Yesterday’s news that BT is cutting Huawei gear out of its network core is now, well, yesterday’s news. The new story is that over the weekend, Huawei CFO Meng Wanzhou was arrested up in Vancouver, Canada.
The situation apparently relates to US investigations of Huawei’s activities in Iran in violation of the sanctions against that country. As with ZTE, Huawei gear containing technology from the US wound up there despite strict export licenses. ZTE was nearly destroyed by the accusations, eventually paying a $1.4B fine after getting thrown around like a political football for a few months. Now it may be Huawei’s turn.
As one might expect, Huawei disputes all of this and has protested to Canada about the arrest. The US will likely be requesting extradition, but details on the timing of the next steps are unclear. There are many levels to all of this, but at the core of the extended conflict is an uneasy balance of Huawei’s low pricing economic challenge to western telecommunications vendors against the political and security issues raised by its relationship to government power structures in China. Capacity has a really nice in-depth article all about the arrest and the history behind it.
What makes everything truly unclear is whether a presidential tweet will shift all of this into the public political consciousness. When it comes to the ongoing trade negotations, this could be an unexpected complication or it could be a rather unsubtle pressure tactic. In the end it will probably be both anyway, it’s an escalation either way.
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