Nearly a dozen rural telecom operators in the United States People who depend on Huawei for their network equipment are in talks with their main competitors, Ericsson and Nokia, to replace their Chinese equipment, sources close to this matter said.
The companies, which include Pine Belt in Alabama and Union Wireless in Wyoming, are looking for reduced prices and are waiting for government help, but have not yet reached agreements, the sources said.
The talks are crucial for small operators who in recent years have trusted Huawei or ZTE for high-quality, low-cost mobile network equipment, even when the big US telecom companies have rejected the Chinese company. The US government described Huawei as a security threat and effectively banned US companies from doing business with Huawei.
But changing the seller will not be easy. Nokia and Ericsson, which have been struggling financially in recent years, will not match Huawei’s prices, according to analysts and company executives.
Roger Entner, an analyst at Recon Analytics, estimated Huawei and its compatriot, ZTE, charged 30 per cent to 50 per cent less than rivals.
Talks should not continue until the US Congress passes legislation to provide $700 million in grants to help rural carriers with the switch is approved with change, sources close to the debate said. According to Congress.gov, no action has been taken on the bill since it was tabled in May.
The Rural Wireless Association (RWA), a group of companies, estimates that installing new equipment would cost between $ 800 million to $ 1 billion.
Pine Belt’s President John Nettles said he contacted Ericsson and Nokia last year when he suggested for the first time a federal ban on using $ 8.5 billion of Universal Service for Chinese equipment.
“The conversation has been going on for about a year and they are looking for ways to bring down the price, within the reach of the smaller carriers,”
He added, rural carriers would not be able to afford it.
However, Ericsson and Nokia may have little incentive to offer discounts because economies of scale are not favor in rural operators.
The $ 700 million opportunity is scattered among small operators who, in total, according to an industry leader, need a maximum of 2,000 base stations to be traded. In comparison, the major US operator run networks of more than 50,000 base stations.
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17 November, 2019