State Department Brings Financing Partners to Help Fund Huawei Alternatives

The U.S. government is already implementing recommendations from alternate suppliers of fifth-generation networking equipment by intervening with its international financing institutions so it can match Huawei’s competitive pricing around the globe, according to a senior State Department official.

“We're working with our [U.S. International Development Finance Corporation] and our [Export-Import bank of the United States] to ensure that they can successfully help close deals for Western technology providers in countries around the world,” said Rob Strayer. “We think that's an important way that we can help level the playing field—Not going to the subsidized level that the Chinese are currently using in many cases but having a fair playing field.”

Strayer is the State Department’s deputy assistant secretary for cyber and international communications policy. He spoke during an event Thursday hosted by the Telecommunications Industry Association on the need to ensure trusted supply chains for 5G.

“Economic security is national security,” Strayer said at the top of his remarks, reinforcing the Trump administration policy that has accompanied the push to remove China-based telecommunications equipment from U.S networks. That policy also extends beyond U.S. networks to allies and markets across the globe, where Huawei is the leading provider over European alternatives Nokia and Ericsson. 

Huawei opponents argue the company’s ownership is not transparent, and that it is able to offer its equipment at much lower prices because it receives financial assistance from the Chinese government. 

In June 25 comments to the National Telecommunications Information Administration on the U.S. strategy to secure 5G, Nokia recommended the action Strayer described.

“The Development Finance Corporation (DFC) and the U.S. Export Import Bank (ExIm) can become more engaged in telecommunications infrastructure projects to ensure the availability of financing that allows nations and operators the chance to choose form a variety of suppliers with similar financing terms rather than the current environment where some suppliers are squeezed out of a procurement by financing support for one supplier that is not broadly available from commercial banks to allow a real choice,” the comments read.

While the U.S. has been making progress in its campaign for countries around the world to shun Huawei—the United Kingdom, most recently, said it would ban use of the company’s telecommunications gear in 5G networks—some commercial ties are defying U.S. government actions.

Despite the Commerce Department’s inclusion of Huawei on its Entities List—a list of entities U.S. companies are forbidden from selling their products to—U.S. chip maker Qualcomm on Wednesday announced a multi-year agreement to license its patented technologies for use in Huawei’s cellular devices.

During Thursday’s event, Strayer praised Qualcomm, along with Nokia and Ericsson, for what he said is the tremendous success they’ve been having in standards-setting bodies.     

The U.S. is banking on the development and adoption within those international bodies of standards to establish an open internet architecture and the virtualization of network components into software-based operations in order to reduce reliance on any single equipment  provider, such as Huawei. But Strayer said realizing that vision is still a ways off.

“Getting all the way to software-defined radios will be a challenge,” he said. “Right now we have specialized hardware in the field that works well for telecom operators. We need to get to a place where hundreds of thousands of base stations can be replaced with this virtualized architecture. That might take a few years to get there, to a truly open architecture set of standards and interoperability that's well defined and easily tested and evaluated so that any player can basically plug and play into the different networks.”

Strayer highlighted China’s treatment of Muslim ethnic minorities to show potential dire consequences of allowing China’s dominance in the global telecommunications market.

“We only need to look at the example of XinJiang province to see how the [People’s Republic of China] government is using Chinese technology for pervasive and arbitrary high-tech surveillance in the involuntary collection of personal data that leads to the deprivation of actual liberty of their citizens,” he said. “Allowing untrusted high-risk vendors such as Huawei and ZTE into parts of 5G networks makes those critical systems vulnerable to not only espionage but disruption and manipulation."