Over the past few weeks, the situation has been getting progressively worse for Chinese smartphone manufacturers operating in the American market. It began with the ban on the sale of the latest Huawei devices, as Huawei’s planned deal to sell the Huawei Mate 10 Pro on AT&T collapsed in January because of political pressure. This time around, it's ZTE that faces the brunt of the US government.
The company was caught illegally selling US goods to Iran, and the US Commerce Department banned American companies from selling parts and software to ZTE for seven years. Furthermore, ZTE violated an agreement it had with the federal government by failing to discipline 35 of its employees who were involved with the sale. This meant that the company could no longer use Qualcomm’s processors in its devices. Now further developments indicate that ZTE’s whole Android future is in doubt due to US regulators proposing new rules that could mean ZTE’s sales are cut even more. Additionally, a supply ban means it may not be able to use Android software on its devices.
Things don't look good for ZTE
A US telecom regulator has proposed new rules that would bar government programs from buying from companies that it says “pose a security threat to US telecom networks,” which will likely hurt the likes of ZTE and Huawei, who also have a widespread presence across the telecommunication equipment market. ZTE and Alphabet (the parent company of Google) are said to have been discussing the impact of the ban and as of now, the two companies are still to come to an understanding about the use of Android by ZTE.
New proposed rules from the FCC are expected to be finalized this year, which will further clamp down on companies such as Huawei. The rules would prevent money from the FCC Universal Service Fund from being spent on goods from these companies that pose a so-called “threat” to the integrity of communications networks.
In an era where safeguarding personal information is more important than ever, cracking down on companies that employ shady techniques is essential. However, blanket bans based on unfounded speculations are just as bad and will end up hurting the market in the long run. Both ZTE and Huawei are major players in the telecommunication industry and a blanket ban on their devices might set into motion a sequence of undesirable events. Regardless of how things pan out, it is the consumer that'll suffer, in the already choice-starved US smartphone market.
News Source: Reuters
