Feds’ case against Huawei in cell networks tracked ‘unprofitable’ deals near US military bases

Illustration by Alex Castro / The Verge

According to a report from CNN, the Chinese telecom company had a pattern of installing equipment on cell towers near military bases, even if it wasn't profitable to do so. The investigation sheds light on the US government's motivation behind the "rip and replace" program that pushes for the removal ofHuawei's tech throughout the country

According to CNN, the federal investigation centers around the potential forHuawei's equipment to intercept military communications, including those transmitted by the US Strategic Command. The sale of cheap equipment to smaller, regional telecom providers in states like Colorado, Montana, Nebraska, and Oregon raised suspicion among federal agents. According to CNN, investigators found that these rural, low-traffic locations did not bring any financial benefits to the company.

John Lenkart, a former senior FBI agent, told CNN that investigators began to look at the company from a different perspective, noting that it made deals in locations that made no sense from a return on investment perspective. According to sources close to the situation, it's difficult to prove that a piece of stolen information is real.

In a statement to CNN, the company denied that its equipment could interfere with US military communications. The FCC allocates the spectrum for commercial use, according to the company. It can't get any spectrum allocated to the DOD. The company didn't reply to the request for comment.

The Commerce Department started an investigation shortly after President Joe Biden took office, according to a report from the news agency. The agency is concerned about the possibility thatHuawei's equipment can intercept communications from military bases. If the Department of Commerce deems the company a national security threat, it could further restrict the company.

The US barred telecom providers from using federal subsidies to purchase equipment from either company due to concerns that they pose a risk to national security. Companies are still using banned equipment because of a lack of funding, despite the FCC's announcement of a rip and replace program.

The estimated costs to replace existing equipment have gone up from 18 months ago, when the plan was first introduced, to 22 months later. Smaller telecom providers that rely on the funding to replaceHuawei's equipment, a brand they chose because of its affordability, are worried about this. The FCC is $3.08 billion short on the money it needs to reimburse telecom providers. The telecom providers that applied to the program were only covered by the FCC for 38.5% of the total.