Huawei snarled back at US attempts to freeze it out of an $8.5 billion of mobile subsidies

US attempts to freeze out Chinese mobile giant Huawei just amped up a notch.

In an blog post published on Monday, FCC chairman's Ajit Pai proposed to stop any firm from purchasing equipment from Chinese firms including Huawei and ZTE using Universal Service Fund (USF) money. Established by the FCC in the mid-1990s, the USF is an $8.5 billion fund aimed at supporting and promoting telecoms firms and services in the US.

In the post, Pai wrote: "There are mounting reasons to believe that the Chinese firms Huawei and ZTE pose an unacceptable risk to U.S. national security.

"Recognizing this risk today, I'm circulating an order that would prohibit the use of Universal Service Fund dollars to purchase equipment or services from any company — like Huawei — that poses a national security threat."

Pai further proposed a plan aimed at reducing the presence of such equipment in the US. He expressed concern for carriers – especially those in rural areas of the US — which may already have installed such equipment, specifying both Huawei and ZTE.

"My plan calls first for an assessment to find out exactly how much equipment from Huawei and another Chinese company, ZTE, is in these networks, followed by financial assistance to these carriers to help them transition to more trusted vendors," he said.

"We'll seek public input on how big this "rip and replace" program needs to be and how best to finance it," he added, urging colleagues to support his proposals during a vote on November 19.

Unsurprisingly, Huawei has responded negatively to Pai's proposals, claiming that they will offer no security benefit and widen the digital divide. It also claimed that Pai is "choosing to also ignore what is considered best practice around the globe."

In a statement sent to Business Insider, a Huawei spokesman said: "In 30 years of business, we have never had a major security-related incident in the 170 countries we operate. Huawei is trusted by over two billion consumers; we partner with many of the Fortune 500 businesses, and supply more than 500 network operators around the world.

"Banning specific vendors based on country of origin will do nothing to protect America's telecommunications networks.

"The proposal, released by the FCC Chairman, only impacts the broadband providers in the least well-served, rural areas of the United States," the spokesman continued. "Such action will further widen the digital divide, slowing the pace of economic development without further securing the nation's telecommunications networks.

"The FCC is aware of alternative measures that could solve both issues – continuing to enhance connectivity in those areas while actually improving the security of US networks – but Chairman Pai is choosing to also ignore what is considered best practices around the globe.

"Huawei remains open to engage with the US government and policy makers to find a productive solution to safeguard the US telecommunications system."

Pai's proposals would appear to represent another blow to Huawei's standing in the United States.

Associated Press

Pai's proposals represent yet another twist in the ongoing so-called 'Tech Cold War' between the US and China, in which the two nations are sparring amid accusations of unfair trade practices, economic espionage and military links.

Though Tech Cold War has involved US tech giants like Google and Apple, much of the drama has centred on – and continues to centre on – Huawei.

In January 2018, the Trump administration passed a bill aimed at preventing the US government and its affiliates from using Huawei or ZTE equipment, while in May this year, President Trump signed an executive order which effectively prohibited US firms from using Huawei telecoms equipment, though the order did not mention Huawei by name. Huawei was also placed on an entity list, that barred US firms from doing business with it — resulting it Google pulling its Android license from the firm.

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