Will Huawei Be The Tech Giant of The World That It Is Now?

2019-06-28

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The US has been encouraging allies to restrict Huawei from the telecommunications networks. Security officials say that they think Chinese company can spy or force to shut down the countries network. So far, the allies of the US, Australia and New Zealand have blocked Huawei in their 5G rollout. But some European countries are hesitating in making a decision saying Huawei equipment is much affordable than other companies, plus there is no public evidence that Huawei has or can use its equipment to eavesdrop at national secrets. But even if allied countries bent to the pressure of the US it may be nearly impossible to extract Huawei from countries network where it’s already in work.

 

Here is Why

Huawei dominates 4G network outselling every major seller of the networking equipment. Countries are rushing to test the rollout of 5G network seeing that the potential payout is immense. The first phase, for many carriers will be to upgrade existing 4G networks. That means attaching 5G components to legacy infrastructure, and guess where much of that legacy hardware comes from ‘Huawei”. The first three quarters of 2018 the Chinese company had a 28% share of the global telecom equipment market, Nokia and Ericsson are falling behind by 17 and 13.4 percent consecutively.

 

Take a Close Look of Huawei’s Present in Each Region

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Outside of North America the tech juggernaut outpaces its Nordic rivals in every move. So, to take Huawei out of the network whether it’s 4G or 5G countries first have to replace existing infrastructure provided by the company and that’s a big chunk of the time and money.

 

The High Price of Replacement

Carriers have opposed banning Huawei. Pointing to its superior hardware and lower prices. Take a small US rural carrier as an example. James Valley Telecommunications: All of its wireless core network and radio are from Huawei. It says it will cost around 5000 USD per subscriber if it has to replace all of its current 4G equipment, giving that it is currently servicing about 10.000 rural customers then the network replacement cost would be 50 million USD and it goes beyond just the money. Tolaga research a wireless technology research firm says a typical network replacement cycle takes 5 to 10 years to complete. So even if the US were to ban Huawei in 5G, carriers can still expect to Huawei won’t be out of the network immediately.

 

Huawei’s Superior Technology

Outside of Huawei, Nokia and Ericsson aren’t getting much favor among European carriers. Wireless providers say they have been slow to release equipment as advance as Huawei. Some of Huawei’s 5G technology can be up to a year ahead of its western rivals according to some senior executives.

 

Huawei 5G stands from its massive research and development budget. In 2017 Huawei spent 13 billion USD in R&D. More than its chief rivals combined. The company now owns the most numbers of standard essential 5G patents in the world which is 1529, 5G patents. Some of those are fundamental building blocks of 5G. They include one highly priced technique called “Polar Coding”, a method for correcting errors in data transmission. Regardless of whether a country chooses to block Huawei there is no way to avoid paying royalties to license its 5G technology. With Huawei at the center of the 5G race Govt’ in carriers aren’t ready to abandon it yet. Unlike in the US officials in Germany and the UK still believe they can allow some Huawei equipment in their countries. If more countries follow advice of the US knocking out Huawei won’t be easy.

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China Invest the Places Where the West Left Behind

Huawei is dominant in its market share on the African continent. Their market share also covers large parts of the Middle East as well as South America. If you look at all the places where Huawei have invested and deployed, you'll see one thing they all share: places where America have decided not to invest.

 

For example, many African countries bypassed 3G and went straight from 2G to 4G in anticipation of 5G. Many of these deals are not transparent but are done in the backrooms and are definitely not subject to public scrutiny, for better or for worse. However, these countries are tech starved and when the west decided not to invest because it's "scary", the Chinese government and many Chinese companies decided it was worth the risk and have decided to expand into these places that the west have left behind.

 

So, while the west twiddles its thumbs and slows the deployment of 5G, other countries will inevitably be leaving the west in their dust and be pushing forward into 5G and beyond. Since Huawei make cheap phones and a large amount of that vertical business, who do you think telecoms and countries want to deal when it comes to negotiating contracts? Do you want to deal with multiple vendors with different timelines and schedules and languages or do you just want to deal with one company that can give you everything and are willing to put down other essential infrastructures like roads, hospitals, and football stadiums?

 

When the Chinese invest in Africa, they literally are bringing more than just the kitchen sink!!!