Should the US government acquire a controlling stake in Nokia or Ericsson to stem the threats posed by China's Huawei in 5G? AT&T's CEO doesn't think so.

"I just don't think it's a good idea," AT&T CEO Randall Stephenson told CNBC, noting that governments generally don't have a good track record when it comes to investing in public and private companies.

AT&T's top executive was responding to a suggestion floated this week by US Attorney General William Barr. Barr said the US -- either directly or through a consortium of private American and allied companies -- should purchase a controlling stake in either Nokia or Ericsson for access to secure 5G equipment. He said such a move could blunt the rise of China and Huawei in the space.

Shares of Ericsson and Nokia spiked on the comments, and one major Ericsson shareholder said the firm should be open to the action.

However, Stephenson dismissed the idea that a US investment into Ericsson or Nokia would help matters. Instead, he said a better way for the US to handle the situation would be to encourage innovation in software.

Those comments line up with a rival proposal floated by another Trump appointee, White House Economic Adviser Larry Kudlow. Earlier this week, Kudlow called for the US government to invest into software developed for 5G by US-based companies. And he said AT&T, Dell, Microsoft and others supported the proposal.

"We innovate our way out of this competitive quagmire where everybody is talking about Huawei," Stephenson said today. "Use innovation, use software to win, rather than just government mandates to win."

Stephenson explained that the US sits in a difficult competitive position because its 328 million citizens are vastly outnumbered by the 1.4 billion people who live in China. "If Huawei gets 90% share in China, they get 30% globally," Stephenson said.

"If the United States is the only country that is not using Huawei in our network, then we have a situation where the supply chain we're dependent upon becomes sub scale. And so this is why we think we need to innovate our way out of this," he said.

AT&T and the rest of the major wireless network operators in the US do not use Huawei equipment. Instead, Ericsson and Nokia, and increasingly Samsung, supply 4G and 5G equipment to the big US wireless carriers.

"I think our government is rational in asking who do we think ought to be underlying the technology here," Stephenson said. "So we're sitting here now where the United States is at a competitive disadvantage. So this is why we have to find solutions to ensure that we're not at a very competitive disadvantageous position around the globe."

Stephenson pointed out that AT&T has already made major investments into abstracting software from hardware, though the company has previously said it is doing so to cut costs and improve its operations. Indeed, AT&T has vowed to virtualize 75% of its network by 2020 using software-defined networking (SDN). The company has also been pushing to implement "open RAN" (radio access network) technology into its network.

Although he didn't mention open RAN specifically, the proposal from White House economic adviser Kudlow certainly lines up with the open RAN trend. However, US Attorney General Barr specifically called out open RAN as "pie in the sky" and not something that could be immediately implemented.

And hovering above the issue are a growing range of critics complaining about the Trump administration's apprerant scattershot approach to 5G policy in general and Huawei specifically.

— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano