Huawei Withdraws from U.S. Telecom Market

by Matt Klassen on July 17, 2013

Despite its resolute promise to stick with its development plans in the American telecommunications market earlier this year, it looks like Huawei is reducing its focus on the U.S., citing trade protectionism and phobia as the reasons for the company’s ‘commercial disappointment.’

According to Huawei’s vice president of international media affairs, Scott Sykes, the decision to largely remove itself from the U.S. market is not a reflection of a changing commitment to the market itself, but an unavoidable response to a difficult commercial reality were no opportunities existed for the Chinese company in the foreseeable future.

Of course those opportunities don’t exist for Huawei because it is considered a national security threat, as last October the U.S. House Intelligence Committee issued a warning about Huawei, discouraging American businesses from purchasing its products. Well, the fear-mongering appears to have worked, as Huawei is looking to the greener pastures of Europe and emerging markets in Asia and Africa, but has the American government struck a blow against front companies for the Chinese government, or has the American market lost a worthy competitor?

When the House Intelligence report first broke last year I thought the message might have been better received had it been communicated in a grainy black and white public service video, perhaps narrated by the late Ronald Reagan. The video would, of course, explain the evils of socialism, explaining that if you bought products from Chinese companies like Huawei, not only would you be at risk for leaking sensitive information to the enemy, but should the socialist mindset prevail, you wouldn’t be able to choose the telecom equipment you really wanted…Huawei would choose it for you.

It turns out, however, that such a fear-mongering video wasn’t necessary, only the largely unsubstantiated claim that Huawei and its fellow Chinese telecom equipment manufacturer ZTE posed threats to national security, with vague accusations that both were closely tied to the Chinese government, which, mind you, in a communist country is practically unavoidable.

While American’s might think they’ve been saved from the clutches of an imminent communist threat or perhaps avoided some sort of industrial espionage incident, the reality seems to be that the American telecommunications market is worse, not better, with the absence of such competitors like Huawei.

Although this country’s mobile carriers don’t like to advertise this fact, Americans pay two to three times more for broadband services compared to similar services in other parts of the world. Not only that, but broadband speeds in America, even the blazing 4G LTE, seem antiquated when compared to the broadband speeds of other wireless nations. The reason America is ‘allowed’ to lag behind is exactly because of this sort of strong arm fear-mongering, as less competition in the U.S. market for broadband services means consumers have to pay more for a lower quality wireless product.

In the end, while the average American might read about Huawei’s departure from the U.S. market and consider it a victory against foreign investors and foreign invasions, the reality is this is nothing more than a victory for telecom lobbyists, who were no doubt the driving force behind keeping competition out of America, allowing the incumbents to keep screwing us over, while worthy competitors like Huawei simply pack their bags and head to bigger and better markets.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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