, obtain, maintain, improve, modify, or support any equipment or services produced or provided" by the two companies.
"With this decision, we are sending a clear message: the US Government, and this @FCC in particular, cannot and will not allow the Chinese Communist Party to exploit vulnerabilities in US communications networks and compromise our critical communications infrastructure."