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All 3 Japanese & Deutsche Telekom join the Americans

The U.S. boycott is growing far faster than anyone expected and now looks to cut Huawei sales by US$2-3 billion per year. This is significant even to a company doing US$100 billion in sales this year. There is pressure on India, Italy, and Canada; In all cases, the telcos are unhappy because Huawei is important to them, but resistance may be futile. 

Deutsche Telekom and Softbank want the government to approve the T-Mobile/Sprint merger, a very bad deal for consumers. They are particularly subject to pressure.

DT and Softbank backing away from Huawei is consistent with a behind the scenes deal with the U.S. security interests.  Depending on the assumptions, approval of the deal is worth $10 billion to US$20 billion to the companies. I have absolutely no direct data.

I’ve been close enough to U.S. policy to know that “national security” overrides everything else. If that’s the deal, the Justice Department and the FCC would go along.  I first thought this could be a special case.

When NTT DOCOMO and KDDI  joined, I had to revise my thinking. The Japanese government made the decision, presumably with behind the scenes conversations with the Americans. Relations with China are crucial to Japan, but the U.S. nuclear umbrella is even more important. 

Softbank, NTT DOCOMO, and KDDI spend about US$10 billion on capex each year. Only some of that is equipment and only some of the equipment comes from Huawei. The total Huawei will lose is probably over US$1 billion.

BT & others fought back against the China boycott

Two weeks ago, BT was fighting back against the Huawei boycott. The Security Forces have since prevailed. The cost to Britain will be in the US$billions. Here, from Fast

The U.S. security agencies are currently pressing England and Germany to cut off Huawei, which everyone in the industry believes would be a very expensive move.  BT is smart enough not to take on MI5 and GCHQ directly, but would have to spend many billions more if it lost Huawei and ZTE as suppliers. Update 11/28 New Zealand, one of the Five Eyes working together since World War II, has now cut Huawei out of the 5G plans.

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Trump tweet could kill extradition

The Canadian Justice Minister can refuse extradition if the claim has a political motive. This sounds like it does:

“If I think it’s good for the country, if I think it’s good for what will be certainly the largest trade deal ever made — which is a very important thing — what’s good for national security — I would certainly intervene if I thought it was necessary.”

An experiment in reporting

I’ve lived through what Americans call the Vietnam War, the Cold War, and the Iraq War. The Huawei War is only about commerce, but like all wars will extract a high price from both sides. I’m finding so much news I created this site.

I’ve reported about Huawei since 2004, when they were still unknown in the West. Paul Reynolds of British Telecom told me they were doing exceptional things. They now are twice the size of any other telecom vendor.

They are extremely competitive, remarkably hardworking, and very, very good at what they do. “No one is perfect,” the butler said, and neither are any companies this size. On balance, they have been at least as honourable as peers in the West.  

I have a major conflict of interest. Huawei has paid my expenses to events and contracted with the research company I do some work with. I will do my best to do accurate reporting.