Europe’s 5G problem

Europe hasn't been at the forefront of 5G, even before the Trump administration began pushing allies to block Huawei over concerns that the Chinese government could use its equipment for spying, which the company has repeatedly denied. 5G (from "5th Generation") is the latest generation of cellular mobile ....

Europe hasn't been at the forefront of 5G, even before the Trump administration began pushing allies to block Huawei over concerns that the Chinese government could use its equipment for spying, which the company has repeatedly denied.

Background 

5G (from "5th Generation") is the latest generation of cellular mobile communications. It succeeds the 4G (LTE/WiMax), 3G (UMTS) and 2G (GSM) systems. 5G performance targets high data rate, reduced latency, energy saving, cost reduction, higher system capacity, and massive device connectivity. The first phase of 5G specifications in Release-15 will be completed by April 2019 to accommodate the early commercial deployment. The second phase in Release-16 is due to be completed by April 2020 for submission to the International Telecommunication Union (ITU) as a candidate of IMT-2020 technology.

Their major advantage is that 5G networks achieve much higher data rates than previous cellular networks, up to 10 Gbps; which is faster than current cable internet, and 100 times faster than the previous cellular technology, 4G LTE. Another advantage is lower network latency (faster response time), below 1 millisecond, compared with 30 - 70 ms for 4G. Because of the higher data rates, 5G networks will serve not just cell phones but are also envisioned as a general home and office networking provider, competing with wired internet providers like cable. 

Development of 5G is being led by companies such as Qualcomm, Huawei, and Intel for modem technology and Nokia, Ericsson, ZTE, Cisco, and Samsung for infrastructure.

Huawei Technologies is a Chinese multinational networking and telecommunications equipment and services company headquartered in Shenzhen, Guangdong. Huawei is under investigation for potential violations of US sanctions against Iran. US lawmakers have repeatedly accused the company of being a threat to US national security, arguing that its Huawei-made telecommunication equipments may be designed to allow unauthorised access by the Chinese government and the Chinese People`s Liberation Army.

Analysis 

While Europe led the way with earlier mobile technologies, China, South Korea, Japan and - to a lesser extent - the US, are ahead on the next rollouts.

Despite beating the drum for 5G, which promises gigabit-per-second download speeds - 10 times faster than 4G and at a lower cost to carriers - European telecom executives are expected to be relatively slow to invest for fear that the spending won't pay off for a long time.

European carriers are generally less profitable and regulators have blocked mergers that would allow a patchwork of operators to scale up. The spectrum needed for 5G hasn't all been assigned yet and governments are set to tap them for billions of euros at auctions in the coming year.

Huawei is deeply embedded in Europe's telecom networks, so restrictions could be more disruptive than in other places. In the US, the industry has generally avoided Huawei under government pressure. The Chinese government, far from limiting its telecom vendors facing global scrutiny, may dictate a faster 5G deployment to back Huawei and ZTE Corp., said analysts at New Street Research last month.

Huawei has come from almost nowhere in Europe a decade ago to supply about a third of telecom systems. It's positioned itself to be a critical provider of antennas, switches, routers, small cells and network slicing gear for 5G by conducting trials with carriers. The company has been helped by security agencies that opened the door while closely monitoring its equipment.

That cautious acceptance is now in question as governments realize how hard it will be to police 5G. With 4G networks, data is usually channelled through a central core, or "brain," whereas in 5G, it will be processed and sent between multiple points in a more scattered arrangement that could make it harder to spot weaknesses and hacks.

To avoid bans on Huawei, telecom executives are suggesting software fixes, tighter monitoring and excluding its gear from sensitive parts of their networks. Since Britain raised issues with Huawei's equipment last July, BT Group Plc has highlighted its policy of keeping the company out of its wireless core - including a program to rip out and replace pieces of the EE network it acquired in 2016. Vodafone Group Plc last month said it had paused buying Huawei core gear.

Assessment 

Our assessment is that Europe’s over-dependence on Huawei for its 5G infrastructure has exposed the unprepared nature of the leading European telecom and tech companies. We believe that Huawei’s telecom infrastructure components are already embedded within European networks and replacing a single supplier for the construction of its expansive 5G systems will be difficult. 

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