1. Commerce
January 16, 2018

Here’s why the US government wants China out of its mobile market

The US government is concerned about the impact of Chinese mobile companies in the market and is focusing its efforts on phone maker Huawei.

Huawei, pronounced “Wah-Way”, is the third biggest smartphone maker in the world, after Apple and Samsung. But, US lawmakers are not happy about the influence of Chinese actors in the mobile market.

Why is the US government against Huawei?

Earlier this year, the telecoms operator AT&T had to reverse plans to offer its nearly 140m subscribers Huawei handsets. This would have allowed Huawei to sell its new Mate 10 Pro smartphone in the US through AT&T.

However, congressional lawmakers successfully persuaded the company to scrap the plans citing concerns over national security. There are fears that data from Huawei devices, such as a phone’s location, would be available to Chinese intelligence services.

In addition, lawmakers are reportedly advising US companies that if they have ties to Huawei, this will hamper their ability to do business with the government, one source told Reuters.

This all goes back to a 2012 investigation by the House intelligence committee that accused Huawei, and the Chinese telecoms firms ZTE, of being national security threats. The report said the two companies had attempted to extract sensitive information from American companies.

As well, it cited the companies’ close ties to the Chinese government as a cause for concern.

According to the New York Times, the report warned that if the companies were allowed to do business in the US, it would give the Chinese government the ability to intercept communications. As well, there were fears that this could lead to online attacks on US infrastructure, including power grids.

The claims in the report resurfaced last week after congressman Mike Conaway introduced a new bill to ban US government agencies from using phones and equipment from Huawei and Zte.

It’s not just Huawei which is being targeted

A different Chinese telecoms operator, China Mobile Ltd, is also being prevented from entering the US market.

The company, which is the world’s largest telecoms company in terms of subscribers, applied for a license to do business in the US in 2011. Nearly seven years later, its application is still pending before the Federal Communications Commission.

The UK government doesn’t appear to share these same concerns. China Mobile recently launched a mobile phone service in UK, leasing capacity on BT’s network.

When the new service was launched in December last year, the chairman and chief executive of the company, Li Fend, said:

“We have 880m subscribers and every year we have 90m travellers to the rest of the world … extending this network to the UK gives us a window to go global.”

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