Huawei sells a growing portion of the teams that make up the Internet backbone although some markets like the U.S. and Europe look askance.
In 2012, the Chinese company Alcatel-Lucent snatched second place among the leading providers of Internet infrastructure, second only to Cisco, according to market research firm Dell’Oro Group. Huawei also emerging to assume a greater role in the installation of fiber optic submarine cables that link the global telecommunications network.
Apart from Alcatel Lucent, Huawei is also removed ground Ericsson and Nokia in Europe over the last six years, which has depressed the price of telecommunications equipment and has hurt the finances of those European companies. All three have eliminated thousands of jobs in recent years.
The raid led to the European Union to accuse Huawei and ZTE Corp. compatriot dumping and unfair competition considering that benefit from subsidies in the form of financing at low interest rates from state banks, tax credits, cheap electricity, donation land and other measures.
The European threat to apply tariffs to Chinese companies believe a trade crisis with China, but the EU and Beijing defused partly tension Thursday to commit to create procedures that set quotas for Chinese enterprises in Europe, and European companies in China, around their current levels. While Chinese firms, mostly Huawei, have won about 50% of contracts for 4G networks since last June, Ericsson, Alcatel Lucent and Nokia have about 30% of projects in China.
The growth of Huawei contrasts with what happens to rivals like Cisco, which controls about a quarter of the market for core network equipment but whose market share in the Internet infrastructure has stagnated over the past three years, according to Dell ‘ Gold A Cisco spokesman declined to comment.
The growing rise of Huawei has also become important in light of recent reports that the government of U.S. infiltrated the computer systems of the company to know how to penetrate their network equipment.
The revelation raises questions for telecom companies, who must decide between a limited number of reliable suppliers and the risk of national security concerns in the U.S., Australia and other countries that could cost them contracts if they choose the wrong equipment provider.
Huawei’s growth is also a problem for the security authorities from various countries, who are concerned about possible cyber attacks from China. Those doubts have left out Huawei Internet projects in Australia and South Korea. However, Huawei has found enough customers to its rugged fiber optic transmitters in Latin America and Europe. The Spanish Telefónica SA has made extensive use of Huawei equipment, while other operators have used machines from the Chinese manufacturer to upgrade networks in markets such as Argentina, Brazil and Mexico. Huawei has also provided Internet routers in Africa.
A joint venture named Huawei Marine Networks highlights Huawei’s ambition to play a bigger role the foundations of Internet and the pitfalls facing.
Huawei partnered in 2008 with the British marine construction company Global Marine Systems to leverage its fleet of ships in the installation of submarine cables. Since its founding, Huawei Marine has won more than a dozen small projects around the world, has employed hundreds of people and has become profitable.
This company recently finished putting a cable connecting some islands off the Portuguese coast and has a similar bill pending in West Africa. In July last year, completed the renovation of two segments of submarine cables in the Philippines.
“We want to be one of the top three in the industry”, says Nigel Bayliff, the CEO of Huawei Marine.
However, it still has a long road ahead. Huawei Marine has completed only one project long distance and represents a small percentage of all spending on these cables, according to market research firm TeleGeography. The investment in telecommunications companies such infrastructure has fallen sharply, to less than U.S. $ 2,000 million a year in new undersea cables, from a peak of nearly U.S. $ 14,000 million in 2001, according to TeleGeography.
The advantage of Huawei prices are usually a fraction of what they charge their competitors. Its disadvantage: safety concerns.
In 2012, an investigation by the U.S. Congress argued that Huawei posed a risk to the country because their telecommunications equipment could be used to spy on Americans, something that Huawei has repeatedly rejected. That scared to mobile operators and cable companies U.S. that have been kept away from their products.
Huawei calls into question the veracity of the report of the U.S. Congress and for years offered to auditors to evaluate the vulnerabilities of their teams as well as being transparent about its ownership structure.
Still, Ocean Networks Inc., a developer of submarine cables, not even considered Huawei equipment a few years ago for a new cable telecommunications Hawaii to Panama.
“It was out of the question”, says the CEO of Ocean Networks, Scott Schwertfager, pointing out that if he had chosen the Chinese firm, his company would have failed important U.S. customers.