Chinese network equipment manufacturer Huawei Technologies is beginning to make inroads into the U.S. mobile telecommunications market about three years after establishing a subsidiary here.
On Wednesday, the company's FutureWei Technologies unit, based in Plano, Texas, announced the commercial launch of a small regional cellular network in Southern California and Arizona. NTCH, based in Los Angeles, next week will begin selling flat-rate voice and data services under the Clear Talk brand name in El Centro, California, and nearby Yuma, Arizona. It is using a complete Airbridge CDMA2000-1x (Code Division Multiple Access) network, made in China by Huawei and sold by FutureWei, said Douglas Black, vice president of marketing at FutureWei.
Though Shenzhen-based Huawei is a major player in telecommunications infrastructure in China and has sold networks to mobile operators in several countries, this is the first Huawei cellular network in the U.S., Black said. FutureWei was established in 2001 to sell wired and wireless telecommunications equipment in the U.S. and Canada. Huawei also offers enterprise network gear through a joint venture with 3Com.
Foreign vendors have made inroads in the U.S. mobile industry, especially with handsets, but it takes time for them to get a foothold in the infrastructure because operators are more cautious with networks, said Allen Nogee, an analyst at In-Stat/MDR, in Scottsdale, Arizona.
"If you put all that infrastructure in your network and pay billions of dollars for it, then you're kind of stuck" if the equipment falls short of expectations, Nogee said. Thus more established players such as Nortel Networks and Lucent Technologies are dominant in North American networks, though foreign vendors such as Germany's Siemens AG and Finland's Nokia do have a presence.
As Huawei's track record grows, if it can maintain a price advantage, it may be competitive, Nogee said. However, he doesn't expect Huawei and other Chinese network vendors to transform the industry.
"I don't think we're going to see them overtake the world anytime soon, because they have competitive pressures just like many of these other companies," and most non-Chinese competitors are using low-cost Chinese manufacturing themselves, Nogee said.
NTCH already provides mobile voice services in West Tennessee, southeastern Idaho and western Colorado, in addition to operating more than 160 multi-tenant towers in those areas that it leases to major cellular operators, according to Glenn Ishihara, president of NTCH. With the CDMA2000-1x network, NTCH hopes to establish that small, rural operators can make money on data services, Ishihara said. For example, whereas most MMS (Multimedia Messaging Service) deployments have been in urban areas, NTCH plans to create MMS applications that appeal to its rural customers.
The deal worked out well because Huawei shared that goal, Ishihara said.
"We had an opportunity to be able to prove out the business case for enhanced services without having to speculate on what the market would adopt," Ishihara said. "We believe we are able to provide them an opportunity to showcase their technology," he added. NTCH and FutureWei would not disclose the financial terms of the deal.
NTCH's license covers a region near the Mexican border, inland from San Diego, with a population of about 358,000, Ishihara said. When fully deployed, the Clear Talk network is likely to reach 80 percent of that population, and the company expects to attract between 10,000 and 20,000 customers in the first two years, he said.