You know the US war on Huawei has gotten silly when the attorney general suggests America should buy stakes in Nokia and Ericsson to counter Huawei’s 5G market dominance. That’s exactly what US Attorney General William Barr did last Thursday, according to Reuters.
Not that the US war on Huawei wasn’t silly to begin with – or at least the part involving 5G. Concerns about Huawei being a front for China’s intelligence agencies have been around for something like a decade now. But for the last couple of years, the Trump administration has taken that to unprecedented levels of paranoia by claiming that Huawei’s lead in the 5G equipment market is a threat to the rest of the world because if enough operators install Huawei gear, it will (somehow, don’t ask me how) enable China to take control of the entire internet and make drones crash into airplanes or something.
The US government has already taken action by banning Huawei from various telecoms projects (5G and otherwise) and urging allies to do likewise. Meanwhile, one admin official suggested building a government owned and operated 5G network instead of waiting around for AT&T, T-Mobile and Sprint to build theirs, while Trump’s re-election team last year suggested building it as a wholesale 5G network that cellcos could rent.
Speaking last week at a conference on Chinese espionage hosted by the Center for Strategic and International Studies (CSIS), AG Barr said another option being proposed – and one that the US and its allies should “actively consider” – is for the US to buy controlling stakes in Huawei’s two main 5G rivals, Nokia and Ericsson.
Barr said the alignment could take place “through American ownership of a controlling stake, either directly or through a consortium of private American and allied companies.”
“Putting our large market and financial muscle behind one or both of these firms would make it a far more formidable competitor and eliminate concerns over its staying power, or their staying power,” Barr said.
Maybe this goes without saying – and I sincerely hope I’m stating the bleeding obvious here – but I’d just like to state for the record that this is possibly the stupidest idea I’ve heard yet in what is already a stupid argument.
Never mind whether or not Ericsson and Nokia would be even interested in selling a controlling stake to Americans, or whether any such deal would survive regulatory scrutiny in the EU. Assuming they were, I have no idea what difference a change in ownership would make in helping Ericsson and Nokia increase their market share.
I mean, it’s not like Ericsson and Nokia haven’t yet figured out how 5G works. They have plenty of innovative 5G solutions on offer, and many of their customers have been trialing them for some time. How exactly would a US consortium (private or government-owned) improve anything in either company’s respective portfolios, or make it more sellable – unless maybe the plan is to use US tax money to subsidize contracts and beat Huawei on price? I wonder how US taxpayers would feel about that.
(Anyway, Nokia at least already has plenty of US technology know-how via its purchase of Alcatel-Lucent in 2016. Remember Bell Labs? Nokia owns that now.)
The truth of the matter is that the US taking control Ericsson and Nokia is a complete waste of everyone’s time and money, not least because it wouldn’t do a thing to reduce Huawei’s current market dominance in the 5G space, but it would make the process of operators buying equipment even more political than it already is. It would also likely ensure that both Ericsson and Nokia lose their China business, which is not insignificant.
Luckily (I guess?) it’s very unlikely anyone will take up Barr on his suggestion, which appears to be yet another example of someone in Trump’s administration making some cockamamie public comment that takes the rest of the administration by surprise.
VP Mike Pence has said the White House is not planning on taking up Barr’s idea. Meanwhile, before Barr’s speech, White House economic adviser Larry Kudlow told the WSJ last week that the US has another cunning plan to get back in the 5G game by backing development of open software for commoditized RAN hardware.
I don’t know if this would hurt Huawei (who says it backs Open RAN, at least in principle), but Open RAN is certainly the future of cellular networking equipment, and is expected to level the vendor playing field considerably. Barr says it’s a “pie in the sky” idea – it’s not, but it is at least several years away from commercial reality, if only because Ericsson, Nokia and Huawei want to make as much money as they can from their brand-name hardware before we get to the open RAN phase.
Still, it says a lot that Barr (who used to be Verizon’s general counsel, so you’d think he’d know better) thinks the US government buying control of European network vendors is a more plausible idea than something the industry is already working on.