To counteract Huawei in the telecom market, the US is considering financing Huawei rivals Nokia and Ericsson.
US considers financing Huawei rivals in telecom hegemony
The US says it is looking into financing Huawei rivals Nokia and Ericsson. Huawei is a giant in the telecom market, and with the progress of 5G and its profit, there’s lots of money to be made. Huawei’s work in the telecom industry is growing larger and larger. If countries don’t act to invest in other telecom vendors, Huawei will continue to dominate. The Beijing-sponsored company’s stronghold will only get worse and worse. And America, among others, will find it hard to resist Huawei in 5G and telecom gear.
US Attorney General William Barr says that the US can take charge of Ericsson and Nokia in two ways. One way is through direct investment. The US can invest funds into the company itself and take charge by investment. Another way to invest in telecom vendors is through “a consortium of private American and allied companies.” A number of private companies can invest in Nokia and Ericsson. Of course, the funds for those private companies would come from the US Government.
Takeover by investment: why the US is considering the move
The US is considering a financial investment into Huawei’s rivals because of the current situation in the telecom industry. Huawei owns 15% of all standards-essential 5G patents. The company is already researching 6G. In telecom gear, its prices are ultra-affordable. That makes it hard to beat against companies such as Ericsson and Nokia.
The Trump administration has already said over the last few months that it intends to invest in both companies. The reason behind investing in both pertains to the number of telecom routers needed for smaller carriers. A $1 billion bill has been approved that will help small carriers upgrade their telecom equipment and ditch Huawei.
And yet, even with the US helping its own carriers, it has had a hard time convincing its allies to ditch Huawei. The US has talked with Britain about Huawei. The UK will allow Huawei onto a peripheral 35-percent of the national network. A UK ban is no longer an option. The results with other countries have been mixed as well. Germany refuses to ban Huawei “just because.” Few countries want to ban Huawei from their networks because the company is one of the top players in 5G. Even with the US ban on Huawei, the company is still gaining 5G clientele around the world.
The trouble with Ericsson and Nokia telecom gear
Some say that the only real trouble with Ericsson and Nokia is their slow production and high equipment pricing. And yet, these two issues are nothing small to ignore. When companies price their equipment higher than the competition, they’ll lose out. And that’s the current situation with these three telecom vendors.
Huawei’s telecom pricing is far more affordable than Ericsson and Nokia. And Huawei production of telecom gear is far superior to these two alternate vendors. With the US investing in Ericsson and Nokia, these two vendors will be able to reduce the pricing on telecom gear. In turn, businesses and countries worldwide will turn to these vendors for their telecom gear. Despite what US allies say now, they may turn to these two vendors if the US invests financially in them. And they may encourage others to do the same, with four additional vendors to enter the same race: Dell and Microsoft, and Cisco and Oracle.
The key to beating Huawei in the telecoms race is to not depend on it for anything. Boosting Nokia and Ericsson financially will create a genuine three-fold race where Huawei isn’t ahead by leaps and bounds. And seeing a true three-fold race will even the odds a bit against Huawei.
But there’s a problem few have considered: if Nokia and Ericsson have huge financial investment from the US, will these vendors be “state-sponsored” in some way? Perhaps the key to defeating Huawei may just be the source of the current telecom problem.