Huawei: US Wireless Network Business Remains Undimmed
Huawei officials said the company's equipment sales to smaller US wireless network operators haven't been slowed by ongoing concerns around the security threat the company may pose. In fact, the company said its US wireless network revenues are on track to do the same or better this year than last year.
"We're committed to the small operators here," Huawei's SVP Joy Tan said on the sidelines of the Competitive Carriers Association's trade show in Denver, Colo., last week, though she added that Huawei doesn't specifically break out its US revenues. The small operators are "extremely satisfied," she said.
Although Huawei has been effectively barred from doing business with nationwide wireless network operators in the US like AT&T and Verizon, the Chinese equipment vendor counts 40 mostly small and rural wireless network operators as customers in the US market. And Huawei executives attended the CCA show last week to essentially reassure its US customers that Huawei isn't going anywhere without a fight.
Specifically, Huawei's Tan and Andy Purdy, Huawei's chief security officer, held a session at the event called "Building Trust and Transparency." Speaking in support of Huawei at the event were executives from two of the company's US wireless customers: Viaero and Nemont/Sagebrush Cellular.
Huawei basically argued that it continues to provide low-cost equipment and support to its US customers, and that its products are ideally suited for smaller and rural wireless network operators.
Viaero and Nemont/Sagebrush Cellular join James Valley Telecommunications (JVT) in coming out publicly in support of Huawei. JVT's James Groft told Light Reading recently that he is aware of the security concerns that surround Huawei but said that "this is the United States. I'm a believer in being innocent until proven guilty."
Further, a group of Huawei customers -- including United TelCom, SI Wireless, United Telephone Association and Union Telephone Company -- last year urged the FCC not to bar the Chinese vendor from the US market.
However, Vermont wireless network operator VTel recently broke ranks with its rural wireless peers and confirmed that it is in the process of replacing a small amount of Huawei equipment in its network with equipment from Ericsson. "While VTel has no technical insights into the US government's position that equipment from Huawei, ZTE, and other Chinese manufacturers pose security threats, VTel understands... that if the US government determines that Huawei and ZTE pose a threat to the security of our nation's communications networks, we have an obligation to support this policy," explained VTel.
It's worth pointing out that such developments don't appear to be having much of an impact on Huawei. The company notched $108.5 billion in overall global sales in 2018, up $92.5 billion a year earlier, and the US market represents less than 1% of Huawei's wireless networks business.
Nonetheless, it's no secret that enormous geopolitical issues are hanging over Huawei and its customers, including its small and rural customers in the US wireless market.
Although a US government report warned in 2012 that equipment from Huawei and ZTE could be used for Chinese espionage, the issue has taken on enormous weight in recent months as members of US intelligence community and Trump administration work to push governments around the world to ban Huawei equipment in 5G networks.
While that effort has met with opposition from the likes of Germany's Angela Merkel, momentum against Chinese suppliers appears to be growing inside the US. For example, Congress' National Defense Authorization Act, signed into law last year by President Trump, essentially prohibits the federal government from purchasing equipment from Chinese vendors, including Huawei and ZTE, due to security concerns. And an ongoing FCC proceeding is looking at whether to ban Universal Service Fund -- government funding for building broadband networks in rural areas -- from US companies that purchase equipment from entities deemed a security threat.
Huawei has responded with increasingly vehement denials alongside a lawsuit against the US government.
And, hanging over the question of Chinese espionage is an ongoing US-China trade war that appears to have spilled into a variety of areas in the telecommunications industry, from the arrest of Huawei's CFO to a recent move by the Chinese government to raid Ericsson's offices in Beijing over patent licensing.
At stake, at least in the telecommunications and technology sector, are future revenues from 5G networks and services. US officials are increasingly worried that China will gain a leading position in the development of 5G technology by supporting the construction of a major network in China and by supporting companies that both sell 5G equipment and license 5G patents.
Thus, it's no surprise that rumors continue to circulate that US government officials are discussing ways to potentially completely remove Huawei equipment from the networks of smaller providers in the US. Although Huawei's Purdy said he hasn't heard of any concrete proposals for the US government to initiate such a move, he did say that "it would take an awful lot of money" to do so.