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Huawei has lost the UK telecoms market

Inside Telecom Staff

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A week ago, Huawei had hoped to shine again in the UK telecom market. Unfortunately, this dream is deemed ever-more unrealistic. It is clear now that the United Kingdom is moving forward with its intent to remove Huawei from its core 5G network. 

Recently, Huawei Vice-President Victor Zhang commented on the UK decision over removing his company from the core 5G network by 2027, claiming that, “it is going to have a huge economic impact on the UK”, according to The Guardian. On November 25, 2020, a report entitled, “Spending review 2020” was presented to the parliament by the Chancellor of the Exchequer by Command of Her Majesty. The report pointed out that the UK is set to spend “£50 million next year, as part of a £250 million commitment to building a secure and resilient 5G network”. 

The UK government U-turn over Huawei has left the market with a duopoly- Nokia and Ericsson- that have won contracts from British telecom operators such as BT and Three. The UK reliance on limited equipment’s would affect the telecom market as it will push up prices due to a lack of competition. News from UK digital secretary Oliver Dowden – who is leading a task force to increase the number of suppliers – is set to come up before the end of the year, according to The World News.

The discussions on removing Huawei from UK’s core 5G network have been controversial. However, is it clear that the UK has taken a decisive decision, described as a “legislative backbone” to avoid the so-called high-risk equipment providers. Back to November 24, 2020, a new UK draft law was unveiled. According to The Financial Times, the law imposes £100,000 fines a day on telecoms that fail to remove Huawei from their core 5G networks. These penalties are set to enter into force starting in 2027. 

Talking about the law, UK Digital Secretary Oliver Dowden said that it “will give the UK one of the toughest telecoms security regimes in the world and allow us to take the action necessary to protect our networks,” according to Politico. Moreover, he added, “We are investing billions to roll out 5G and gigabit broadband across the country, but the benefits can only be realized if we have full confidence in the security and resilience of our networks,” according to the BBC.

“This decision is politically motivated and not based on a fair evaluation of the risks,” commented Victor Zhang according to the Financial Times. As their UK business opportunities dwindle, Huawei must work hard to secure other European telecom markets.

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Telecoms

Regulators must look past politics when banning Huawei, report warns

Inside Telecom Staff

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Regulators must look past politics when banning Huawei, report warns

The exclusion of Chinese tech companies from Western countries’ fifth generation rollout efforts due to alleged security concerns will negatively impact the progression of the technology for years to come, a recent report highlighted. 

According to a new report by global tech advisory firm ABI Research, phasing out vendors could hamper worldwide deployment by several years and overload network operators with bank breaking costs to replace already existing infrastructure.

“Our research shows that banning Huawei and ZTE from 5G deployments and restricting their access to silicon and semiconductor supply chains will have severe implications on economic performances. Furthermore, banning these Chinese vendors will hamper 5G and 6G R&D,” Leo Gergs, Research Analyst for 5G Markets at ABI Research, said in the report.

Gergs explained that banning Huawei and ZTE not only imposes additional costs for operators having to replace Huawei equipment from existing network deployments but also restricts the vendor landscape, reducing the degree of competition within the market.

“This imperfect competition inevitably decreases downward pricing pressure, forcing network operators to pay higher costs for network equipment than if they were under perfect competition conditions,” he added.

Matters have even escalated further.

Reuters reported that the outgoing Trump administration notified Huawei suppliers, among them chipmaker Intel, that it is revoking certain licenses to sell to the Chinese company and intends to reject dozens of other applications to supply the Chinese tech giant.

This restriction can easily prove to do more harm than good, especially for the American economy, as Huawei plans to start manufacturing their own chipset in a newly built factory in Shanghai, the ABI report explained.

“Even though Huawei will produce 5G chipsets for its products only, Huawei’s long-term ambitions will be to serve the entire Chinese market,” Gergs highlighted, adding that Chinese demand for U.S. chipsets will continuously decrease.

“American semiconductor companies generate a substantial portion of their revenues from China. The impending demand erosion will impact the U.S. semiconductor industry severely,” the report further emphasized.

It is also worth mentioning that phasing out these companies can result in negative implications on 5G standardization.

The report stressed that Huawei and other telecommunications companies are among the top contributors to the 3rd Generation Partnership Project (3GPP) – which is a program that unites telecom companies to develop protocols for mobile telecommunications.

Gergs noted that stripping Huawei from the opportunity to monetize this R&D investment will cause Huawei to reconsider and decrease their efforts. As a result, rollout, and evolution of 5G will suffer not only on a national level but also globally.

“Regulators need to be very careful and avoid taking a politically motivated decision on economic and technology matters,” Gergs warned. “To ensure that 5G can unveil its true transformative effect to the world, regulators and political bodies need to prevent the 5G rollout from becoming a bargaining chip for geopolitical interests.”

Thus, regulators and politicians need to fully access the consequences of what’s a stake when deciding to ban these vendors and look at the matter not only from a political perspective, but also from an economic and technological viewpoint.

“If certain network equipment were found to be insecure from a technology point of view, a healthy and unrestricted economic market would naturally move away from these infrastructure components. This would happen without the political intervention, which is harmful to the economy and will jeopardize the immense value that 5G and future generations of cellular connectivity will bring to societies around the globe,” the report concluded.

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Deutsche Telekom, Cellnex team up in tower and investment deals

Karim Hussami

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German telecoms giant Deutsche Telekom has partnered up with Spanish cell phone mast operator Cellnex to combine their tower business in the Netherlands, laying the ground for investments in a newly established Digital Infrastructure Vehicle (DIV).

Under the agreement, which was announced on Thursday, the companies will become anchor investors in the DIV investment fund focused on European digital infrastructure.

T-Mobile Infra

Deutsche Telekom operates its Dutch towers via an entity known as T-Mobile Infra which will be contributed to the DIV, the operator said in a statement. The investment fund will primarily focus on fiber infrastructure, towers, and data centers, with aims of delivering attractive, risk-adjusted returns.

The German operator will donate $406 million in capital commitments to the fund, while Cellnex has agreed to commit $243 million. “Its investment in Cellnex Netherlands aims to create value by gaining exposure to the growth derived from 5G adoption, as well as by realizing synergies resulting from the merger,” Cellnex said in a statement.

DIV will contribute to the T-Mobile Infra business to Cellnex Netherlands in return for a 38 percent stake, as part two of the transaction.

How many cells will the deal include?

According to the deal, Deutsche Telekom will integrate its 3,150 mobile towers in the Netherlands with Cellnex’s 984 sites.

The tower specialist firm noted that its operation of 4,314 sites – in parallel to having 180 new masts already in the pipeline – will render it to become the largest independent mobile tower company in the country.

“At the same time, DIV opens an innovative way to finance telecom infrastructure in partnership with institutional investors,” Deutsche Telekom CEO Tim Höttges said.

As the fifth-generation technology expands in worldwide rollout, telecom towers are increasingly prized by investors navigating a world of low returns thanks to their steady, inflation-linked cash flows, and prospects for more development.

To guarantee the continued investment in the sector, more connections will be needed to link up billions of devices in an Internet of Things (IoT).

Whilst customers enjoy better signals on their smartphones when new sites mushroom up, it also offers faster data and better call quality, especially when working from home.

The COVID-19 crisis has shown the importance of stable broadband connections for people to communicate and remain connected, which would lead to strengthening the digital infrastructure in Europe.

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Telecoms

Four European telecom operators deploy OpenRAN solutions to boost technology

Karim Hussami

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Four European telecom operators deploy OpenRAN solutions to boost technology

To better serve its customers, four of Europe’s largest operators– Deutsche Telekom AG, Orange S.A., Telefónica S.A., and Vodafone Group Plc– have committed to supporting and deploying OpenRAN solutions.

In a Memorandum of Understanding (MoU), the operators said they are interested and committed to the implementation and deployment of Open RAN solutions that take advantage of new open virtualized architectures, software and hardware to build more agile and flexible mobile networks in the 5G era.

Important milestone

This step is considered an important milestone towards a diverse, reinvigorated supplier ecosystem and the availability of carrier-grade Open RAN technology for a timely commercial deployment in Europe.

Enrique Blanco, Chief Technology & Information Officer (CTIO) at Telefónica, said: “Open RAN is the natural evolution of radio access technologies and it will be key for 5G networks. Telefónica believes the whole industry must work together to make it a reality. I am excited to be partnering with major European operators to promote the development of an open technology that will help to enhance the flexibility, efficiency and security of our networks. This is an extraordinary opportunity for the European industry not only to promote the development of 5G but also to participate in its sustainable technological development.”

What is OpenRAN and how does it work?

 It is about network innovation, flexibility and faster rollout.

 This is why operators are committed to its promotion, development and adoption to ensure the best network experience for their customers.

Telcos plan to join forces with their leading European partners to foster a diverse, competitive and secure 4G/5G ecosystem based on open RAN solutions, in order to seize this opportunity.

Impact on telecommunication market

On the other hand, the implementation of Open RAN is expected to have a positive impact on the European Telecommunication market.

Within the traditional RAN, the networks uses fully integrated cell sites, where the radios, hardware and software are provided by a single supplier as a closed proprietary solution.

Mobile operators are re-evaluating the way their networks are deployed.

OpenRAN has the capability to drive European technological innovation through the use of the experience of expanding corporations and expanding governments.

Those RAN solutions open the market to new suppliers, leading to faster deployment of 5G, an economy of network and world-class services.

Moreover, Europe must keep the same pace as other countries in the race for the long-term development of Open RAN, instead of staying behind, especially with the progress of the US and Japan have made in this filed.  

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