• Rahul Roy

The FCC's subsidy ban for Huawei purchases is upheld by an appeals court.

The 5th Circuit Court of Appeals concluded that the Federal Communications Commission had full authority and competence to enact the regulation prohibiting recipients of "Universal Service Fund" subsidies from purchasing equipment or services from corporations considered national security concerns.


On Friday, a federal appeals court declined to hear Chinese tech giant Huawei's request to overturn a rule that barred rural phone carriers from using government funds to purchase its equipment on national security grounds.

The 5th Circuit Court of Appeals concluded that the Federal Communications Commission was completely within its authority and competence to adopt the regulation prohibiting recipients of "Universal Service Fund" subsidies Purchases of equipment or services from companies deemed national security are prohibited.

The three-judge panel also dismissed Huawei Technologies Ltd's claim that the FCC lacked the expertise to classify the company's equipment as a security risk to US telecommunications infrastructure.

"Assessing security risks to telecom networks falls within the FCC's wheelhouse," the judges wrote in a 60-page opinion, dismissing any suggestion that it was a "junior-varsity" agency when it came to national security. Huawei did not respond to the ruling right away.

The Trump administration sanctioned Huawei, arguing that the company could not be trusted not to spy for Beijing in compliance with Chinese law. Huawei claims to be an employee-owned company rather than a government-owned one. At the time, the company described the decision as "political, not security-related."The company described the decision as "political, not security-related" at the time. It claimed that by making national security decisions, the FCC was exceeding its authority.

The decision on Friday followed a longstanding US court tradition of not second-guessing government decisions on national security. Huawei's sales in the United States plummeted after a congressional panel warned in 2012 that the company and ZTE were security risks and advised carriers to avoid them. Trump's administration will end in May of 2019.

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