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Blocking China can lead to fragmented 5G market

With trade relations between China and the US still tense, efforts to cut out vendors such as Huawei from 5G implementations can lead to two separate ecosystems and varying industry standards. This may result in consumers losing out on benefits they have enjoyed from 4G, which has seen the adoption of a common global framework. 

In rolling out new services, a primary focus typically would be to reduce cost and achieve benefits of scale. In this aspect, it would be ideal for all stakeholders to know where the industry was heading and for there to be a final resolution, said GSM Association’s (GSMA) Asia-Pacific head Julian Gorman, in an interview with ZDNet. 

US Attorney General William Barr last month said the US and its allies should invest in Huawei competitors to slow the Chinese company’s growing 5G market share, pointing to Finish vendor Nokia and Sweden’s Ericsson as potential candidates. The US government previously had accused Chinese networking vendors, namely Huawei, of sharing sensitive information with their government and providing access to private US business communications. The Trump administration had called for countries to boycott Huawei’s telecommunications systems, specifically its 5G equipment, and put pressure on its allies, including Europe, New Zealand, Australia, and the UK, to ban Huawei products, threatening that it would be “difficult” for the US to do business in countries that deployed Huawei equipment.


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Commenting on the ongoing 5G spat between China and the US, Gorman acknowledged the need for governments to protect their national security interests. He noted that GMSA advocated the need for “transparent, fact-based frameworks” for ensuring security and that vendors and suppliers were able to all security requirements. 

“We need to de-risk concerns about being able to build and roll out 5G networks,” he said. “When it comes down to the resolution of that, we support any discussions that will help make this framework clear and within which operators can operate. Different countries have different national security interests. We’re encouraging the adoption of standards and the rollout of 5G.”

On the possibility of two realms emerging, should market players prepare to support two trading blocs flanked by China and the US, he described this as a sub-optimal outcome. He noted that 4G had marked the first time the world came together to operate on one global standard, where previously it was split into the two camps of CDMA and GSM. 

“To step back from having a global standard is a step back from the benefits of scale and opportunities for innovation and faster growth because you have two ecosystems growing in separate directions,” Gorman explained. “You lose the scale of innovation and [it’s a] distraction. We certainly advocate maintaining a single [global] standard.”

He also urged for a quick resolution to the ongoing tensions, noting that network planning and vendor strategy required time to establish and implement. He added that while there still was some time to work things out, the longer the uncertainty dragged on and the delay stretched, organisations would put off their investment decisions longer and the cost of making such decisions would be higher.

Governments should not hinder, but should enable 5G deployment

Ericsson’s Asia-Pacific CTO Magnus Ewerbring also supported the early rollout of 5G networks. In an interview with ZDNet, he said countries that hopped on earlier, and industries were enabled by 5G, they would more quickly gain a competitive advantage over others that chose to wait. 

Ewerbring urged regulators not to inhibit the move and to release the necessary spectrum and drive the adoption of 5G, so their local industry could benefit from it as soon as possible. 

“Clearing the spectrum, proportioning it out to operators as early as possible is good…and establish the rules on how these should be used…because then [telcos] can decide what to invest in [terms of] their networks. If they don’t have the spectrum, they can’t do much,” he said. 

According to a EY study released last month, 15% of organisations currently were investing in 5G and this figure would climb to 69% over the next three years. Another 74% believed 5G would be integral to their business in the next five years, found the survey, which polled more than 1,000 businesses worldwide. 

Amongst those investing in the technology today, however, 67% either were engaging in trials or in discussions with suppliers, rather than transitioning to the operational stage. Some 48% were confident they could move to a 5G-based Internet of Things (IoT) infrastructure, as 74% noted they would have to overhaul their operating model to push this to implementation. 

The study revealed that 75% noted the need for use cases around 5G, while 37% noted that integration with existing technologies was the biggest internal barrier to adoption. Another 35% pointed to a perceived lack of maturity as the top external challenge.

EY’s global telecommunications sector lead Tom Loozen said: “Enterprises are aware that 5G can fundamentally reshape their organisations. To succeed, they need to develop a road map that is aligned to the broader landscape of technology transformation, but anxieties persist around technology integration, maturity, and cybersecurity. 

“To overcome this inertia, 5G vendors need to articulate a more compelling vision of the opportunity, while enterprises need to educate themselves on the game-changing possibilities that go beyond efficiencies alone,” Loozen said. 

According to the study, 60% of respondents were struggling to identify the right 5G vendor, with 67% noting that itnteractions with vendors had been largely transactional and tactical. 

Asia-Pacific businesses, specifically, were lagging in their 5G investments, with just 10% currently pumping funds into the technology, compared to 13% in Europe and 19% in the US. Some 43% in Asia-Pacific were planning to invest in 5G within the next year, while 38% in Europe and 48% in the US said likewise. 

Commenting on security concerns about 5G, Ewerbring underscored the need to still assess vendors based on trust and their ability to deliver what the organisation required. He said Ericsson focused on, amongst others, how it developed and updated its products, the measures it adopted to ensure robust security, and provided guidelines on how its products should be deployed so they could work with other networks securely. 

Gorman said: “5G is an opportunity to create an agile, purpose-built network tailored to the different needs of citizens and the economy. But, it is vital that all stakeholders work together to ensure 5G is successfully standardised, regulated, and brought to market. 

“We strongly believe in competition and a fair and open market place, and we are looking at ways to stimulate greater competition in the market,” he added. “Competition stimulates innovation and all parties including operators, enterprises, and consumers benefit. Restrictions can affect the nature of competition in markets and the consequences need to be analysed and understood.”

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