Huawei controversy opens field for 5G challengers

Customers look at Huawei smartphones at a flagship store in Shanghai. Huawei plans to strengthen the brand in its core domestic market. (AFP)
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Updated 29 June 2020

Huawei controversy opens field for 5G challengers

  • Current situation offers opportunity to firms like NEC and Samsung to shine

TOKYO: With growing pressure to keep China’s Huawei out of 5G network development, it could be time for firms like Japan’s NEC and South Korea’s Samsung to shine.

Washington has pushed allies to bar Huawei, a Chinese telecom giant, from building next-generation 5G mobile networks, claiming its equipment can be used to spy for Beijing.

Huawei denies the charges, but US pressure has prompted an about-turn in Britain.

The government had already pledged to cut the firm out of the most sensitive “core” elements of 5G that access personal data, and is now reportedly pushing for plans to end Huawei’s involvement in Britain’s 5G infrastructure by 2023.

But excluding Huawei is not without challenges, because there are currently only two alternatives in Europe for 5G equipment such as antennas and relay masts: Finland’s Nokia and Sweden’s Ericsson.

Britain has encouraged Washington to form a club of 10 democratic nations that could develop its own 5G technology, but there has been little movement so far.

“The vast majority of the commercial networks sold in the world come from the big three,” said Sylvain Chevallier, in charge of telecoms at BearingPoint consultancy, referring to Huawei, Nokia and Ericsson. “But a world of three is not good for operators, and if it goes down to two it will be worse still,” he told AFP.

That leaves a tempting potential opening for telecoms firms like Samsung and NEC. But building a successful 5G network is no simple task.

That is a lesson Samsung has already learned. Despite being a major player in 3G, it found itself unable to compete with the big three on 4G and struggled to win commercial contracts.

“This has been a challenge for Samsung,” said Daryl Schoolar, a mobile technology specialist at consulting group Omdia.

In building its 5G network, Samsung has so far focused on North America and parts of the Asia-Pacific region.




The logo of NEC, Japan’s electronics and information technology company, is displayed at the firm’s headquarters in the capital Tokyo. (AFP/File)

“So while operators may feel uncertain about Samsung Networks, they are much further along in the process of being a global presence than NEC,” Schoolar added.

NEC does have some advantages, including a partnership in Japan with mobile operator Rakuten.

The firms have already cooperated on a 4G network and are now jointly developing a 5G system.

The Japanese firm is also a leader on undersea cables, fiber optic networks and — thanks to its affiliate Netcracker — logistics management software.

“Netcracker has a strong presence with operators in Europe, which could be a real entry point for NEC,” said Stephane Teral, chief telecoms analyst at LightCounting, a market research firm.

NEC is tightlipped about its contracts for mobile networks, saying only that it is holding feasibility demonstrations for “a number of customers and we are engaged in commercial discussions with others.”

Britain’s government has reportedly asked both NEC and Samsung to take part in demonstrations as it looks to diversify its 5G options.

And on Thursday, NEC announced a tie-up with Japanese operator NTT intended in part to speed up the development of a 5G network.

Samsung and NEC joined forces 2 years ago and have launched a joint marketing team to offer 5G products to European and Asian markets.

Still, the path ahead will be tough, said Schoolar.

“I think it’s a major challenge for NEC. It requires more than radios, it requires investing in people who can do system integration, sales, customer support, network design and engineering,” he said.

“Plus NEC will need to build operator trust that they will be there to support them in 5 to 10 years as those 5G networks evolve.”

Washington has backed the use of nonproprietary technology like Open RAN in 5G development, hoping it will provide an entry point for US firms.

Such a move would open up opportunities for NEC, allowing them to “create an economic model that would shake up traditional equipment manufacturers,” said Chevallier.


Analysts urge Canada to focus on boosting the economy

Updated 06 July 2020

Analysts urge Canada to focus on boosting the economy

  • Canada lost one of its coveted triple-A ratings in June when Fitch downgraded it for the first time

TORONTO: Canada should focus on boosting economic growth after getting pummeled by the COVID-19 crisis, analysts say, even as concerns about the sustainability of its debt are growing, with Fitch downgrading the nation’s rating just over a week ago.

Canadian Finance Minister Bill Morneau will deliver a “fiscal snapshot” on Wednesday that will outline the current balance sheet and may give an idea of the money the government is setting aside for the future.

As the economy recovers, some fiscal support measures, which are expected to boost the budget deficit sharply, could be wound down and replaced by incentives meant to get people back to work and measures to boost economic growth, economists said.

“The only solution to these large deficits is growth, so we need a transition to a pro-growth agenda,” said Craig Wright, chief economist at Royal Bank of Canada. The IMF expects Canada’s economy to contract by 8.4 percent this year. Ottawa is already rolling out more than C$150 billion in direct economic aid, including payments to workers impacted by COVID-19.

Further stimulus measures could include a green growth strategy, as well as spending on infrastructure, including smart infrastructure, economists said. Smart infrastructure makes use of digital technology.

“We have to make sure that government spending is calibrated to the economy of the future rather than the economy of the past,” Wright said.

Canada lost one of its coveted triple-A ratings in June when Fitch downgraded it for the first time, citing the billions of dollars in emergency aid Ottawa has spent to help bridge the downturn caused by COVID-19 shutdowns.

Standard & Poor’s, Moody’s and DBRS still give Canadian debt the highest rating. At DBRS, Michael Heydt, the lead sovereign analyst on Canada, says his concern is about potential structural damage to the economy if the slowdown lingers too long.

Fiscal policymakers “need to be confident that there is a recovery underway before they start talking about (debt) consolidation,” Heydt said.

Fitch expects Canada’s total government debt will rise to 115.1 percent of GDP in 2020 from 88.3 percent in 2019.

Royce Mendes, a senior economist at CIBC Capital Markets, said the economy still needs more support.

“Turning too quickly toward austerity would be a clear mistake,” he said.