It’s been a turbulent few months for Huawei, as China’s biggest network equipment provider has been forced to defend itself against a series of allegations from the US about the security of its 5G network infrastructure. As the US tries to convince its allies in Europe to ban Huawei from their 5G rollout plans, the Chinese tech giant says that the allegations only serve to sharpen its resolve to provide the most ambitious and innovative 5G products and services in the industry.
As a show of support from its partners in the UK, Huawei began its pre-MWC event in London last week with a four-way conference call between its executive director and CEO of its Carrier Business Group, Ryan Ding, and representatives from Vodafone, EE and Three UK – three of the UK’s mobile network operators with whom Huawei has deployed 5G network equipment.
Following the live call, Total Telecom joined a media roundtable with Mr Ding, to discover what 2019 has in store for Huawei – both in the UK and across the globe.
“The demonstration call this morning of the live networks was based on the networks that we have already deployed here in the UK [hence we were able to involve Vodafone, EE and Three UK]. Those are the three live networks that we have deployed so far using 5G,” Ding explained.
Huawei’s growth and the threat posed by a potential ban
While a ban from the US was obviously not top of Huawei’s Christmas list this year, Ding said that the ban would only have a limited effect on his company’s global operations.
“Actually in 2017 and 2018 we witnessed some of our biggest growth challenges. During that period of time the growth rate was about 2 per cent to 3 per cent [for CBG]. In 2019 I believe we will see even better growth as 5G is coming to the market. As you have asked about the security pressures on Huawei, I can tell you that there is some impact on some countries but there will be no impact on 95 per cent of our markets.
“On the contrary, in other markets, Huawei has become a very popular topic, so we are known by more customers and known better by the public, so to some degree, this whole situation has just provided free advertising for Huawei,” he added.
Ding argued that the renewed scrutiny that Huawei was facing as a result of the US’ allegations was actually a force for the good – causing the company to increase its focus on excellence and increasing its R&D investment across the board.
“Because of the security concerns, we have made an even bigger investment in R&D this year, to improve the competitiveness of our products and make our services better.
“I believe that this misunderstanding [over security of Huawei’s networks] will exist for some period of time, but if we can continue to provide best products and best services to the industry and continue to be open and transparent to the markets, I believe that the pressure will turn into bigger momentum and more opportunities,” he explained.
R&D as the lifeblood of 5G innovation
Huawei has made some enormous investments in research and development for 5G, allocating a massive 15 per cent of its total revenues to R&D. From 2011 to 2017, Ding served as Huawei’s global head of R&D, giving him a unique understanding into the firm’s R&D focus.
“When I first took up this position, Huawei’s R&D contribution was about 11 or 12 per cent of its total revenues. By the time I left that position, the figure had risen to 15 per cent. I believe that the R&D investment ratio will continue to rise this year.
“Huawei is constantly monitoring its R&D focus. From the outside it might seem that Huawei has a very big portfolio of products but for us there are only two categories of products: One is related to connectivity, the other is related to computing.
“Of course, we also provide smartphones, so the two categories I am talking about are related specifically to infrastructure type products,” he said.
Ding emphasised that while Huawei ha a huge remit for R&D, the company has to maintain a laser focus on its portfolio, axing underperforming projects when necessary.
“Over the last two years, those products that have not seen big business, or that we believe that we won’t be able to be among the top two vendors for, we have reduced our investment in those products and look to exit those markets.
Clearly, 5G will continue to be a key column of Huawei’s R&D focus in the coming months and years.
“Today Fixed Access, Transmission, Wireless and Core Networks are our key focus. In the past few years, we have been stepping up our investment in these areas.
“I can say that for 5G we were not only the first to invest but we have also made the biggest investment, that is the reason that we can continue our leadership with regards to 5G.
“Without having the best products or best services, we cannot continue to gain success in the market,” he said.
Britain as a leader for 5G in Europe
Ding believes that the UK will be one of the first countries in Europe to launch fully commercialised 5G mobile services, with a launch date expected in the second half of 2019. With over 18 years of experience in the UK’s mobile telecoms sector, Huawei believes that the UK will lead from the front when it comes to 5G in Europe.
“Globally for 5G development, Korea is the fastest moving country but the UK will be one of the fastest countries to deploy 5G in Europe.
“There is an important factor here – in the UK, spectrum release was among the earliest in Europe. Secondly, the UK operators are very innovation minded and are very open to new technologies. That is why for the last few years we have been working with almost all of the operators in the UK on innovations related to base stations and overall site solutions for the UK, he explained.
The GSMA recently called for a single, standardised, security certification process for 5G network equipment in Europe, as a way of stemming the US led witch-hunt against Chinese network equipment providers. Ding believes that the implementation of such a process would be a real boost for the European mobile sector.
“As a vendor we are very much in favour of the GSMA’s call for a single and unified certification process. On one hand, this can alleviate the 5G security concerns of the industry. On the other, it can improve the efficiency of the 5G certification process. From Huawei’s point of view we greatly support this call,” he said.
Healthy competition will streamline 5G rollout, particularly in Europe
Huawei has now won over 30 5G contracts across the world, 18 of which are in Europe. These 30 contract wins mean that Huawei has ore skin in the 5G game than either Ericsson or Nokia.
When asked about the state of the competitive landscape between the world’s key network equipment providers, Ding said that he believed Huawei had a strong edge.
“If you are asking about how big our 5G lead is, I’m not in a position to comment, but you should ask our customers. On 5G, Huawei is very far ahead of its competition.
“You have asked a very good question – where is Huawei in this competitive landscape? I firmly believe that our competitors now have perfectly usable 5G base stations, however usable is different from good. It’s like the difference between driving an everyday car and driving a Porsche – the Porsche can give you a much better experience. I strongly urge you to compare our products with the competition, particularly in terms of their performance, weight, size and their maintainability,” he said.
5G rollout will be a phased affair
From a global perspective, Ding believes that there will be similarities between the rollout of 5G networks and their 3G and 4G predecessors.
“We believe that there will be some similarities between the 5G market and the 3G and 4G markets – that is to say that the world will not deploy 5G in one go, but it will come in waves,” he said.
“So far we believe that Korea will see the first wave of deployment. China and Europe will be among the second wave. There is a big difference here in China because China has such a massive market – therefore the cost of 5G devices will drop much more rapidly than it did for 3G or 4G.
Globally speaking, the 5G market will grow much quicker than it did for 3G or 4G. At MWC this year, you may see that 5G phones are a more popular topic than 5G base stations. There may be more vendors releasing 5G phones than there were for 4G phones in 2011. The economy might have a slight impact on the speed of rollout but generally speaking I am very optimistic about 5G development.
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