Backhaul exempted in US government ban on Huawei and ZTE

14 August 2018 | Alan Burkitt-Gray

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The US has banned its government agencies from buying telecoms equipment and services from Huawei, ZTE and three other Chinese companies.

However the National Defense Authorisation Act, signed by President Donald Trump yesterday, does not ban interconnection to wholesale networks that use Chinese kit.

The act nearly reinstated the complete ban on ZTE’s use of US-licensed hardware and software, but a late compromise removed this provision, which would have prevented ZTE from continuing as a company worldwide.

Section 889 of the act says that no US executive agency may “procure or obtain or extend or renew a contract to procure or obtain any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system” from any of the named companies.

Nor may any agency enter into a contract with an organisation “that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system”.

The act lists Huawei and ZTE for all equipment and adds three others for “the purpose of public safety, security of government facilities, physical security surveillance of critical infrastructure”: Hytera, Hangzhou Hikvision and Dahua. Subsidiaries and affiliates of all five are also banned.

However there is a crucial get-out clause that may allow Chinese equipment to be used. Executive agencies are explicitly allowed to procure services that connect “to the facilities of a third-party, such as backhaul, roaming, or interconnection arrangements”, using Huawei or ZTE.

Section 889 of the act also says that nothing in the paragraph banning Huawei and ZTE “shall be construed to … cover telecommunications equipment that cannot route or redirect user data traffic or permit visibility into any user data or packets that such equipment transmits or otherwise handles”.

Though confusingly written, this paragraph seems to imply that, if equipment is unable reroute traffic or is unable to permit packet sniffing, it is permitted.

The new law explicitly covers “loan, grant, or subsidy programs” run by agencies such as the Federal Communications Commission, the Department of Agriculture, the Department of Homeland Security, the Small Business Administration, and the Department of Commerce. That means those agencies will be unable to support small rural telecoms providers that use Huawei and ZTE equipment.

Huawei is already gathering evidence from rural operators that use its kit and say they would be unable to re-equip with non-Chinese equipment from companies such as Ericsson and Nokia.

These operators will be unable to benefit from subsidies under the new law, and they will also be unable to provide service to US government agencies in their operational areas.

The act has more than 4,600 sections, covering a huge range of the US military’s needs for 2019 – from the funds for M27 rifles to the ranks held by army chaplains. The new law is named after John McCain, the 81-year-old senator from Arizona who is seriously ill from a brain tumour.