Year in Review 2010: Huawei blazes LTE trail, struggles in U.S. market

Much to the chagrin of major network infrastructure suppliers, Chinese vendor Huawei blazed a trail across the globe to win the lion's share of LTE contracts worldwide.

While the vendor's strategy to win infrastructure contracts in the U.S. is under attack, Huawei is leading the initial wave of LTE contracts globally, winning 35 percent of commercial LTE contracts so far. That number is more than twice the number of its rivals, according to research by TeleGeography.

A key piece of Huawei's wins lies in the fact that the vendor is not aggressively competing on price but can offer other financial advantages, such as a bigger well of vendor financing than its infrastructure competitors. Huawei also offers a compelling SingleRAN architecture that includes WiMAX and TD-LTE.

Still, it's only fair to point out that Ericsson (NASDAQ:ERIC) comes out on top when it comes to total revenue booked, according to the report. It has won fewer but bigger contracts, including those with Verizon Wireless (NYSE:VZ), AT&T (NYSE:T) and TeliaSonera, and has 16 percent of the LTE deals. 

But Huawei is confident about its prospects. Ying Weimin, head of the Chinese equipment vendor's LTE business unit, said Huawei expects to double the number of commercial LTE contracts next year (it has 18 contracts), and anticipates LTE-related revenue to make up a significant portion of the vendor's sales by 2014.

Big contracts in the U.S. market, however, remained elusive in 2010 amid mounting skepticism from U.S. lawmakers worried about national security should Huawei handle infrastructure for a major U.S. operator. These worries reportedly hampered Huawei's ability to secure a multi-billion dollar network modernization contract from Sprint Nextel (NYSE:S). That award went to Ericsson, Alcatel-Lucent  (NYSE:ALU), and Samsung.

Huawei is determined to win a U.S. contract. Charlie Chen, Huawei's senior vice president for U.S. marketing, last month told the Financial Times that eventually Huawei would land a deal with a major U.S. carrier, even if it does not happen right away. "It may take a long time. It may take three or five or 10 years; it doesn't matter. We'll get there," he said.

Huawei continues to deny that it has links to the Chinese military and has strongly protested characterizations to the contrary. In an effort to smooth the waters in the U.S. market, Huawei took a number of actions, which included creating a three-pronged security plan. That plan calls for the establishment of a national security committee in the U.S., U.K. and France, opening up of certain software codes in equipment and make them accessible to third parties for testing and offering trusted delivery of all products.

Amerilink Telecom has been lobbying the U.S. government on Huawei's behalf, stacking its board with former U.S. officials. Huawei is currently working with Cox Communications on the company's 3G CDMA network, and also is a supplier for Clearwire's (NASDAQ:CLWR) mobile WiMAX network.

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