It's almost commonplace now to say we're in uncharted territory. The type of social behavior that was said to be the driver of innovation in mobile technology — our greater mobility and wider social circles — is today, and for the near future, a danger to humanity. The economy into which some in our society are all too eager to emerge, is already suffering from an artificial, though necessary, shutdown.
Nothing more pointedly epitomizes the tremendous confusion among the very people that a global 5G Wireless infrastructure would seek to bring together than the arson attacks against wireless transmitter masts in the UK and throughout Europe. The motive behind these attacks is believed to be the widely propagated conspiracy "theory," backed by an ample supply of lack of evidence, that Chinese technology embedded in 5G towers is intentionally creating coronavirus spores and spreading them with high-frequency radio waves. There's so much to disprove the very notion of this mechanism, the "theorists" argue, that it must be true.
The abundance of disposable income that was supposed to fuel the world's transition to a more practical, easier-to-manage, energy-efficient wireless infrastructure, has already been ransacked by SARS-CoV-2. Now the business model and the value proposition for the technology portfolio -- or, at the very least, what parts of that portfolio may be salvaged -- must change. As countries are faced with 20% unemployment or worse, 5G must transition from a cool feature into a national priority.
In China, that transition has already happened. On March 24, that country officially launched its nationwide transition program to a full 5G Wireless infrastructure -- not 5G paired with 4G LTE as the US and Europe is deploying now, but weaning China off of the high-power, high-cost 4G network, which was the original purpose of China Mobile's first idea. With hopes that its virus spread and transmission rates are under control, China is doubling down on wireless as the engine of its economic restoration.
"China is halfway through its Made in China 2025 plan, where they want their companies to be essentially dominant, or have control, in the global marketplace," remarked Dr. Paul Carter, CEO of Dulles, Virginia-based independent wireless network testing firm Global Wireless Solutions. "Certainly, the growing dominance of Huawei and Alibaba illustrates that effort. However, countries and companies across the globe are perhaps waking up and realizing what's taking place."
"The question, however, is whether or not other countries and their companies can react quickly or not to maintain -- or, in the case of a government, help their domestic companies maintain -- commercial market share and prominence," continued Dr. Carter, in a note to ZDNet. "For example, will the EU stop fracturing long enough to put policies in place to help its domestic companies maintain or establish themselves in their own markets let alone the global marketplace? Will large players in the industry, like Cisco and Ericsson, fall by the wayside or step up their game? And who will be the next darling startup that develops a killer 5G app, product, or service — and from what country?"
"The challenge posed by an ascendant, increasingly global juggernaut championed and backed by our primary geopolitical rival -- Huawei -- is real, if at times overstated," wrote Doug Brake, who directs broadband and spectrum policy for Washington, DC-based think tank Information Technology & Innovation Foundation, in a policy paper published last April 27. "Next-generation wireless equipment is connective tissue for emerging applications such as artificial intelligence and automated smart-city controls. It makes little sense to allow control of such important infrastructure to be influenced by a government that does not have US interests at heart."
There's a plurality of ways one can interpret Brake's word "control:"
Control over any one department does not necessarily lead to dominance in the other three (just ask Nokia). To what kind of "control" did Brake refer?
"I try to break it down into the short- and long-term security aspects," responded Brake, speaking with ZDNet. "Equipment providers don't just turn their equipment over to operators. They continue to have an operating agreement -- a contract between the two, where they continue to service the equipment, and provide software updates. So they have a certain degree of control over the firmware that runs the equipment itself."
That gives such a provider a kind of unlocked door, if you will, for designating how the underlying network may be structured, particularly for wireless network-dedicated tasks such as distributing backhaul -- the cache of data and services a transmitter must have on-hand to serve customers instantaneously. Global standards are nice to have, but especially now a telco does not have a running service contract with a globe. Huawei has a front-row placement in the race for 5G deployment in China, which is to be expected. For it to have real control, however, Huawei needs those service contracts outside of its home turf. Even a contract for maintaining old equipment can exert some influence here.
"There's also a longer-term concern," Brake continued. "Thanks to some of China's unfair policies that made Huawei a real juggernaut, if that only continues and they gain more and more market share, and with Nokia on shaky financial footing -- with private equity interests circling them -- Huawei could push us into an involuntary monopoly on telecom equipment. That is not a good position to be in."
China's goal, according to its state news service Xinhua, is to accelerate its 5G program, and to have deployed some 600,000 stand-alone 5G base stations by the end of 2020. At the end of March, Xinhua said the country was about two-thirds of the way toward that goal. Breaking from the global 3GPP consortium's portfolio, the country announced it would develop and deploy its own autonomous vehicle communications standard by 2025, with some services becoming operational between 2035 and 2050.
Last April 20, China's Ministry of Industry and Information Technology (MIIT) called for greater investment in what it is now officially calling 6G. It was the first unequivocal signal that China intends not only to take the lead with whatever follows 5G, but to pave its own way.
Remarkably, however, it will not be the monopoly that Doug Brake warned about. When China Mobile locked out Finland-based Nokia from renewing its contracts in the country (doing business as Nokia Shanghai Bell), that signaled to some that the country was closing its technological borders. What ended up happening was China Mobile awarding those contracts instead to Sweden's Ericsson. That prompted Nokia to pack its bags and vacate China altogether, telling Light Reading's Iain Morris upon its departure that it refused to take China Mobile's direction in building specializations and derivatives of 5G just to suit China's whims on technology standards.
"With the economies of scale that they've already had," states ITIF's Brake about Huawei, "they've reached escape velocity. On a purchasing power parity basis, the largest investor in R&D in the world. They're massive, and only growing."
Nokia's evacuation of China may have dealt it a crippling blow, after already having found itself reeling in the wake of the novel coronavirus. Last April 30, the company made substantive cuts to its full-year outlook, citing investment postponements by other telco customers. During a conference call, outgoing Nokia CEO Rajeev Suri said he remained confident Nokia would be able to renew its contracts with China Unicom.
"We have consistently said we would take a prudent approach to pursuing market share given the profitability and cash challenges there," Suri remarked (thanks to Seeking Alpha for the transcript). "Given that, we have prioritized our 5G radio activities on features that are required globally and for markets with better economics and have avoided specific local requirements."
But are those global requirements changing, particularly with the dramatic reductions in consumer spending across the globe, and countries (not just China) adopting a more nationalist approach to supporting their communications infrastructures? Nokia invited ZDNet to ask it such questions. After we submitted them, along with a few others -- which gently avoided the topic of whether the company was bracing itself for a hostile takeover attempt -- Nokia officially declined to respond.
Back in December 2018, a complete overhaul of the European Union's telecommunications code came into effect -- an absolute necessity, given that the code up until that point treated telecommunications companies as national, rather than global, entities. Since the turn of the century, EU legislators had sought language in their telecoms law that resolved any question about the definition of significant market power (SMP). It took a decade-and-a-half for their arguments to make it into law: Market power, they decided, is not synonymous with "market share." It's a state of being whereby an entity can make whatever decisions it wants without any view to its competitors -- essentially, as though it had no competitors.
There can be, as EU law now defines it, a state of joint SMP, where two (conceivably more, however impractical) entities act to the exclusion of all competitors other than themselves -- as though there were no competitors -- regardless of their respective market share numbers.
Under the current EU framework, the regulatory agencies of member nations all have "obligations" to make certain that SMP players ensure "symmetric access" in order to ensure a level, competitive playing field. Interpretations of this phrase, however, appear still to be split between what type of access would be regulated symmetrically: to the network, so that all service providers have equal interfaces and none are given preferential treatment; or to the market that these providers would build on that network. Some maintain that equal access to the network is equal access to the market -- that the network is the marketplace.
If we absolutely believed that, then there would be no argument in Europe today about the dangers of Huawei, and no skepticism about its participation in what most will agree remains a global standards process. Granting any access to Huawei whatsoever, its opponents argue, gives it the opportunity for "control" -- conceivably, to make deals and sign contracts as though there were no competitors.
Yet kicking Huawei out of Europe, even if it's done country-by-country, could trigger exactly the class of regulation that the remaining competitors would rather avoid: an intensified oversight into how networks are managed in the interest of symmetric access, upholding the notion that networks are markets. It would be a government-imposed duopoly. What's more, the type of access the law would compel equipment providers to enable, could be the very same type from which Huawei would be excluded, to create the duopoly in the first place.
EU law demands symmetries in all markets, with the methods of attaining those symmetries left to member nations to decide upon. That's not the argument nations want to be having right now.
Nokia warned of China Mobile seeking specializations to its equipment, which it believed would go against the interests of a global standard -- arguably, an asymmetrical access point in the network. Is there a danger that 5G could evolve from here, from a global standard into two (or more) hemispheric ones? Or in the alternative, would a Western 5G that is symmetrical for Nokia and Ericsson but not for Huawei, be in Europe's interests?
"For the first wave of 5G RAN [radio access network] deployment in Europe and the UK, it will typically be NSA [non-standalone]," responded Sylvia Lu, an advisory board member for the UK national industry advisory council UK5G. "This is like a sandwich, 5G is deployed as an add-on to the existing 4G networks to improve capacity. Excluding Huawei from their 5G buildouts in some European markets means removing it from 4G, as some European carriers long ago installed Huawei products for their 4G networks, this would cost huge sums and given the current economic situation, in my view, still a very big 'if.'"
Put another way, believes Lu, genuinely kicking a competitor off a network in a time of global crisis would mean the imposition not just of regulations, but of costs. In addition to UK5G, Lu is also head of technology strategy for Swiss-based wireless chip provider U-blox, as well as a board director for the industry consortium Cambridge Wireless. She believes the industry is capable of maintaining its own open access, without the intervention of government agencies or oversight frameworks.
"Technology companies and telecoms vendors saw value in developing 3GPP standards, a global standard helps to enable technology companies to build one standard, sell equipment globally, achieve economies of scales, and reduce the cost of equipment," wrote Lu, in a note to ZDNet. "Global standards are critical to ensure interoperability between vendors, but also interoperability between different segments."
Governments talk about being the arbiters of fairness. But they would much rather have competitors define fairness for themselves, however unfairly they may come to that decision.
Prior to the onset of the pandemic, European nations were poised to cautiously include Huawei in their respective markets, and the UK -- now charting its own course in the wake of Brexit -- was set to follow Europe's lead anyway. Some of the skepticism Europe has expressed towards China's handling of the pandemic, especially in the early stages, did appear to bleed onto its impression of Huawei. But so long as Nokia seems to remain on shaky financial footing, Europe's telcos may not be in a position to tolerate the elimination of two players from its 5G market, let alone one.
Huawei finds itself in, as James Stewart declared to Donna Reed without her bathrobe hiding behind a shrub, a very interesting situation: It can't afford to be seen as the singular SMP, not even in its own home country. As a result, it may be in the enviable position of being able to dictate the terms in which "symmetric access," or market openness, occurs. That is to say, Huawei could build a technology platform that acts like a Chinese 5G for East Asia -- with its own, exclusive portfolio for autonomous vehicles, IoT, and AI -- and a 3GPP 5G for Europe. And it may have time to make those adaptations that it didn't have before, now that the rollout process for Europe has slowed down. It would not have legal market or network supremacy in any market, but it would have sole discretion over the technical, legal, and diplomatic channels that keep things that way.
The word for that very interesting situation is "control."
The downside of that strategy is that 5G ends up being a golden starburst sticker, for whatever wireless technology individual nations care to slap it onto. It's China's ticket to beating the US, not just to curing the virus but establishing infrastructural dominance. Not only will 5G be "done," as in eggs. It'll be used, as in tires.