China wins one, loses one in US trade spats

US loosens ZTE stranglehold, but China Mobile blocked from operating as virtual carrier

ZTE has had some good news in America, but China Mobile has had bad news.

ZTE's been given a limited reprieve in the form of an authorisation (PDF) from the Department of Commerce's Bureau of Industry and Security that lets it keep trading.

The Department's document allows the company to:

  • Continue operating and maintaining equipment already installed in the US, including bringing in spare parts, for contracts signed before April 15 (when the trade ban against the company came into force);
  • Support handsets sold in the US before April 15;
  • Receive security vulnerability disclosures relating to its equipment, “when related to the process of providing ongoing security research critical to maintaining the integrity and reliability of communications networks and equipment”; and
  • Transfer funds as needed to operate within the scope of the authorisation.

The authorisation isn't a sign that ZTE is off the hook, as the US House of Representatives has passed an amendment to a defense spending bill that excludes ZTE and Huawei from selling products and services to the Pentagon. That bill, however, omitted language passed in the Senate that also banned ZTE buying from American suppliers.

Far-reaching impact

America's ban on ZTE is affecting its business as far away as Europe, if Bloomberg's sources are right. Its inability to buy US technology led to it losing a US$700m contract to Ericsson in Italy.

Mobile carrier Wind Tre signed Ericsson to provide base stations for 60 per cent of its network, Bloomberg said, displacing ZTE from a billion-dollar deal signed two years ago when the operator was named VimpelCom.

China Mobile not coming to America

Meanwhile, China Mobile has been blocked by the United States' National Telecommunications and Information Administration (NTIA) from obtaining a license to sell mobile services in America.

The application to become a mobile virtual network operator (MVNO) in the US was an expression of China Mobile's ambitions to expand internationally. Last year it launched into the UK under the CMLink brand, to give Chinese expats cheap calls home.

No such luck for those in America, where the company first applied for a Federal Communications Commission licence in 2011.

Citing caution over national security, the NTIA declined to allow the company a clearance.

The release quotes assistant secretary for communications and information, David Redl, as saying: “After significant engagement with China Mobile, concerns about increased risks to U.S. law enforcement and national security interests were unable to be resolved. Therefore, the Executive Branch of the U.S. government, through the National Telecommunications and Information Administration pursuant to its statutory responsibility to coordinate the presentation of views of the Executive Branch to the FCC, recommends that the FCC deny China Mobile’s Section 214 license request.” ®

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