Huawei is not escaping scrutiny over its ties to Sprint and how the thereof could affect the carrier’s proposed merger with T-Mobile, as yet another pair of industry voices recently joined those calling for the two network operators to provide the federal government with legal assurances that they don’t intend to use the Chinese firm’s technologies should they be allowed to merge. Strategy consultants David Wade and Scott Mulhauser are now arguing that T-Mobile and Sprint should be willing to provide Washington with a contractually binding guarantee that their planned network upgrades meant to enable the fifth generation of mobile connectivity won’t include any equipment from Huawei or ZTE — another Chinese telecom firm that’s even controlled by a state-owned company — if they’re truly honest about their intentions to deploy 5G without exposing Americans to spying and hacking attacks.
The beginning of the end – but for whom?
The new calls emerged mere weeks after a number of federal regulators cleared the proposed consolidation estimated to be worth some $26.5 billion. The green light came from the so-called “Team Telecom” which includes the Department of Justice, Department of Homeland Security, Department of Defense, and the Committee on Foreign Investment in the United States. The lattermost authority was the one many analysts previously expected to be the first to push against the merger attempt. While the committee ultimately approved the merger, it seems it did just that beforehand as T-Mobile parent Deutsche Telekom dropped all Huawei equipment from its 5G project shortly before the wireless carrier had its Sprint tie-up approved by the foreign-investment watchdog. The development marked a major blow to Huawei’s ambitions seeing how the Chinese firm sees 5G as an imperative technology that could either elevate its status of the world’s largest telecom equipment maker to unprecedented heights or be the beginning of the end of its industry dominance. With DT being the leader in wireless research and development on the Old Continent, its decision to drop Huawei from its list of suppliers is bound to cripple the company’s foreign ambitions.
Huawei still already signed some two dozen supply contracts centered on the fifth generation of wireless networking and believes more are on the way, but some of its historical partners are now abandoning it either due to political pressure or because they were legally compelled to. That’s what recently happened in Australia after Canberra revised its rulebook concerning suppliers of telecom technologies in a manner that prevented the local industry from sourcing critical network solutions such as 5G systems from China. Beijing condemned the move and called for a level playing field, accusing Australia of succumbing to pressure from the U.S. which itself is something it describes as entirely baseless. That commentary was met with irony from some Western critics, with opponents of the aggressive foreign expansion strategy pursued by the Chinese telecom sector being quick to point out that Beijing can always walk the walk after talking the talk, i.e. open its own market to overseas companies since its firms were given the same courtesy for decades and are only facing some obstacles as of recently and due to what many perceive as perfectly valid concerns.
The point of no return
Regardless of what happens with Huawei’s Western ambitions and its truly endless clashes with the U.S., T-Mobile and Sprint seem unlikely to rely on its telecom equipment moving forward, not just because of the intense regulatory scrutiny and potential political backlash that would cause but also due to the fact that the self-proclaimed “Un-Carrier” hasn’t been on great terms with the Shenzhen-based firm for several years now. Much of the animosity between the two stems from a trade secret theft lawsuit T-Mobile won in 2017, albeit without managing to prove Huawei’s management ordered the crime. Ultimately, Sprint and T-Mobile now appear to be on course to having their merger approved with no major concessions and even assuming they stick with 5G tech from the likes of Ericsson, Nokia, and Samsung, the fact that the number of major network operators in the U.S. will drop to four will mark a point of no return for the industry. Even as the two are presently beefing up their prepaid offerings, the chances that the overall level of wireless competition in the country will rise in the long term remain slim.