Huawei has failed in its attempt to sue for US subsidies for its customers. The US regulator FCC is allowed to classify Huawei as a risk to national security and accordingly refuse to pay out subsidies, says a federal appeals court. In addition, Huawei’s accusation regarding procedural deficiencies is unfounded.
In 2019 the FCC decided that it would not provide any funds from the universal service fund for the installation of risky technology. In 2020, the US regulator classified Huawei and ZTE as security risks. This means that US network operators are not allowed to spend money from the universal service fund on purchases from Huawei and ZTE.
Above all, this has consequences for smaller regional carriers in the USA, which are the only ones who still use Huawei technology. For network expansion in sparsely populated, rural regions, they fall back on federal funding. The FCC rejected Huawei’s complaint against the restriction in December 2020, citing the “overwhelming evidence”.
The company was exposed to direct pressure from the Chinese government to participate in espionage activities, it was said to justify. In addition, Huawei’s relations with the People’s Liberation Army of the People’s Republic of China posed a risk. The vote of the five FC commissioners was unanimous across party lines. Huawei sued the FCC decision.
FCC is responsible
Huawei had submitted to the Federal Court of Appeals that the FCC’s decision was “arbitrary”, that the FCC had violated procedural rules, and that the agency was not entitled to make decisions on national security issues. That is the task of the President, Parliament, the secret services and / or the responsible minister.
The three judges do not agree with this view: The assessment of risks for telecommunications networks is very much the task of the FCC. In addition, the regulatory authority was guided in its decision by “robust” contributions from other authorities and officials with relevant expertise. The court also rejects Huawei’s other arguments.
Huawei is no longer entitled to ordinary legal remedies. Theoretically, the company can request that the case be reconsidered in an extended bench of the same court or for a hearing in the US Supreme Court. Such requests are rarely approved.
The procedure is called Huawei v. FCC and was ruled by the U.S. Fifth District Court of Appeals under Ref. 19-60896.