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Huawei selling Honor phone brand in face of US sanctions

Inside Telecom Staff

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Huawei

Chinese tech giant Huawei is selling its budget-price Honor smartphone brand in an effort to rescue the struggling business from damaging U.S. sanctions imposed on its parent company.

The sale announced Tuesday is aimed at reviving Honor by separating it from Huawei’s network equipment business, which Washington says is a security threat, an accusation Huawei denies. It is under sanctions that block access to most U.S. processor chips and other technology.

Huawei Technologies Ltd.’s announcement gave no financial details but said the company will have no ownership stake once the sale is completed. Huawei will retain its flagship Huawei smartphone brand.

The buyer is a state-owned company in Shenzhen, the southern city where Huawei is headquartered, and a group of Honor retailers. Earlier news reports on rumors of a possible sale put the price as high as 100 billion yuan ($15 billion).

“The move has been made by Honor’s industry chain to ensure its own survival,” said the Huawei statement. The buyers said in a separate statement the split was “the best solution” to protect customers and employees.

Huawei, China’s first global tech brand and the biggest maker of switching equipment used by phone and internet companies, is at the center of U.S.-Chinese tension over technology, security and spying. The feud has spread to include the popular Chinese-owned video app TikTok and messaging service WeChat.

Economists and political analysts expect little change in U.S. policy toward China under President-elect Joe Biden due to widespread frustration with Beijing over trade and technology.

Huawei appears to be preparing for hard times by focusing its resources on its high-end smartphones, said Nicole Peng of Canalys.

The sale is “definitely a sign of weakness,” said Nicole Peng of Canalys.

“It shows Huawei knows that the situation will not change immediately between China and the U.S.,” Peng said.

Tuesday’s announcements gave no indication how Honor planned to regain access to U.S. chips and other technology including Google’s popular music, maps and other services. Other Chinese smartphone brands such as Xiaomi, Oppo and Vivo operate without such restrictions.

“In theory, Honor would be like any other Chinese OEM (manufacturer),” said Kiranjeet Kaur of IDC in an email. However, he said Honor needs time to restore access to suppliers and set up its own research and development.

“The challenge remains how quickly it detaches itself from its dependence on Huawei and gets access to all the relevant tech,” said Kaur.

U.S. security complaints focus on Huawei’s network gear and leading role in next-generation telecom technology.

American officials say Huawei might facilitate Chinese spying, which the company denies. They also see Chinese government-supported technology development as a threat to U.S. industrial dominance. The Trump administration is lobbying European and other allies to exclude Huawei and other Chinese suppliers as they upgrade networks.

Meanwhile, Huawei’s chief financial officer, Meng Wanzhou, the daughter of company founder Ren Zhengfei, is under arrest in Canada and fighting extradition to the United States to face charges related to possible violations of trade sanctions on Iran.

Sanctions imposed last year block Huawei’s access to most U.S. processor chips and other technology. Those were tightened in May when the White House barred manufacturers worldwide from using U.S. technology to produce chips for Huawei, including those designed by its own engineers.

The buyer is Shenzhen Zhixin New Information Technology Co. It was founded by Shenzhen Smart City Technology Development Group Co., which was formed by the city government to develop information technology infrastructure.

The Smart City company owns 98.6% of Zhixin, according to Aiqicha, a financial information service of search engine Baidu, Inc. The buyers’ statement said the rest of the 40-member investment group includes Honor retailers.

Honor, founded in 2013, is one of the world’s biggest-selling smartphone brands. Huawei says it ships 70 million handsets a year.

Total shipments of Huawei and Honor handsets fell 5% from a year earlier in the quarter ending in June to 55.8 million, according to Canalys. Sales in China rose 8% but shipments abroad fell 27%.

Huawei reported earlier total revenue for the first nine months of 2020 rose 9.9% to 671.3 billion yuan ($100.4 billion). That was down from 13.1% growth in the first half, but the company said it still was profitable.

Huawei’s smartphone sales outside China have suffered because the company is barred from preinstalling Google services, which many customers expect. Huawei is allowed to use Google’s Android operating system because it is open source and involves no commercial transaction with the American company.

Huawei says it has removed U.S. components from its core products, but the president of its consumer unit, Richard Yu, warned in August the company was running out of chips for smartphones.

Honor might be able to line up suppliers before a new U.S. administration is formed, said Peng of Canalys. She said Honor is less likely to prompt security concerns because it will be smaller than Huawei and have no role in next-generation infrastructure.

“It’s much less likely to become a target of the U.S. government,” she said.

BEIJING (AP) — By JOE McDONALD and ZEN SOO AP Business Writers

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Airline CEOs, Biden officials consider green-fuel breaks

Associated Press

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Airline CEOs, Biden officials consider green-fuel breaks

Chief executives of the nation’s largest passenger and cargo airlines met with key Biden administration officials Friday to talk about reducing emissions from airplanes and push incentives for lower-carbon aviation fuels.

The White House said the meeting with climate adviser Gina McCarthy and Transportation Secretary Pete Buttigieg also touched on economic policy and curbing the spread of COVID-19 — travel has been a vector for the virus. But industry officials said emissions dominated the discussion.

United Airlines said CEO Scott Kirby asked administration officials to support incentives for sustainable aviation fuel and technology to remove carbon from the atmosphere. In December, United said it invested an undisclosed amount in a carbon-capture company partly owned by Occidental Petroleum.

A United Nations aviation group has concluded that biofuels will remain a tiny source of aviation fuel for several years. Some environmentalists would prefer the Biden administration to impose tougher emissions standards on aircraft rather than create breaks for biofuels.

“Biofuels are false solutions that don’t decarbonize air travel,” said Clare Lakewood, a climate-law official with the Center for Biological Diversity. “Real action on aircraft emissions requires phasing out dirty, aging aircraft, maximizing operational efficiencies and funding the rapid development of electrification.”

Airplanes account for a small portion of emissions that cause climate change — about 2% to 3% — but their share has been growing rapidly and is expected to roughly triple by mid-century with the global growth in travel.

The airline trade group says U.S. carriers have more than doubled the fuel efficiency of their fleets since 1978 and plan further reductions in carbon emissions. But the independent International Council on Clean Transportation says passenger traffic is growing nearly four times faster than fuel efficiency, leading to a 33% increase in emissions between 2013 and 2019.

The U.S. accounts for about 23% of aircraft carbon-dioxide emissions, followed by Europe at 19% and China at 13%, the transportation group’s researchers estimated.

The White House said McCarthy, Buttigieg and economic adviser Brian Deese were “grateful and optimistic” to hear the airline CEOs talk about current and future efforts to combat climate change.

Nicholas Calio, president of the trade group Airlines for America, said the exchange was positive.

“Airlines are ready, willing and able partners, and we want to be part of the solution” to climate change, Calio said in a statement. “We stand ready to work in partnership with the Biden administration.”

By DAVID KOENIG.

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Internet disruption reported in southeast Iran amid unrest

Associated Press

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Iran Telecom

Iran’s impoverished southeast has been experiencing wide disruptions of internet services, experts said, as unrest gripped the remote province after fatal border shootings.

Several rights groups reported in a joint statement that authorities shut down the mobile data network in the restive province of Sistan and Baluchestan, calling the disruptions an apparent “tool to conceal” the government’s harsh crackdown on protests convulsing the area.

The reports of internet interference come as Iranian authorities and semiofficial news agencies increasingly acknowledge the turmoil challenging local authorities in the southeast — a highly sensitive matter in a country that seeks to repress all hints of political dissent.

Starting Wednesday, the government shut down the mobile data network across Sistan and Baluchestan, where 96% of the population accesses the internet only through their phones, rights groups said, crippling the key communication tool.

After four days of unverified “localized regional network disruptions” amid the protests, NetBlocks, which monitors worldwide internet access, confirmed a new disruption to internet connectivity in the province beginning late Saturday.

“This is Iran’s traditional response to any kind of protest,” Amir Rashidi from Miaan Group, a human rights organization that focuses on digital security in the Middle East, told The Associated Press on Saturday. “Shutting down the internet to block news and pictures getting out makes (authorities) feel more comfortable opening fire.”

The week saw a series of escalating confrontations between police and protesters. Crowds with light arms and grenade launchers descended on Kurin checkpoint near Iran’s border with Pakistan on Thursday, Abouzar Mehdi Nakhaie, the governor of Zahedan, the provincial capital, said in comments carried by Iran’s semiofficial ISNA news agency. The violence killed one policeman, he added.

Earlier this week, protesters attacked the district governor’s office and stormed two police stations in the city of Saravan, outraged over the shootings of fuel smugglers trying to cross back into Iran from Pakistan on Monday. The border shootings and ensuing clashes killed at least two people, the government said. Many rights activists in the area reported higher death tolls without offering evidence.

Iran’s Foreign Ministry spokesman, Saeed Khatibzadeh, vowed Friday to investigate the deaths. Officials insisted that calm had returned to the streets.

The Iranian government previously has cut off internet access and cellphone service in tense times. In the fall of 2019, for instance, Iran imposed a near nationwide internet blackout as anti-government protests sparked by an increase in fuel prices roiled the capital of Tehran and other cities. Hundreds were reportedly killed in the crackdown nationwide.

Given that authorities targeted the mobile network and not the landline in Sistan and Baluchestan, the disruption likely wouldn’t appear on regular network data, said Mahsa Alimardani, researcher at Article 19, an international organization that fights censorship. The area already suffered from unreliable internet connections.

“This targeted shutdown was very intentional because they knew the realities of this province,” where people are poor and use cheap phones as opposed to computers, Alimardani said.

Sistan and Baluchestan is one of most unstable and least developed parts of Iran. The relationship between its predominantly Sunni residents and Iran’s Shiite theocracy long has been fraught. A low-level violent insurgency in Sistan and Baluchestan involves several militant groups, including those demanding more autonomy for the region.

The area also lies on a major trafficking route for drugs and petrol, which is highly subsidized in Iran and a key source of income for smugglers.

DUBAI, United Arab Emirates (AP) — By ISABEL DEBRE

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Nevada governor proposes giving tech firms power to govern

Associated Press

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Nevada governor proposes giving tech firms power to govern

Nevada’s governor on Friday unveiled a proposal that would allow technology companies to establish jurisdictions with powers similar to those of county governments, arguing the state needed to be bold to diversify its economy and pushing back against those who have likened the idea to company towns.

“This proposal is an exciting, unprecedented concept that has a potential to position Nevada as a global center of advanced technology and innovation, while helping to create immediate positive economic impact and shape the economy of the future,” Gov. Steve Sisolak said of his Innovation Zones idea. “As we’ve learned in the past, an emergency requires us to throw out the tried-and-true, discard the ‘How We’ve Always Done It’ manual and move on.”

Under the proposal, companies developing cutting-edge technologies that have at least 50,000 acres (200 sq. kilometers) of land and promise to invest $1.25 billion could establish “Innovation Zones.” The zones would be governed by a board responsible for overseeing zoning, taxation, law enforcement and other government functions on their land. It would override local county regulations.

The governor’s office of economic development would initially appoint three members to govern the zone, including two required to be from the company.

While the legislation does not specifically mention the company, the proposal is geared toward Blockchains LLC, a cryptocurrency company that owns 67,000 acres of land (270 sq. kilometers) in rural Storey County. Blockchains LLC hopes to build a smart city 12 miles (19 kilometers) east of Reno that would include underground data storage bunkers, 15,000 homes and a research and development park where entrepreneurs could invent applications of blockchain technology.

Blockchain is a digital ledger known mostly for recording cryptocurrency transactions. Local governments have also taken advantage of its secure record-keeping capabilities to document marriage licenses and facilitate overseas voting.

The Innovation Zone proposal has sparked concerns about ceding excessive amounts of power to technology companies. But Blockchains CEO Jeffrey Berns insists that the company’s technology has the potential to empower people to control their digital footprint.

“What we’re trying to build is a place where you have power instead of companies,” he told The Associated Press earlier in February.

An economic impact study commissioned by Blockchains projects the company’s Innovation Zone will create jobs, economic activity and revenue from a tax imposed on transactions made on the blockchain. The study projects Blockchains’ proposal will eventually generate $2.2 billion in direct output annually, about 1.3% of Nevada’s overall economic activity.

But forecasting the economic impact of unproven technology is difficult, particularly because many of the potential applications of the company’s ledger technology have yet to be invented.

Applied Analysis’ Jeremy Aguero, who authored the study, said the projections were based on more than cryptocurrency transactions and encompassed any action on Blockchains’ database made in Nevada or elsewhere. Blockchains, he said, planned to pilot its cryptocurrency in Nevada on industries like cannabis sales or in the gig economy and then expand its applications to other sectors and locations. All of the transaction taxes would be collected by Nevada.

“When we think about it in terms of the revenue estimates that are being yielded, it’s not just related to cryptocurrency. It’s related to any of the transactions that will add a block to the chain,” Aguero said.

Blockchain technology is already used to record financial transactions, store medical records and coordinate supply chain logistics. Sisolak said the purpose of innovation zones is to attract developers to Nevada as they devise new ways to use the technology.

“The applications of the technology are limitless. We cannot even imagine what their technology could be,” he said.

The yet-to-be invented applications are a key reason that Blockchains wants to establish an Innovation Zone. The company and the proposal’s proponents say small jurisdictions are not the ideal governmental bodies to make decisions about new technologies and a massive development that, in Storey County’s case, could increase the population tenfold.

“The traditional forms and functions of local government … are inadequate alone to provide the flexibility and resources conducive to making the State a leader in attracting and retaining new forms and types of businesses,” according to draft legislation.

Some locals disagree. Storey County resident Eileen Gay said that the mechanisms in place for development and project approval protect local interests and the environment.

“Oversight is what makes for safe, well-considered, well-balanced development,” she told county commissioners at a Feb. 16 meeting. “What is to prevent this 800-pound gorilla of a neighbor from swallowing our small neighborhood up?”

Developers may indeed invent new ways to use the digital ledger, but at an August 2020 Storey County Commission meeting, Blockchains lobbyist Matthew Digesti described the company’s proposal as something local governments routinely encounter: a “high-tech business park integrated with a master planned residential community.”

Sisolak said he understood that the Innovation Zones was unconventional, but he said the pandemic had proven that Nevada needs to be bold to diversify its tourism-driven economy. He said government and the private sector needed to work together to induce economy recovery.

“What we’ve been doing has not worked,” he said. “We cannot wait for economic recovery to come to us. We must accelerate and pursue innovative ways to inject Nevada with new and organic economic growth, and more jobs.”

CARSON CITY, Nev. (AP)

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