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ZTE & Telstra Set To Be Banned From Access To Android On ZTE Smartphones

Telstra executives who have had a “watching” brief on the sale of Telstra branded ZTE phones are now facing having to find a new supplier after both the US and US Governments deemed the Chinese technology a real threat to national security and banned their products from being sold in the USA.
The ban, which will last for seven years, will cover “any commodity, software or technology” exported from the United States, this includes all licenses from US firms such as Google and their Android operating system.

The implications for ZTE and Telstra could be huge as the carrier currently carries nine ZTE made models.

A Telstra source told ChannelNews that they have been aware of the problem for “some time” and that they have been keeping a “watching brief” on the situation.
For ZTE itself, the latest U.S. action means one of the world’s top makers of smartphones and communications gear will no longer be able to buy technology from American suppliers, including components central to its products. ZTE has purchased chips from Qualcomm, Dolby, and Intel, and optical components from Acacia Communications and Lumentum Holdings. A seven-year ban would effectively cover a critical period during which the world’s telecoms carriers and suppliers are developing and rolling out fifth-generation wireless technology claims Bloomberg.

“All hell breaks loose,” wrote Edison Lee and Timothy Chau, analysts at Jefferies, after the export ban was announced.

This week the US banned the import of ZTE smartphones into the USA for seven years. They have also stopped US manufacturers of smartphone technology from supplying ZTE with components and licences, they include Qualcomm and Dolby technology.

Recently ZTE accepted a combined civil and criminal penalty and forfeiture of $1.19 billion after the US Department of Commerce nobbled ZTE for violations of US Export Administration Regulations.

In a statement issued on Tuesday night the a department spoksperson said “ZTE also agreed a seven-year suspended denial of export privileges, which could be activated if any aspect of the agreement was not met and/or if the company committed additional violations of the Export Administration Regulations (EAR).”

Now, though, the Department of Commerce says it believes ZTE made false statements in 2016 and 2017. Not only did ZTE continue to pay full bonuses to employees that had been involved in the illegal activities, it also failed to issue letters of reprimand.

““ZTE misled the Department of Commerce,” Wilbur L. Ross, Secretary of Commerce, said today. “Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored.”

Observers claim that the ban leaves ZTE’s use of Android in a potential quandary. The Google software is released under the open source license, which means that ZTE can presumably continue to install it on its smartphones and tablets.

However, that doesn’t include Google’s specific apps for Gmail, the Google Play store, Google Maps, and other software. Use of those is governed by the Mobile Application Distribution Agreement, or MAPA, a contract signed between Google and device OEMs.

Without that agreement – which, it would appear at first glance, Google would no longer be able to extend to ZTE under the terms of these sanctions – ZTE’s phones could not be considered Android certified. Currently, ZTE is listed as providing certified Android devices, which Google describes as being “tested for security and performance and preloaded with Google apps.”

Bloomberg said trhat ZTE faces tough options in particular due to the ban on buying Qualcomm’s processors and modems, the main components in smartphones. China’s Huawei Technologies, makes those chips for use in its own handsets, while MediaTek. is Qualcomm’s largest rival in offering chips on a so-called merchant basis. ZTE may have to either buy from a competitor or get chips from a Taiwanese company whose products generally lag those of its U.S. rival’s in performance.

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