Gov'ts, industry must balance economic needs, security concerns

Recent actions by Middle East and Asian governments, as well as eight U.S. senators, that question whether telecom equipment manufacturers could undermine national security issues underscores how governments around the globe are going to have to balance the fact that wireless communications are an integral part of their own economies and yet feel comfortable that their national security concerns have been addressed.
Saudi Arabia and the United Arab Emirates want access to Research In Motion Ltd.’s (RIM) enterprise servers, and more countries might follow suit. The Indian government is slowing its 3G wireless buildout due to national security concerns as well. And last week, eight Republican senators asked the Obama administration to investigate Huawei Technologies Co. as it bids to supply wireless equipment to Sprint Nextel Corp. (S) The irony there is that Huawei already sells equipment in the United States to Clearwire Corp. (CLWR) , in which Sprint Nextel owns a controlling stake.
National security issues are no laughing matter, but the simple fact in telecom today is there are few suppliers so unless you are an operator building a network in Sweden, Finland, France or China, the equipment supplier likely will be from a vendor based in another country.
Industry market research firm iSuppli Corp. says the global market for telecom equipment – wireless and wireline – is expected to rise to more than $83 billion by 2014. But while the stakes are large for the equipment suppliers, they are equally as large for the countries that need infrastructure to build out wireless networks for their own financial health. One estimate I heard several years ago said that for every 1% increase in cellular penetration, a nation’s gross domestic product also increases 1%. Thus countries, especially poorer ones, can hurt their own economies by delaying wireless rollouts.
Solutions can be found, however. When French-based Alcatel merged with U.S.-based Lucent (ALU) , a separate subsidiary was formed to handle sensitive contracts between Lucent’s Bell Laboratories and the U.S. government. For everyone’s sake, governments and equipment manufacturers should work to find effective solutions so global economies can move forward.