Vendors like Huawei and ZTE have been effectively shut out from U.S. Tier 1 wireless network contracts after some lawmakers raised concerns about national security a few years ago. But now that it's 2015, isn't it time to revisit those policies?
Why now, you might ask. Why not? Back in 2012, a U.S. government report called out China-based network vendors Huawei and ZTE as security threats that could be used as backdoors for Chinese espionage. Of course, the companies said the claims were without merit. The chairman of Huawei USA even presented an open letter to the U.S. government spelling out its position.
Huawei has for years worked with Tier 2 and 3 carriers in the United States, but it's been barred from working with Tier 1 carriers due to those national security concerns. Flash forward a few years, and we've got Edward Snowden's revelations about hidden U.S. government surveillance programs in the rear-view mirror. This week, the European Union's highest court struck down a trans-Atlantic pact used by thousands of companies to transfer Europeans' personal information to the U.S. The European Court of Justice ruled that the "Safe Harbor" pact violates the privacy rights of Europeans by exposing them to allegedly indiscriminate surveillance by the U.S. government.
Who's spying on who? Clearly, the world has changed since 2012, or at least, the world as we know it.
While all this is going on, it still seems as if the U.S. doesn't know what it wants to do with China. Some years back, around the time the U.S. government was telling Sprint (NYSE: S) not to let Huawei come to the network infrastructure party, I spoke with an expert on the subject who seemed to conclude that A) the U.S. does not have a plan for working with China and B) the U.S. ought to get one. As far as I know, not much has changed on that front, but I don't have any insider knowledge of the relations. Obviously, China is not part of the controversial Trans Pacific Partnership, so there's that.
Yet this weird policy forbidding Chinese vendors like Huawei from providing certain telecom gear to Tier 1 U.S. wireless operators continues to exist. (Update: To clarify, the U.S. government made it clear that it will not buy services from a service provider that uses Chinese network equipment. Since Tier 1 providers typically want to sell gear to the government, they are effectively shut out from doing so.) It's OK for Huawei to supply gear to Tier 2 and 3 operators, and it's doing deals in the wireline space, like the deal with PocketiNet for rolling out its fiber to the home (FTTH) initiative to bring gigabit Internet to the city of Walla Walla, Wash. It's also been suppling distributed antenna systems (DAS) and other gear, and it's "allowed" to supply handsets and other devices.
So what gives? It seems that with all the emphasis operators are putting on open source, commercial off-the-shelf solutions and the general desire to dish out less money for their gear, it would be in the operators' collective best interest if more vendors like Huawei were allowed to compete. And looking toward 5G, Huawei worldwide has been devoting significant R&D to the technology.
I asked Huawei's U.S.-based VP of external affairs Bill Plummer about Huawei's current aspirations in the U.S. Is the company interested in providing infrastructure equipment to U.S. wireless operators, either now or for 5G? "We are a world leader, if not the world leader, where we certainly have proven the technology in terms of 4G on a global basis," he said. "Absolutely, we're not just committed but ready to work with customers in any market, including the U.S." And as the Internet of Things becomes realized in 5G, "that's when we're really going to see the promise of the Internet of Things emerge and carriers are going to need to have the expertise and the cutting edge and yet affordable product that global leaders like Huawei deliver."
In short, I think that's a "yes." When I first met with Huawei executives in the U.S. many years ago, they talked about their strategy for winning business in the U.S., starting with Tier 3 operators. Despite facing stiff competition from incumbent vendors, the company was willing to make the investment. Now, it seems, it's time for the U.S. to take a risk and open up the gates to competition -- a "novel" idea for the free world. --Monica