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Technology Senators propose more than $1 billion in subsidies to fund 5G alternatives to China's Huawei

00:55  15 january  2020
00:55  15 january  2020 Source:   cnet.com

FCC bars Huawei, ZTE from billions in federal subsidies

  FCC bars Huawei, ZTE from billions in federal subsidies More problems for the Chinese tech companies."Given the threats posed by Huawei and ZTE to America's security and our 5G future, this FCC will not sit idly by and hope for the best, said FCC Chairman Ajit Pai in a statement during Friday's open meeting. "Today, we not only ensure that the federal funds in the USF are not spent on equipment or services from these suppliers, but we also propose a process to remove such equipment already deployed in USF-funded networks.

A bipartisan group of U.S. senators concerned about China ' s dominance in 5 G technology on Tuesday introduced legislation to help subsidize companies developing more secure 5 G gear. The bill would use US wireless auctions to fund the subsidy program that will be used to enhance research and

Huawei founder Ren Zhengfei had denied that the company received subsidies in a BBC interview in February Since 2015 China has provided more funding each year to support its exports than the OECD' s 36 member-nations combined Nevertheless, Oi is working with Huawei to prepare for 5 G .

A bipartisan group of U.S. senators concerned about China's dominance in 5G technology on Tuesday introduced legislation to help subsidize companies developing more secure 5G gear. The bill would use US wireless auctions to fund the subsidy program that will be used to enhance research and development of 5G equipment and encourage the deployment of secure 5G technology throughout the world.

Mark Warner, Richard Burr standing next to a person in a suit and tie: Vice chair Sen. Mark Warner, D-Va., left, and chairman Sen. Richard Burr, R-N.C., talk before the start of a Senate Select Intelligence Committee hearing. Bill Clark/CQ Roll Call via Getty Images© Provided by CNET Vice chair Sen. Mark Warner, D-Va., left, and chairman Sen. Richard Burr, R-N.C., talk before the start of a Senate Select Intelligence Committee hearing. Bill Clark/CQ Roll Call via Getty Images

Six senators including, the leaders of the Senate Select Committee on Intelligence, Richard Burr, a Republican from North Carolina, and Mark Warner, a Democrat from Virginia, introduced the Utilizing Strategic Allied Telecommunications Act. The legislation would allocate at least $750 million to companies developing 5G wireless technology. It would also create a $500 million fund to be doled out to companies deploying "trusted and secure" equipment around the world.

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But Huawei , which brought in more than 0 billion in revenue last year, isn’t your ordinary And in March, the Federal Communications Commission proposed a rule that would stop US companies The FCC’ s Universal Service Fund provides subsidies to boost phone, wireless, and broadband

But the mood around Huawei ’ s headquarters in southern China suggests the company is girding itself for a future in which the United States is more bitter rival than friend. Huawei says it stockpiled months’ worth of U. S . parts before Washington announced the ban, in anticipation of the conflict.

The proposed bill doesn't call out specific companies, but the sponsors of the legislation made it clear that the legislation is designed to provide alternatives to gear made from Huawei and ZTE, Chinese telecom-equipment makers that have ties to the Chinese government.

"Every month that the US does nothing, Huawei stands poised to become the cheapest, fastest, most ubiquitous global provider of 5G, while U.S. and Western companies and workers lose out on market share and jobs." Warner, who co-founded the wireless company Nextel before entering public service and currently serves as Vice Chairman of the Senate Intelligence Committee, said in a statement. "It is imperative that Congress address the complex security and competitiveness challenges that Chinese-directed telecommunication companies pose."

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  Huawei calls FCC's new restrictions unconstitutional in legal challenge Move comes after agency barred US carriers from using federal funds to buy equipment from the embattled Chinese telecom.The FCC announced in November it had voted to prohibit the use of its $8.5 billion a year Universal Service Fund to purchase equipment and services from Huawei and ZTE because they allegedly pose a national security threat. The government fund is used by multiple programs to subsidize US broadband deployment and services.

China ' s Huawei Technologies said it would invest . 1 billion in Italy over the next three years, as the Chinese telecoms giant called The United States has lobbied Italy and other European allies to avoid Huawei equipment and also to closely scrutinize ZTE, alleging the vendors could pose a security risk.

Aided greatly by subsidies from the Chinese government, Huawei grew its global revenues from billion in 2009 to 7 billion in 2018. A bipartisan group of senators led by Commerce Committee Chairman Roger Wicker recently introduced the 5 G Leadership Act.

Mark Warner, Richard Burr standing next to a man in a suit and tie: Vice chair Sen. Mark Warner, D-Va., left, and chairman Sen. Richard Burr, R-N.C., talk before the start of a Senate Select Intelligence Committee hearing. © Bill Clark/CQ Roll Call via Getty Images

Vice chair Sen. Mark Warner, D-Va., left, and chairman Sen. Richard Burr, R-N.C., talk before the start of a Senate Select Intelligence Committee hearing.

National security officials fear that equipment from these manufacturers could be used to spy on other countries and companies. In May, President Donald Trump issued an executive order effectively banning new Huawei gear from US communications networks. The Federal Communications Commission also voted last year to cut off funding to wireless carriers that use equipment from these firms because of the national security risk associated with the equipment.

Huawei and ZTE have denied their gear can be used to spy or to compromise US security.

Huawei is one of the biggest makers of 5G equipment, and its technology is considered to be the most advanced. It's also the second largest smartphone maker behind Samsung, having surpassed Apple in 2018.

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  China reportedly bans foreign hardware, software from government offices The technology is reportedly to be replaced with Chinese alternatives within three years.China's Ministry of Foreign Affairs didn't immediately respond to a request for comment.

Huawei Technologies has secured more than 25 commercial contracts for 5 G and forecasts its revenue this year to surpass US0 billion . That pipeline of commercial 5 G contracts has not only put Huawei ahead of rival mobile network equipment suppliers Ericsson and Nokia, but the Chinese

On Wednesday, Senator Mark Warner of Virginia, the top Democrat on the Senate Intelligence Committee The major mobile phone companies have renounced the use of Huawei equipment in their 5 G But Huawei remains appealing to rural networks because it is cheaper than alternatives .

The company, founded in 1987 by a former officer of the Chinese People's Liberation Army, still has close ties to the Chinese government, according to six US intelligence chiefs, including the directors of the CIA, the FBI and the National Security Agency, who testified before Congress in 2018 that the company could conduct "undetected espionage" if its gear was used in US networks.

US officials say that the Chinese government has been subsidizing the company's growth abroad by enabling it to offer low-cost loans and other support in order to give it a competitive edge against Western equipment competitors.

The problem is especially concerning given the massive upgrades underway throughout the world toward next generation 5G wireless technology. The fifth generation of cellular technology promises download speeds 10 to 100 times faster than those of current 4G networks. It's being rolled out across the US and throughout the world.

Senator Burr, Chairman of the Senate Intelligence Committee, said in a statement today that it was important that Congress act now to protect networks of the future.

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"[The] risks could prove disastrous if Huawei, a company that operates at the behest of the Chinese government, military, and intelligence services, is allowed to take over the 5G market unchecked," he said. "This legislation will help maintain America's competitive advantage and protect our national security by encouraging Western competitors to develop innovative, affordable, and secure 5G alternatives."

The details

The proposed legislation calls for using proceeds from the FCC's sale of wireless spectrum licenses over the next five years to establish a fund of at least $750 million that can be used to subsidize research and development by any company using open-standards for 5G technology. This could help smaller US companies get a foothold in the 5G equipment market, which is dominated by Asian and European companies. Huawei largely competes with Scandinavian suppliers Ericsson and Nokia.

The FCC already has two major wireless spectrum auctions planned for this year. The legislation would allow the government to collect $750 million or 5% of all auction proceeds whichever figure is higher, for the fund.

The National Telecommunications and Information Administration, a division of the Commerce Department, would administer the funds and oversee the grant program.

The bill would also raise an additional $500 million for a Multilateral Telecommunications Security Fund, which will be controlled by the Department of State.  US officials could use these funds to help carriers in other countries purchase non-Chinese equipment. The US has struggled to persuade other countries to abandon Huawei and others as suppliers. The fund would also help the US play a bigger role in crafting international technical standards for 5G.

Senate passes bill banning government purchases of Huawei gear .
Bill targets companies deemed to pose a threat to US national security.The bipartisan bill, which passed the House of Representatives in December, bars the FCC from using the funds to help carriers purchase equipment from those companies. It also would require the FCC to create a $1 billion fund to help smaller carriers remove and replace any "suspect network equipment.

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