New US companies to produce 5G telecom gear to replace Huawei
To replace Huawei in the US and its dominance over US telecom gear, the Trump administration is encouraging new US companies to enter into telecom gear production. Among the new companies to enter the hardware race are Dell and Microsoft.
Ericsson and Nokia are two companies that are present telecom hardware makers. The cost of their equipment is greater than Huawei's. Huawei has dominated the telecom industry in the US due to its budget pricing on network equipment.
Dell and Microsoft are new to the mix, though these two companies produce laptops and PCs. They already make mobile equipment, so telecom gear shouldn't be too hard to manufacture. It will require some research, though.
Why US 5G telecom gear should come from US companies
If something isn't broke, why fix it? That seems to be the question behind the move to see the US manufacture its own 5G telecom gear. Why replace Huawei at all? Huawei is a threat to national security, in the words of US President Donald Trump. The company has Beijing sponsorship, Beijing ownership (CEO Ren Zhengfei owns a mere 2% of the company), and greets its clientele via government officials.
Though Huawei says it wouldn't comply with a Beijing order to spy on American citizens, Huawei cooperates with foreign governments to spy on political opponents. Its spy activities are taking place in the African governments of Uganda and Zambia with digital surveillance "safe cities."
Huawei's telecom gear is affordable and budget-friendly, making it hard for businesses to buy telecom gear from Ericsson and Nokia, for example. The Trump administration's $1 billion Utilizing Strategic Allied Telecommunications Act proposal from a few months ago would give monies to US hardware makers. US hardware makers would receive about $750 million towards 5G telecom hardware R&D.
American deployment businesses would receive $500 million to deploy American 5G equipment worldwide. Additionally, Congress says it will give subsidies to small carriers to upgrade their telecom gear and eliminate Huawei from American networks entirely. Cisco and Oracle are additional potential hardware makers for the new US 5G telecom gear.
Americans look to Huawei for its telecom gear to save money, but in light of Huawei's questionable espionage activities, Trump wants businesses to look to American hardware makers. Ericsson and Nokia telecom gear may cost more than Huawei's, but at least it would be more secure than their Chinese rival. You can't put a price on security.
New strategy highlights American dependence on Huawei
Some say that Trump's new emphasis on moving past Huawei telecom gear is an example of American dependence on Huawei. One reason why Trump continues to do business with Huawei is because of Huawei's dominance in the global telecom industry. Huawei has a hegemony on the global telecom industry. They are hard to beat whether in China or elsewhere.
Even without subsidies beyond China, Huawei has still done more R&D in telecom gear than all other global manufacturers. Just as an example, Huawei is currently researching 6G, though customers aren't experiencing 5G in all its fullness yet. The company owns 15% of all 5G standards-essential patents. Even after the Huawei Ban, the company's clientele continues to climb — a sign that perhaps both the US and Huawei are financially dependent on each other.
This American dependence highlights a financial problem. It's not financially helpful to rely on one company at the exclusion of all others. American companies trying to save money are going with Huawei. And yet, Huawei is now a national security threat, moving them to look elsewhere for their telecom gear.
Trump is asking Dell and Microsoft to enter into the telecom gear race in order to help America become more self-sufficient in its telecom gear. As 5G takes off, there's opportunity for much profit. Huawei sees the financial profit, which is why it invests so much per year into networking equipment. For America to wean itself off Huawei, it will have to diversify its portfolio, a statement former Counterterrorism, DHS, and NSA officials endorse entirely.