Washington is pressuring AT&T to cut all business relations with Huawei, Reuters reported Tuesday, citing congressional aides. Top regulators in the United States are also said to be strong-arming the second largest wireless carrier in the country to push against its peer China Mobile's efforts to enter the domestic market. National security concerns have been cited as the main reason for the move in both cases, with the development coming shortly after AT&T called off its retail agreement with Huawei at the last second, also following pressure from Washington and its intelligence committees. The deal was planned to be announced at last week's Consumer Electronics Show 2018 in Las Vegas and would have marked a major achievement for Huawei's ambitions to become the world's largest smartphone vendor.
Without support from at least one national carrier, no original equipment manufacturer can hope to seize a significant portion of the U.S. market where mobile service providers account for well over half of all annual phone sales, according to most industry trackers. The regulatory hurdles Huawei ended up facing in the U.S. aren't exclusive to its attempted collaboration with AT&T, with one source claiming the U.S. government is warning all domestic firms with existing or developing ties with Huawei and China Mobile about the consequences of their business decisions, essentially telling them not to count on any state or federal contracts if they continue pursuing such deals. AT&T was hence also warned not to carry any Huawei-made devices via its subsidiary Cricket Wireless and is also presently being pressured to cease its 5G collaboration with the Chinese tech giant. While the former is already understood to be guaranteed, AT&T has yet to decide whether to cut its ties with Huawei on the 5G front.
The intelligence community in the U.S. is understood to be fearful of Huawei and China Mobile's ties to the Chinese government, having repeatedly expressed concerns that Beijing's intelligence agencies are able to freely access data collected by the two companies' equipment such as cell towers and smartphones. Similar questions were raised about ZTE in the past, with the Chinese firm even being sanctioned by the Federal Trade Commision last year for violating sanctions imposed on Iran, yet it continues to operate in the U.S. with the help of Verizon and AT&T, two largest domestic carriers. Beijing has yet to openly criticize the move, with its foreign ministry only saying it's hoping Chinese firms can compete on an equal playing field internationally. Not all industry watchers believe the Far Eastern country has the right to appeal to Washington's insistence on blocking Huawei's U.S. ambitions, citing China's aggressively protectionist economic policy.