The world’s third largest smartphone maker was expected to announce today the details of its breakthrough deal to sell its devices through a US carrier. The only problem is, that phone maker is Huawei, and it is still not welcome in the United States.
The Wall Street Journal reports, citing people familiar with the matter, that AT&T has suddenly walked away from the deal, declining to comment on why.
Huawei’s failure to strike the deal means the company is effectively shut out of the US market, as most phone sales are made through service plans with carriers.
The setback is part of a long saga of US suspicion of the telecoms giant, which extends beyond smartphones into the broader telecom equipment and software market. Despite being the global leader, with revenue more than that of closest competitors Nokia and Ericsson combined, pressure from Washington has hamstrung major US carriers from signing equipment deals with the Chinese company. This, in spite of the fact that Huawei is leaps and bounds ahead of the competition in terms of service and products.
“Their design cycles, their innovation cycles, I think have been the fastest of anyone I’ve seen because they have the R&D resources to throw at these things,” a person familiar with US wireless firm Clearwire’s dealings with Huawei was quoted by the WSJ as saying. After Spring acquired the firm in 2012, the US government required them to remove Huawei’s equipment to clear the deal.
Another potential deal with AT&T was apparently tanked in 2016, despite Huawei offering equipment at 70% less than the cost of competitors. A person familiar with the matter told the WSJ:
AT&T executives told staffers they felt trapped between the security concerns and their duty to shareholders.
National Security Agency director Michael Rogers and James Comey, then-director of the Federal Bureau of Investigation, personally spoke to senior AT&T management, the person said.
Despite Washington’s best efforts, however, some freely acknowledge that Huawei’s ascent can’t be stopped. Mike Rogers, the former congressman who chaired the House intelligence committee lamented, “given current market trends, it’s hard to imagine Huawei not being the only option in 10 years.”
The latest setback this week for Huawei’s ambitions will also beg the question in Beijing: Amid US calls for reciprocity, why do we allow US smartphone makers to sign deals with our carriers if we can’t do the same in America?