US lawmakers and regulators’ biggest beef with Huawei has been over security and its alleged ties to the Chinese military. Though Huawei has dismissed those allegations, it has said on many occasions that those perceptions have killed off lucrative deals with US operators that it should have won.

For instance, Huawei VP of external affairs Bill Plummer recently told GigaOM that Huawei was practically a shoe-in to become the third vendor in Sprint’s $4.5 billion LTE build and network overhaul, but due to government pressures it was booted from list of finalists. Instead, the contract went to Samsung. “We were the most competitive offering for Sprint in terms of technology and total cost of ownership, but non-market forces dictated the result,” Plummer said.

Though Huawei has had run-ins with the Australian government as well as the US, it hasn’t faced the same obstacles in other regions. In fact, Huawei is now  the second largest provider of telecom equipment in the world and in the first half of this year it actually beat market leader Ericsson in total revenues.

Huawei hasn’t exactly been banned from the US. It’s been making progress selling inexpensive carrier-branded smartphones here, and over the summer it revealed its most significant contract to date: it’s building T-Mobile’s MyTouch line of Android handsets. But on the infrastructure side it’s only landed a handful of small deals, and some of those – like its WiMAX contract with Clearwire – have fizzled out.

As the Journal pointed out, a public listing on a US or international exchange wouldn’t silence all Huawei critics, but it would lay bare the company’s finances  and ownership structure. The more Huawei looks and acts like a Western company, the more it would get treated like one – or so the logic goes. But going public hasn’t exactly been a boon to fellow Chinese vendor ZTE, which is having many of the same troubles with the US government, despite its listings on the Shenzhen and Hong Kong stock exchanges.

There’s also a question of whether the biggest US opportunity has already passed Huawei by. The telecom world is one characterized by tight carrier-vendor bonds. Every decade or so a new generation of network of emerges, which gives carriers the opportunity to sever old bonds and forge new ones. LTE is a good example. The transition to 4G in the US, saw a big shakeup in vendors: Motorola and Nortel disappeared from the scene while Ericsson and Cisco emerged as the dominant suppliers of radio and core networks, and Samsung captured its first foothold on US soil.

Huawei would have loved to have been part of that shakeup, but as of now the big US operators have awarded their major LTE contracts, establishing a new set of incumbents for years to come.

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Sweden’s Ericsson brought in $15.25 billion in the first half of the year, putting it $850 million shy of its Chinese rival. That may seem like a lot, but currency exchange rates differences between the Chinese yuan and the Swedish kroner have a big impact. The two also have different portfolios. Ericsson is still by far the largest cellular infrastructure maker in the world, while Huawei has sizable handset and enterprise businesses. Ericsson no longer has the revenues from its handset joint venture with Sony, but it did get a big sales boost this year from its recent acquisition of network systems vendor Telcordia.

Ericsson would surely argue it sells more actual telecom network gear than Huawei, but one thing is certain: this race isn’t over. Both companies are growing despite the poor global economy, and as they continue to land more contracts and currencies continue to fluctuate, they likely will keep leapfrogging one another. Huawei and Ericsson are both well ahead of their next closest competitors, Alcatel-Lucent and Nokia Siemens Networks(si).

The amazing thing is that Huawei has risen to global network prominence despite having almost no impact in the U.S., which along with China are the two most important infrastructure markets in the world. Huawei has some handset deals to sell carrier-rebranded smartphones – the biggest of which is for T-Mobile’s next generation of MyTouch phones – but it doesn’t have a single major network equipment contract to its name in the U.S. Meanwhile Ericsson has its fingers in every major network build of the Big 4 carriers – and most of the smaller contracts as well.

Huawei attributes this to ingrained prejudice in U.S. government circles against a Chinese vendor building the country’s sensitive communications networks. As a privately held company, Huawei lacks the transparency of its competitors, which all trade publicly on major global exchanges. Alleged links between Huawei and China’s People’s Liberation Army have led the U.S. government to block government contracts and acquisitions of domestic companies. Huawei has denied such links and has even invited a U.S. investigation to assuage any security concerns.

In a recent interview, Huawei external affairs VP in the U.S. Bill Plummer said those sinister perceptions of Huawei have cost it a huge amount of business in the U.S., even though European and Canadian carriers haven’t shied away from dealing with the vendor. Plummer said Huawei was on the verge of becoming the third supplier in Sprint’s LTE contract and CDMA network overhaul, but politics got in the way (the contract went to Samsung).

“We were the most competitive offering for Sprint in terms of technology and total cost of ownership, but non-market forces dictated the result,” he said.

Related research and analysis from GigaOM Pro:
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• CES 2012: a recap and analysis
• Mobile 2012 and beyond
• The future of mobile: a segment analysis by GigaOM Pro