By Drew FitzGerald and Sadie Gurman
The U.S. and its allies should consider countering the might of
Chinese electronics giant Huawei Technologies Co. by taking a
financial interest in competitors Nokia Corp. and Ericsson AB,
Attorney General William Barr said Thursday.
The suggestion from Mr. Barr, a former general counsel to
cellphone carrier Verizon Communications Inc., represents one of
the Trump administration's most aggressive proposals yet for
pushing back against Shenzhen-based Huawei.
"We have to make a decision on the 'horse' we are going to ride
in this race," Mr. Barr said during a speech at the Center for
Strategic and International Studies in Washington, where
law-enforcement officials described the challenges of combating
China's threats to U.S. economic and national security.
The Federal Bureau of Investigation has more than 1,000 open
cases involving China's attempted acquisition of U.S. research and
technology "spanning almost every industry and sector," FBI
Director Christopher Wray said. Mr. Barr warned that allowing China
to dominate 5G networks poses a "monumental danger" not just for
security but for the future of the U.S. economy.
U.S. officials have long worried that Huawei's dominance of the
telecommunications-equipment market poses a threat to national
security. Nokia and Ericsson also supply cell-tower gear to the
world's network operators but have struggled to deliver reliable
profits as Huawei gains a greater share of the global market each
year.
"Some propose that these concerns could be met by the United
States aligning itself with Nokia and/or Ericsson through American
ownership of a controlling stake, either directly or through a
consortium of private American and allied companies," Mr. Barr
said. "Putting our large market and financial muscle behind one or
both of these firms would make it a more formidable competitor and
eliminate concerns over its staying power."
The Trump administration has been weighing several anti-Huawei
proposals, including some of the ideas Mr. Barr floated Thursday.
White House officials have discussed incentives for U.S.
private-equity firms to buy stakes in Ericsson or Nokia, a person
familiar with the matter said.
Mr. Barr's speech came after White House officials told The Wall
Street Journal this week that they are working with U.S. technology
companies on a separate plan to create advanced software for
next-generation 5G telecom networks to jump-start a market for
viable alternatives to Huawei. The plan aims to establish common
engineering standards that would allow 5G software developers to
run code atop machines that come from nearly any hardware
manufacturer to reduce or eliminate reliance on Huawei
equipment.
Mr. Barr, a former Central Intelligence Agency official who
earned his master's degree in Chinese studies, said the "open"
software model would take too long to deliver results.
"This is just pie in the sky," he said. "This approach is
completely untested and would take many years to get off the
ground, and would not be ready for prime time for a decade, if
ever."
The attorney general's skepticism shows Trump administration
officials remain split on the best combination of policies to
counterbalance Huawei, the world's top telecom equipment seller.
Decision makers within the White House and several U.S. agencies
have clashed over decisions involving telecom regulations, export
controls and wireless spectrum rules.
It remains unclear whether any potential suitors would consider
Sweden-based Ericsson or Finland's Nokia attractive acquisition
targets. Both tech firms are their home countries' national
champions. Each firm's market capitalization sits well above $20
billion. Shares of both companies rose Thursday after Nokia
reported better-than-expected fourth-quarter earnings.
Blair Levin, an analyst for advisory firm New Street Research
who led the Obama administration's National Broadband Plan, said
Mr. Barr's comments could grease the wheels for any corporation
that might take an interest in the Scandinavian electronics
giants.
The attorney general "appears to be signaling that to the extent
companies who are competitors need some kind antitrust waiver to
form a more competitive alternative to Huawei, the DOJ will be
quick to grant it," he said.
A White House spokesman declined to comment. Representatives of
Nokia and Ericsson declined to comment. Huawei declined to make an
executive available for comment.
Mr. Barr also urged policy makers to offer U.S. companies
licenses to use the "L-band," a swath of radio frequencies
cellphone carriers could use to transmit more data over future
wireless networks. The prospect of ground-based use of those
airwaves has remained in limbo for years as Federal Communications
Commission officials weigh whether to authorize its use.
Allowing cellphone carriers to use the L-band would offer a
windfall to troubled telecom firm Ligado Networks LLC. The company,
formerly known as LightSquared, has faced opposition from the radio
channel's existing users, which include Global Positioning System
users and weather researchers.
"While some technical issues about using the L-band are being
debated, the FCC needs to resolve this question," Mr. Barr
said.
Mr. Barr also urged the commission to quickly sell off licenses
for cellphone service in the "C band," another set of frequencies
considered useful for 5G technology. FCC Chairman Ajit Pai,
speaking at a separate event held hours later in Washington,
unveiled a proposal to start auctioning that spectrum in December.
Mr. Pai declined to comment on Mr. Barr's call to action.
Mr. Barr's involvement in this issue is somewhat unusual given
that the FCC directs most federal telecom policy, though other U.S.
agencies, including the Commerce Department and Pentagon, also
influence government decisions. The Justice Department tends to
play a less direct role regulating cellular and landline networks,
though Mr. Barr's years in the private sector made him well-versed
in telecom matters.
On Thursday, the top U.S. law-enforcement officer said both
policy ideas could help American firms regain an edge atop faster
fifth-generation wireless networks. Telecom companies say their
networks will run hundreds of times faster with 5G upgrades, but
the technology is only beginning to become commercially
available.
--Parmy Olson contributed to this article.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Sadie
Gurman at sadie.gurman@wsj.com
(END) Dow Jones Newswires
February 06, 2020 23:12 ET (04:12 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Ericsson (NASDAQ:ERIC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Ericsson (NASDAQ:ERIC)
Historical Stock Chart
From Sep 2023 to Sep 2024