Diversification Is Key To Fighting Huawei Dominance

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A former counter-terrorism official says that the only way to fight Huawei dominance in the telecom sector boils down to three words: diversification and interoperability.

"The only solution to pushing back against Huawei and the PRC plan to vertically integrate and monopolize the 5G market is for the US and allies, such as the Five Eyes, to pursue a strategy that embraces setting standards for diversification and interoperability across the supply chain.

This will thwart Huawei's current scheme to lock customers into its technology and avoid a future where Huawei becomes a sole global supplier for wireless network technology. Interoperability makes sense from a business and national security perspective," said former Obama Administration Counterterrorism Official, Department of Homeland Security, Department of Justice, Federal Bureau of Investigation, and National Counterterrorism Center Advisor Nate Snyder.

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Snyder's words echo those of former Department of Homeland Security official Michael Chertoff and former National Security Agency head Mike McConnell, who said last month that the US is too reliant on Huawei when it comes to 5G and telecom equipment, and that "the U.S. can benefit greatly from enhanced coordination with its allies, leveraging their innovations to address our own technological and manufacturing gaps," such as "purchasing 5G technologies from Sweden's Ericsson rather than China's Huawei."

Nate Snyder's comments are made as a direct result of the article in The Washington Post that highlights Huawei's role in building and maintaining North Korea's wireless network. Evidence has been uncovered by The Post that shows that Huawei not only established North Korea's wireless network but also worked with North Korea on other projects between 2008 and 2012.

North Korea is considered to be a political enemy of the United States, and Huawei's cooperation with North Korea puts the company at odds with the US at a time when US President Donald J. Trump is trying to reach a trade deal with Huawei's home country.

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Diversification across the supply chain involves having more partners than just Huawei when it comes to telecom equipment and 5G gear. In order to have more companies at work in the supply chain, the US must make more allies and rely on the allies it already has. It must push to include other companies and their equipment, even if it means paying more for telecom equipment than one would pay with Huawei.

Huawei has found a way to lock customers into its grip by keeping costs extremely low. Huawei routers are ideal for rural areas, and their inexpensive nature makes them hard to beat. By supporting the most cost-effective company, Huawei, the US is locking itself down into a dependency on Huawei — and locking down the industry, too.

When the US only supports Huawei telecom gear, it forces the other telecom equipment makers out of business because, losing money, those other telecom equipment makers can't keep up with Huawei. Additionally, interoperability, the ability to use other telecom equipment in place of Huawei routers and gear, would also help to remove America's strong reliance on Huawei.

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One cannot rely on Huawei telecom equipment and then, in an emergency where such equipment is lost, not know how to find suitable replacements. One must use other equipment to get a feel for how good of a Huawei substitute it would be. Again, though, going to Huawei rather than "shopping around" and exploring one's options outside of the Shenzhen-based company isn't going to help the US or its allies (or other countries) in the long run. The longer the US relies on Huawei, the more dependent on Huawei it becomes.

Snyder could have another meaning in mind behind interoperability, such as finding other companies to be skilled enough to replace Huawei, companies that can provide the necessary telecom equipment and technologies that Huawei can.

This is the reason why Trump has relaxed the ban on Huawei: because Trump realizes the US is in need of Huawei's technology and financial contributions. First, Huawei invests $11 billion a year, and American high-tech companies, in dire financial need, begged the President to allow them to sell to Huawei once more. Trump gave in for financial reasons, to see that the US continues to make its money.

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But with American companies begging or urging the President to relax the ban, it's obvious that American companies need Huawei's business. Trump's decision to allow new companies to apply for selling licenses for selling to Huawei at a time when any Entity List member would be denied such privileges shows just how strong a reliance on Huawei the US has.

Snyder says that America's alliance in the Five Eyes and its reliance on New Zealand, the United Kingdom, and other Five Eyes countries will prevent the US from finding itself in this same predicament again. With congressional laws designed to deny Huawei patent royalties during its ban, and laws designed to deny the President the right to remove Huawei from the Entity List without congressional approval, investments in other comparable companies at the moment is an excellent start to this new strategy.