Huawei is finding it increasingly difficult to go about its business in the United States. The company’s smartphone business has found it very difficult to establish a footing in this market as the carriers aren’t willing to play ball and now even retailers have decided to stop selling its products. However, it appears that now carriers may also decide against using network equipment from Huawei because the Federal Communications Commission might block their federal subsidies if they don’t comply.

The Wall Street Journal reports that the FCC is mulling a new rule which will prevent small and rural carriers from cashing out their federal subsidies if they source network equipment from Chinese companies like Huawei and ZTE. The rule is expected to be proposed tomorrow but the possibility that it may be shelved hasn’t been ruled out.

The proposal from the FCC will prevent carriers using Huawei or ZTE equipment from drawing from the Universal Service Fund, it’s a program created by the government to subsidize companies that provide broadband services in rural areas that are often not served by larger carriers.

It’s not like Huawei is a major supplier of network equipment to U.S. carriers. It only accounts for less than 1 percent of such hardware used by carriers in the country but the U.S. reportedly wants to stop the company from gaining any more market share particularly in the run-up to 5G.

Huawei maintains that its products are not detrimental to U.S. national security and that the allegations against it for spying on China’s behalf are unfounded.

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