China’s Huawei set to lead global charge to 5G networks
China’s Huawei set to lead global charge to 5G networks
Huawei’s dominant position in China — set to become the world’s biggest 5G market by far — is well-documented. However it has also been making in-roads in the rest of world to compete with rivals Ericsson and Nokia in several lucrative markets, including countries that are longstanding US allies.
5G networks, now in the testing stage, will rely on denser arrays of small antennas and the cloud to offer data speeds up to 50 or 100 times faster than current 4G networks and serve as critical infrastructure for a range of industries.
Deals to start building 5G networks are still largely a year away, but Huawei has signed 25 Memorandums of Understanding (MoUs) with telecom operators to trial 5G equipment, a Reuters review of company reports and announcements found.
These MoUs — pre-cursors to potential commercial contracts — include agreements with Britain’s BT, Bell Canada (BCE) , France’s Orange Germany’s Deutsche Telekom and global player Vodafone.
Huawei lags behind Sweden’s Ericsson, with 38 MoUs, and Finland’s Nokia, with 31, according to the data, which does not include deals that have not been made public.
However, the Chinese company’s existing partnerships with operators could give it an extra edge; as of 2016, Huawei said it had supplied more than half of the 537 4G networks globally and 59 of the 90 4.5G networks — an intermediate step before 5G.
“Existing network footprint is important because operators still need to maintain their legacy ... networks and could save money by using the same vendors,” said Stefan Pongratz, a top industry analyst with research firm Dell’Oro.
Huawei also has the home advantage: the firm and smaller, domestic-focused peer ZTE are each guaranteed about a third of China’s 5G network contracts, under Beijing’s policy, while foreign players have to compete for slivers of the market.
By 2025, 1.2 billion people worldwide are set to have access to 5G networks — a third of them in China, according to the GSMA, a global trade group of nearly 800 mobile operators.
There are however potential risks ahead; Huawei, like its rivals, has spent billions of dollars developing 5G network technology, there are no guarantees about when operators around the world will adopt the new technology.
Many cash-strapped operators want to see significant consumer and business demand before allocating capital, something out of Huawei’s control. Some emerging markets have yet to adopt 4G, putting major 5G moves at least a decade off.
Unlisted Huawei is triple the size of either Nokia and Ericsson in terms of its annual revenue, which totalled about $92 billion last year, half of it from China. It sold 32 percent of global mobile radio access gear — antennas and base stations — in the last quarter, against Ericsson’s 30 percent and Nokia’s 25 percent, according to market research firm Dell’Oro.
Ericsson has been under heavy pressure to cut costs in recent years at a time of dwindling profits, while Nokia has had to integrate multiple acquisitions in its networks business.
Nokia said it was confident its broad 5G portfolio, which also includes software and services to manage networks, would allow it to win a bigger slice of the telecoms market.
Ericsson said its longstanding ties with customers and advanced 5G patent portfolio would keep it competitive. “All our customers are looking at 5G,” a spokesman said.
Huawei’s 5G MoUs include non-binding agreements with big telecom operators in South Korea, Japan and Australia, Italy, Turkey and Saudi Arabia, on top of Britain, Germany, France and Canada.
Potential commercial benefits aside, these agreements indicate that many countries allied to the United States do not share Washington’s security concerns.
A bill introduced in the US Senate earlier this month would bar equipment from Huawei from any US government networks to prevent Chinese spying. A leaked presentation from a National Security Council staffer earlier this year suggested the US government build its own 5G network — a proposal that was widely ridiculed by industry experts.
Huawei categorically rejects US spying concerns.
“Huawei is trusted by governments and customers in 170 countries worldwide and poses no greater cyber-security risk than any (communications) vendor, sharing as we do common global supply chains and production capabilities,” a spokesman said.
Bruce Rodin, vice president of wireless networks for Bell Canada, said his company used an external cyber-security firm to conduct extensive testing of Huawei products.
“We’ve been doing it for about 10 years and never seen malicious code or backdoors,” Rodin told Reuters, characterising the US moves as an effort to protect American companies. “It’s a commercial thing. They are protecting their industry,” he said.
Deutsche Telekom said it cooperates with Huawei on many levels and found no evidence of security risks. “The hardware is built to Deutsche Telekom’s specifications and is examined by our own security department,” a spokesman said. Orange told Reuters it is cautious with Huawei “as with any supplier.”
Thomas Jarzombek, a member of the German parliament and digital spokesman for Angela Merkel’s Christian Democrats, said that in the wake of revelations about US spying by former NSA contractor Edward Snowden, American tech companies were not necessarily to be trusted either.
This month, a trade mission by British Prime Minister Theresa May to China included a glowing endorsement of Huawei for its commitment to Britain.
Debates over the timing of 5G deployment will top the agenda at Mobile World Congress, Europe’s biggest annual technology conference taking place next week in Barcelona. The industry is counting on the new technology to trigger a wave of growth in equipment sales and mobile services starting in 2020.
French state-owned bank drops plan to aid trade with Iran
PARIS: French state-owned bank Bpifrance has abandoned its plan to set up a mechanism to aid French companies trading with Iran, in the face of US sanctions against Tehran.
Earlier this year, the bank had said it was working on a project to finance French companies that wished to export goods to Iran despite US sanctions.
“It’s put on hold,” said Nicolas Dufourcq, Bpifrance’s chief executive. “Conditions are not met (...) Sanctions are punitive for companies.”
Bpifrance was working on establishing euro-denominated export guarantees to Iranian buyers of French goods and services. By structuring the financing through vehicles without any US link, Bpifrance thought it was possible to avoid the extraterritorial reach of US legislation.
Dufourcq’s latest comments show how the scope of the sanctions is making trade with Iran increasingly difficult for European companies.
The United States is renewing sanctions on Iran after withdrawing from a nuclear deal forged in 2015 between Tehran and world powers. Washington reimposed some of the financial sanctions from Aug. 6, while those affecting Iran’s petroleum sector will come into force from Nov. 4.
Even though several European countries have said they are seeking to protect their companies from the sanctions, several major companies including oil company Total, Air France-KLM and British Airways have announced they would suspend activities in Iran.
German officials have in recent weeks advocated for the creation of an independent system for cross-border payments to make trade with Iran possible even with the US sanctions.
European Union diplomats have said US President Donald Trump’s positions on trade and on Iran were fueling a rethink about the EU’s dependency on the US financial system.
However, European countries appear to be struggling to find or agree on effective options to tackle the issue.