5G players dance for US government's anti-Huawei money
President Trump is expected to sign legislation this week that would allocate up to $1 billion to rip Huawei's equipment out of rural US networks and replace it with products from "trusted" suppliers.
And vendors ranging from Nokia to Ericsson to Mavenir to COMSovereign are falling over themselves to convince regulators that they're the "trusted" vendor that can handle the job – and get all that cash.
"Through its strategic acquisitions and organic research and development efforts, COMSovereign has become a leading pure-play American communications provider capable of actively deploying wireless microwave, 4G, LTE Advanced, and 5G-NR telecommunications applications," the company wrote in a recent FCC filing, adding that its affiliates develop "much of their own hardware and software in proprietary North American facilities."
(It's worth noting that COMSovereign just last month acquired Virtual Network Communications for its virtualized LTE core and LTE small cells, among other assets.)
Ericsson too sought to play up its US bona fides: "Since 2018, we have been proactively executing a regionalization strategy for our supply chain, to place manufacturing and development as close to the customer market as possible in order to mitigate potential risks or regional disruptions and reduce dependence on one supply site or vendor," the vendor's North American security chief, Jason Boswell, said in testimony Wednesday during a Senate hearing on the security of the 5G supply chain. "In general, all active 'intelligent' 3PP electronics (e.g., digital semiconductors, silicon based technology, application-specific integrated circuits (ASICs), field programmable gate arrays (FPGAs), etc.) for the Ericsson Radio System (ERS) are predominantly sourced from US companies, with a minor part from Japanese, Korean, and European companies."
To highlight its blooming US operations, Ericsson issued a press release at almost the same time the Senate hearing started announcing that its new US smart factory in Lewisville, Texas, is now operational and "producing 5G base stations to enable rapid 5G deployments."
But that wasn't quite enough for US Sen. Cory Gardner, who asked Ericsson's Boswell about the company's research-and-development operations that are located in China.
Boswell responded that all of Ericsson's software development is funneled into its Swedish headquarters, where it is verified and cryptographically signed as secure.
During Wednesday's Senate hearing, other vendors focused on how American they are: "Intel Corporation is a US semiconductor manufacturer headquartered in Santa Clara, California, that employs over 100,000 people globally, with more than half of those in the United States. Intel is the largest global semiconductor supplier, with the majority of our advanced manufacturing and research and development (R&D) is conducted in the United States," testified Intel's Asha Keddy.
Blocking Chinese espionage
At issue is Congressional legislation first introduced less than a year ago that would pay the rural wireless operators across the US – including United TelCom, SI Wireless, Viaero, James Valley Telecommunications (JVT), NE Colorado Cellular, United Telephone Association, Nemont Telephone Cooperative, Union Telephone Company and others – to get rid of the Huawei base stations and antennas they purchased for 4G. The legislation dovetails with a similar rip-and-replace program proposed last year by the FCC. (Bigger US wireless network operators like Verizon and AT&T have eschewed Huawei network equipment for years, a stance that was recently extended to the Chinese vendor's phones.)
Driving such efforts are worries – promulgated for years by US government officials – that Huawei's equipment can be used for spying by the Chinese government. Huawei disputes those allegations.
"Ericsson the leader in 5G technology? Really? How about periodic public bake-offs to demonstrate what is best technology? Need more transparency!!" tweeted Huawei's chief US security officer Andy Purdy on Wednesday, who said he sat in the front row of the Senate hearing where Intel, Ericsson and Nokia executives testified. "Hope they will invite us to respond!!"
But Huawei's denials have fallen on deaf ears. The so-called "rip and replace" bills moved through the House and the Senate during Trump's impeachment trial last year, with the House approving the legislation by voice vote on December 16, 2019, and the Senate passing it on February 27, 2020. Trump is widely expected to sign the legislation into law as early as this week.
While the legislation would provide up to $1 billion to get rid of Huawei equipment in the US, it's not clear on the details. As the Rural Wireless Association (RWA) recently pointed out, "while Congress has authorized $1 billion it still must appropriate the funds and that this could take some additional time."
The RWA represents many of the rural US network operators that use Huawei equipment.
Further, the legislation calls on the FCC to "develop a list of suggested replacements of both physical and virtual communications equipment, application and management software, and services or categories of replacements of both physical and virtual communications equipment, application and management software and services."
Thus, it's still unclear whether Ericsson, Nokia or COMSovereign are eligible for that $1 billion.
In Senate testimony Wednesday, Nokia's CTO Michael Murphy argued that the FCC shouldn't require operators to replace Huawei's equipment with more 4G equipment; instead, the money should be used for a 5G upgrade. "This would ... potentially help accelerate 5G in rural communities, thus supporting the US drive towards nationwide 5G leadership. In short, there are no downsides," he said.
Nokia's Murphy also cautioned lawmakers against requiring vendors to support "open" technologies like open RAN. "The reality is that fully compliant open interfaces as specified by the ORAN Alliance, the most relevant in this context, have not been deployed anywhere in the world yet. These are new grounds for the industry. In fact, it is uncertain whether the most critical interface specified by ORAN will be deployed widely, as alternatives are already being proposed by several contributing, significant members," he said.
But upstart rival Mavenir disagreed.
"The adoption of OpenRAN will disrupt what has become a duopolistic situation in the United States born from massive consolidation among vendors. This consolidation has led to Ericsson and Nokia controlling the lion's share of mobile communications network infrastructure deployed in the United States," the company wrote in recent FCC filings. "By requiring OpenRAN interfaces, the Commission will allow greater technical innovation, price competition, and new service and business models to develop, while allowing rural MNOs to reduce both capital and operational expenses."
While it may seem obvious, it's worth pointing out that Mavenir has positioned its business around open RAN products while Nokia has not.
One battle in a bigger war
Importantly, the Huawei rip-and-replace legislation – which essentially amounts to a government-funded wireless network in the rural US – is only one element in a much wider fight between the US and China. The two countries remain entwined in a trade war that ranges from cybersecurity to the price of steel. And as part of efforts to prevent the spread of equipment that could be used for spying, US officials have urged other countries to also ban Huawei equipment, with varying levels of success.
The UK, for its part, sought a compromise action in which it is limiting Huawei equipment but not banning it outright – a move some have suggested is a nod to the UK's separation from the European Union and its subsequent need to retain trading relationships with both China and the US.
Regardless, some US lawmakers are working to punish the UK because of its compromise on Huawei. According to Bloomberg, a Republican Senator from Arkansas is planning legislation that would remove the UK from the list of countries that can easily invest directly into US real estate and other areas.
Another element in the US government's campaign against Huawei centers on funding US-based alternatives to the vendor. Indeed, newly introduced legislation would allocate a separate $1 billion for that effort, which in part involves open source software and open RAN technology.
Not surprisingly, AT&T and Verizon have voiced support for that legislation. "The bill recognizes that greater virtualization, network disaggregation, and a transition to more open network architectures can catalyze greater competition with Huawei globally – while playing to longstanding US strengths in software management, vendor diversity and network virtualization," wrote AT&T and Verizon in a letter to the bill's sponsor, according to Multichannel News.
But even all those actions, incredible as they are, don't cover the breadth of efforts percolating among US lawmakers to block Huawei. During the Senate's hearing Wednesday, Alaska Sen. Dan Sullivan discussed Huawei's recent patent-infringement lawsuit against Verizon, and asked whether Verizon could file a similar case against Huawei in China. "If we can't do it there, you shouldn't be able to do it here," he said, wondering aloud whether Huawei should be legally prevented from filing such lawsuits against US companies. He suggested such legal proceedings could provide Huawei with access to proprietary technology through the discovery process.
To be clear, the FCC – including the agency's Communications Security, Reliability, and Interoperability Council (CSRIC) – isn't the only entity looking into ways to obtain secure access to 5G equipment. ATIS recently formed its 5G Supply Chain Working Group while other organizations include the Federal Acquisition Security Council for federal procurement and the Department of Homeland Security's Information and Communications Technology (ICT) Supply Chain Risk Management (SCRM) Task Force.