The Federal Communications Commission's hearing room in Washington, DC, December 14, 2017. (Photo: VCG)
On October 28, the US Federal Communications Commission (FCC) announced it was tabling new proposals which would place further restrictions on Huawei within the US market, removing government subsidies for small and rural US providers who purchase equipment or services from the Shenzhen companies.
Justifying the move, the commission's chairman Ajit Pai branded the company a "national security threat" and repeated the commonly held line that the company would utilize "backdoors" for espionage. He also proposed a "rip and replace" program to remove the company's equipment.
Although Huawei has already been subject to a host of growing restrictions within the United States, including a prohibition from major telecommunications providers and its addition to a commerce department "entity list," smaller telecommunication companies have depended on the Chinese company's competitive prices to make ends meet. The Federal government is now forcing them to change direction.
However, in many ways this is counterproductive. In purposefully narrowing the market, the US will only drive up costs for smaller providers, waste enormous amounts of its own public money and in turn set back its telecommunications network over needless replacements.
In more than a few ways, the obsession with waging war against Huawei is hurting the United States in practice, with Washington failing to disrupt Huawei's global telecommunications success.
Why do smaller US telecommunications firms gravitate towards Huawei? The answer is the company provides the perfect blend of both competitive innovation and affordability. For smaller companies lacking resources, Huawei has provided the perfect opportunity for such networks to obtain both cost-effective and cutting-edge equipment.
This is a model that has seen it sustain success all over the world and propelled it to the front in the race to achieve 5G. Without Huawei, the world of telecommunications would be far more expensive, for both the company and of course the consumer.
The US, however, has increasingly sought to derail the company's success for geopolitical reasons. In doing so, they have sought to eliminate it from the American market completely. The presence of Huawei equipment within rural and local telecommunications providers has proved a "last frontier" to extinguish.
Although a CNN study noted that the loss of such business in the US will not make any meaningful difference to Huawei, it will nevertheless injure the firms affected.
First, completely eliminating a provider, the cheapest one for that matter, will dramatically increase prices for smaller companies. The American taxpayer will be forced to foot the bill, but this is not a long term substitute for a permanently damaged market. In every scenario, things will be more expensive and less convenient.
Secondly, the move also will set back the development of US communications infrastructure even further behind the rest of the world.
If the United States government is forcing companies to rip out and replace their technology, while also subsidizing billions for them to do so, then this might be accurately described as a waste of both time and money. Funds that could be invested in advancements such as 5G are instead diverted into replacing Huawei equipment.
At the same time, affected companies have no resources or scope to upgrade their own capabilities in the midst of it all.
Given this, the new FCC rules hurt nobody but their fellow Americans. The bid to attack and push out all things related to Huawei in the United States is consequentially extending beyond reason in that it is hurting their own national interests in the process while failing to actually contain the company at all.
The Shenzhen firm has come out of a US diplomatic campaign to have it banned around the world and blacklisted relatively unscathed. With over 60 commercial 5G contracts under its belt, it is continuing to thrive in such circumstances.
Given this, the costs Washington is mounting on itself through this ludicrous campaign are growing. It has deprived itself of 5G technology, imposed collateral damage upon Silicon Valley and now wants to spend billions on forcibly removing Huawei from its own networks, making the market smaller, more expensive and out of reach, making it all that much harder to move forward.
The lesson here is not how you win a "technology war," but certainly how you fall behind.