WASHINGTON—President Trump is weighing an executive order that could ban Chinese telecommunications gear from U.S. networks, but the plan is facing resistance from U.S. carriers in rural areas whose networks run on Huawei Technologies Co. equipment.
While the executive order would likely not identify companies by name, Huawei is considered the prime target. U.S. officials say that Huawei has close ties to the Chinese government and could use its systems to monitor and disrupt U.S. telecommunications.
Rural U.S. carriers, many of whom have built their networks on low-cost Chinese gear, have been quietly lobbying against such a ban. The federal government and analysts estimate Chinese hardware makes up less than 1% of U.S. telecom networks, after Congress in 2012 effectively banned it from nationwide phone and internet providers.
“We’ve obviously been in touch with the administration to make sure they understand whatever they do in that [order] doesn’t have the unintended consequence of hurting rural America,” said Carri Bennet, general counsel of the Rural Wireless Association, a trade group of smaller carriers. “What nobody in the administration or government or Congress seems to have looked at is how pervasive is all this gear in our networks.”
RWA’s members estimate it might cost from $800 million to $1 billion for them to replace all the potentially affected gear from their wireless networks—costs they believe the government is legally required to reimburse.
James Groft, chief executive of James Valley Telecommunications, said replacing Huawei equipment in his small South Dakota network would cost about $10 million and tie up many of his 50 employees. “For a period of one or two years, we’ll have to focus on replacing Huawei and not do anything else,” he said.
He added that his carrier can’t do long-term planning while anti-Huawei measures are in play, including a possible Federal Communications Commission order barring federal subsidies to carriers that use Chinese gear and services.
“I’ve never seen anything publicly that Huawei has done anything wrong,” Mr. Groft said. “I would feel better about this if they [the federal government] had assurances there is something credible, and not fearmongering.”
A Huawei spokesman said the company declined to comment on unannounced measures.The Shenzhen, China-based telecommunications giant has repeatedly denied working surreptitiously for Beijing, and its chairman recently challenged the U.S. to present any evidence of spying.
More broadly, some in the industry worry about Chinese retaliation in response to a U.S. order, such as Beijing banning hardware from American companies.
“There’s always a risk that the Chinese would view this as a degree of escalation they haven’t seen before,” one industry official said. “Then you get the tit-for-tat response.”
European manufacturers such as Ericsson AB and Nokia Corp. are also watching the U.S. deliberations with apprehension, since both have major operations in China.
Both Ericsson and Nokia said they had strict protocols to ensure their global manufacturing supply chains are secure. Nonetheless, American and British officials are concerned that Beijing could use these companies’ Chinese-based factories or employees to insert vulnerabilities into the equipment, allowing the Chinese government or hackers to spy, disable communications or modify data.
Despite the industry concerns, administration aides say there is a renewed push from national security officials to issue the executive order ahead of a major global wireless trade show later this month in Spain. The trade show, MWC Barcelona, was formerly known as Mobile World Congress.
The exact outlines of the administration’s executive action remain unclear even to industry insiders. Some believe the order would declare a national emergency related to telecommunications supply-chain security and give the Commerce Department broad powers to adopt rules to address the problem.
Those rules ultimately could extend to other countries, including Russia.
U.S. as well as British officials may require all telecom-equipment makers to meet common security criteria, such as sharing with government officials the software code they use so it can be tested for vulnerabilities, said people familiar with the reviews.
British officials already require Huawei to submit their code for testing in a U.K. lab funded by Huawei and overseen by both Huawei employees and the U.K. government.
The executive order appears unlikely to take immediate action against individual companies, administration officials say, because of the risk of legal challenges. Instead, the order likely would leave it to a government agency to do a fact-finding. It also could be limited in ways that avoid industry objections.
The White House and Commerce Department didn’t comment.
Whatever form the order takes, the administration is under considerable pressure to take some further action soon to limit Huawei, particularly from next-generation 5G networks. Such an order could help the administration convince allies in Europe and elsewhere that it is serious about eradicating risks from its own networks.
That is one reason why there is a renewed push to get the executive order out before MWC Barcelona, where the U.S. delegation is likely to be lobbying allies to take similar steps—and counter the Chinese delegation’s expected message that China is winning the race to 5G.