U.S. government officials are broadening the scope of options to stunt Huawei’s growth and remove its equipment from domestic networks. The latest suggestion calls for the U.S. government to issue credit to companies such as Nokia and Ericsson that would allow non-Chinese vendors to match Huawei’s generous financing terms in a bid to regain market share, according to unnamed sources in a Financial Times report.

Huawei, the world’s largest telecom vendor, is viewed as a national security threat and the U.S. government has been waging a multi-front campaign to weaken the vendor’s ability to compete for 5G contracts in the United States and other Western countries. The notion of funneling money to Huawei’s top competitors comes just weeks after Congress unveiled bipartisan legislation that would authorize $1 billion in funding for rural wireless operators to replace equipment from China-based vendors Huawei and ZTE.

“This would level the playing field to a degree because the perception is that Huawei is getting Chinese government help that allows them to continually undercut the competition,” said Anshel Sag, analyst at Moor Insights and Strategy. “It absolutely muddies the waters but I have advocated for such a solution as a potential resolution for the conflict. I’m just not sure that the amounts being rumored would be enough.”

Huawei enjoys significant credit lines from China’s state banks and that financing enables it to offer network providers more appealing terms than its rivals, according to the Financial Times. One anonymous source in the U.S. government told the newspaper that combating Huawei is a top priority and officials within the Defense Department, the Commerce Department, and the Department of Homeland Security are involved in ongoing discussions.

“The reality is that on a global level, the RAN playing field is not too uneven,” said Stefan Pongratz, vice president at Dell’Oro Group. “Huawei’s dominance is more pronounced outside of the North America region with Huawei holding a larger share than both Ericsson and Nokia combined if the North America RAN revenues are excluded.”

5G is also about much more than the RAN, he explained. “While the RAN is playing a dominant role initially as operators roll out 5G [New Radio] to improve efficiencies and reduce cost — what is interesting about 5G is that the overall system technologies are considered equally if not more important than the RAN,” Pongratz said. “The [research and development] required to provide a solid 5G portfolio with the increased complexity in the RAN and core, the increased use of [artificial intelligence] and automation in services, and the proliferation of new use cases spanning across multiple industries will complicate the entry for new entrants seeking to catch up in the 5G race.”

Government officials are also discouraged by the fact that no U.S.-based company can compete with Huawei in supplying radio access network (RAN) equipment to mobile operators. Cisco and Oracle have pushed back on suggestions that they enter the RAN market, according to the Financial Times. The Trump administration is also considering offering incentives to bolster smaller U.S. companies like Altiostar that make open source software that operators can use to piece together infrastructure from non-proprietary white boxes.

“The shift toward general purpose equipment and more open solutions could help with some aspects but it will not change the fact that this is a scale game and accumulated advantages will compound over time," Pongratz said. 

Sag described that open-source option as a "much harder sell" because most operators are already working and familiar with the incumbent RAN vendors. “Any challengers would have to be above and beyond better in flexibility, price, and performance to even compete with the incumbents," he said.

Huawei is also embroiled in a drawn-out legal battle with the U.S. government, which is challenging the constitutionality of a ban against using its equipment in government networks. President Donald Trump also signed an executive order that prohibits Huawei from purchasing American-made products and further actions by the Commerce Department prompted multiple companies to halt business with the vendor.

In a bid to change global perceptions of its business, Huawei’s founder and CEO Ren Zhengfei recently floated the idea of licensing the company’s 5G technology, including patents, to a company based in the West. However, there’s been little discussion or interest in that effort since it was broached last month.

“Many are concerned about an addiction to Chinese technology whether because it’s better and/or cheaper in a world that’s increasingly digitized and in which where complex business models, processes, and systems are essential for society to function,” analysts at Strand Consult wrote in a recent research note. “Some politicians do not want to base security and robustness in networks on diffuse trust concepts with nations with ambiguous relationships.”

The research firm’s analysts conclude that the industry and its myriad users have benefited from telecom market liberalization. “However, in a strange contradiction, exploding competition has led to a re-regulation of networks,” the firm wrote. “Low price is not the only reason companies select Huawei. Its products have improved considerably in quality, and state-owned Chinese banks have financed Huawei and its customers with favorable terms.”

Joe Madden, founder and president at Mobile Experts, says government-backed funding of Huawei’s competitors would be a contradiction of U.S. economic policy. “I don’t think that subsidizing Nokia and Ericsson through the American operators would be an effective policy,” he said.

“Today, the U.S. government has the moral high ground, sanctioning Huawei for violation of [intellectual property] and pushing back against Chinese government subsidies. If we start to offer our own government subsidies then we erode our moral high ground. Further, I don’t believe that it would change the market share in the [United States].”

A subsidy is the “only rational decision if governments really want to ensure that their operators don’t use Huawei,” Sag explained. “Ultimately, cost is the biggest factor here and unless that’s addressed then I don’t see how they can even start to talk about anything else.”