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Fed’s case against Huawei in mobile networks followed ‘unprofitable’ deals near US military bases

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An FBI investigation into Huawei reveals that the Chinese telecommunications company had a pattern of installing equipment on cell towers near military bases in rural America — even if it wasn’t profitable to do so. according to a report from CNN. The unearthed investigation sheds some light on the US government’s motive behind the stalled “rip and replace” program pushing for the removal of Huawei’s technology across the country.

According to CNN, the federal investigation focuses on the possibility that Huawei’s equipment is intercepting military communications, including those sent by the US Strategic Command, the agency charged with managing the US nuclear arsenal. It’s no secret that Huawei sold low-cost equipment to smaller, regional telecom providers in states like Colorado, Montana, Nebraska and Oregon, but, as CNN reports, this aroused suspicion among federal agents. As CNN notes, researchers found that these rural, low-traffic locations provided no financial benefits to Huawei, but that they were located near military bases.

John Lenkart, a former senior FBI agent, told CNN that investigators began to “investigate” [Huawei] less from a technical lens and more from a business/financial point of view,” noting that it made deals with companies in locations that “didn’t make sense from a return on investment standpoint.” While the FBI reportedly found that Huawei’s equipment could technically disrupt military communications, sources close to the situation told CNN that it’s difficult to trace a piece of stolen information to actually prove it.

In a statement to CNN, Huawei refutes all claims that its equipment may interfere with US military communications. “Our equipment only works on the spectrum allocated by the FCC for commercial use,” Huawei told CNN. “This means it cannot access the spectrum assigned to the DOD [Department of Defense].” Huawei did not immediately respond to The edge‘s request for comment.

A report of Reuters points to the presence of a similar ongoing investigation by the Commerce Department that began shortly after President Joe Biden took office. The agency is also concerned about the possibility that Huawei’s equipment could intercept communications from nearby missile silos and military bases. According to ReutersThe Commerce Department could further restrict Huawei in the country if it believes the company poses a threat to national security.

In 2019, the US began throttling both Huawei and China-based ZTE over concerns they pose risks to the country’s security, preventing telecom providers from using federal subsidies to buy equipment from both companies. The FCC later announced a rip-and-replace program to remove the equipment already installed — three years out, companies still use the banned equipmentpartly due to a lack of funding.

Since the plan’s introduction, the estimated cost of replacing existing equipment has skyrocketed from $1.8 billion in September 2020 to $5.6 billion in February 2022. This is a major concern for smaller telecom providers that rely on funding. to replace Huawei’s equipment, a brand they probably chose for its affordability. On Friday, FCC Chair Jessica Rosenworcel sent a letter to Congress (PDF) explaining that the agency is $3.08 billion short of the money it needs to fully repay telecom providers. The FCC can only cover 39.5 percent of the total $4.98 billion needed to satisfy the telecom providers that have signed up for the program.

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