Huawei had some good news to share regarding its smartphone business this week, but now there's some not-so-good news for the company that's come out.
President Donald Trump may sign an executive order that would declare a national emergency and block U.S. companies from using Huawei and ZTE networking equipment. That's according to a report from Reuters, which adds that the executive order has been under consideration for more than eight months and that it could be issued as soon as January.
As for the reason behind the executive order, it's said that U.S. officials have concerns that Huawei and ZTE work for the Chinese government and that their networking equipment could be used to spy on the U.S. Neither Huawei nor ZTE have commented on this rumor, but the companies have previously denied that their products are used for spying.
Earlier this year, the U.S. government banned the use of Huawei and ZTE products for itself and government contractors. Considering that, it's not too surprising to hear that the government is now turning its focus to networking equipment from Huawei and ZTE in an effort to further minimize the companies' presence in the U.S.
The concern with this executive order is the impact that it could have on rural U.S. carriers using Huawei and ZTE networking equipment. While the major U.S. carriers have largely ditched Huawei, many smaller carriers use networking equipment from Huawei and ZTE because it's typically less expensive than alternatives. The Rural Wireless Association, which represents carriers with fewer than 100,000 subscribers, estimates that 25 percent of its members use Huawei or ZTE networking equipment. If all RWA members were forced to replace their Huawei and ZTE equipment, it could cost between $800 million and $1 billion, which could be difficult for small rural carriers to afford.