Huawei legally challenges FCC's Universal Service Fund ban

Huawei has challenged the United States Federal Communications Commission (FCC) in court for banning it from selling network equipment in the country. 

The FCC agreed to ban telcos from purchasing Huawei and ZTE equipment from its Universal Service Fund (USF) in late November. In its explanation, the FCC said Huawei and ZTE pose national security threats to the United States. The ban put new restrictions on subsidies that are dedicated toward expanding broadband to rural and underserved areas of the country.

"Networks are vulnerable to various forms of surveillance and attack that can lead to denial of service, and loss of integrity and confidentiality of network services," it said.

"As the United States upgrades its networks to the next generation of wireless technologies -- 5G -- the risk that secret 'backdoors' in our communications networks will enable a hostile foreign power to engage in espionage, inject malware, or steal Americans' data becomes even greater."

As part of the legal challenge, the Chinese network equipment maker filed a petition to the United States Court of Appeals for the Fifth Circuit requesting for the court to hold the FCC's order as unlawful. According to Huawei, the FCC allegedly circumvented due process by labelling Huawei as a national security threat.

In the petition, Huawei accused the FCC of exceeding its statutory authority and violating federal law by failing to substantiate its findings with "evidence or sound reasoning or analysis".

"Banning a company like Huawei, just because we started in China -- this does not solve cybersecurity challenges," Huawei's chief legal officer Dr Song Liuping said at a press conference.
 
Song also claimed that both FCC chair Ajit Pai and other FCC commissioners failed to present any evidence to prove their claim that Huawei constitutes a security threat, and used words like "backdoors" to scare people.
 
In the statement, Pai issued when the ban was ordered, he said the ban was based on evidence and cited an EU report from October that stated 5G would increase attack paths for state actors.

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

It is one of many legal battles Huawei has entered into to hit back against US regulators. The Chinese network equipment also issued a lawsuit against the United States in response to having its telco equipment seized by the country's government authorities. Huawei later dropped the lawsuit after the United States agreed to return the equipment after it was held for two and half years.

Previously, Huawei filed a separate motion against the US government alleging that section 889 of the National Defense Authorization Act 2019 (NDAA) -- which enforces a ban on US federal agencies and their contractors from using Huawei equipment due to security concerns about the Chinese government -- is unconstitutional.
 
"They are using every tool they have, including legislative, administrative, and diplomatic channels. They want to put us out of business," Song said at the time.

While Huawei is currently banned from selling network equipment to telcos as part of the USF and is among the companies on the United States' Entity list, the United States Department of Commerce in November allowed the Chinese telecommunications giant to continue to buy technology from certain companies that received temporary licences. This marked a shift in tone from the department, which previously said the extensions were in place to allow American telcos to transition away from Huawei equipment.
 
Outside of the United States, Huawei has continued to experience strong growth. In the third quarter, Huawei's revenue hit 611 billion yuan, approximately $86 billion, which was a jump of 24.4% over the same period last year.

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