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Huawei 5G products not hurt by US sanctions – sources
Measures against China's biggest network equipment vendor have not had a noticeable impact on the quality of its products, Light Reading has learned.
It's officially go-time for 5G in China, with the government issuing commercial 5G licenses a year ahead of its initial schedule.
The action paves the way for China to quickly grow into the world's biggest 5G market, eclipsing the US and other countries in terms of geographic 5G coverage, 5G spending and, eventually, 5G customers. That's important considering US officials, including President Trump, continue to warn that the US is in a "race" with China to 5G and the winner of that race will reap the economic rewards of 5G innovations.
In its 5G announcement this week, the Chinese government cited forecasts from the GSMA that predicted China would grow into the world's largest 5G market by 2025, with 460 million 5G users. The government also cited data from the China Academy of Information and Communications Technology predicting that Chinese wireless network operators would spend up to $223 billion between 2020 and 2025 building 5G networks.
"5G licensing will be a significant boost to the domestic economy, as it will drive the transformation and upgrading of the real economy, promote the application of 5G to various fields including manufacturing and agriculture, and boost digital economic growth," said Wang Zhiqin, head of the IMT2020 (5G) Promotion Group, a team established by the Chinese government to accelerate the development of 5G in China, in a statement from China's Ministry of Industry and Information Technology (MIIT), the agency charged with issuing 5G licenses.
There were several surprises in China's 5G announcement:
Instead of merging some of its state-owned mobile operators from three to two, as some had expected, the government increased the number of 5G operators to four. China's MIIT granted 5G licenses to existing operators China Mobile, China Telecom and China Unicom, as well as state-owned China Broadcasting Network Corp. "Issuing licenses for China Broadcasting Network Corp, a new fourth 5G carrier, will help build a next-generation communication network," Wang said in a statement. "Granting four 5G licenses is conducive to fostering rational competition and investment in the market."
China's Minister of Industry and Information Technology Miao Wei said in a statement that "China welcomes foreign companies to actively participate in the construction of China's 5G market and share the benefits generated in the market." China Unicom specifically noted it will "continue to welcome foreign companies to participate in domestic 5G construction." Those statements appear geared to give China the moral upper hand considering the US government has mostly banned China's Huawei from supplying equipment to US operators.
According to Huawei officials speaking to the WSJ, China's 5G rollout may be much more egalitarian than 5G buildouts in the US and other countries because operators in China are controlled by the Chinese government will build out 5G coverage to remote areas as well as urban areas. In markets like the US, operators often only focus construction on urban areas where profits can be more easily made.
One of the big questions still hanging over China's 5G push is which wireless equipment companies will reap the rewards of Chinese operators' spending. Huawei -- which is based in China and is the world's largest supplier of wireless networking equipment by revenues -- is an obvious candidate. According to the South China Morning Post, Huawei currently commands 50% of the Chinese wireless network equipment market.
Citing unnamed sources, the publication reported that China Mobile -- China's biggest telecom company with an incredible 722.6 million customers -- may award the bulk of its 5G business to domestic suppliers Huawei and ZTE, while reserving 5% of its business for Sweden's Ericsson and Finland's Nokia.
Huawei, of course, is caught in the middle of a US-China trade war and currently is subject to a Trump administration prohibition preventing US companies from doing business with the Chinese vendor. That could create serious problems for Huawei as it works to obtain components from US suppliers for its 5G equipment.
According to the WSJ, Huawei stockpiled 5G equipment for Chinese wireless network operators in anticipation of that ban that should last through the end of 2019, but it's unclear what the company might do if the ban stretches into 2020.
"We remain concerned that if the US export ban on Huawei remains in place for some time, and is even extended to other Chinese tech companies, it will be very difficult for China to build 5G in scale," Wall Street research firm Jefferies wrote in a note to investors and reported by Reuters. "The action by China to accelerate 5G licensing does not remove or alleviate this risk."
China's MIIT didn't specify which spectrum bands would be used for the commercial rollout of 5G in the country, but Chinese officials previously issued 100MHz in the 3.5MHz band to China Telecom and China Unicom, and they issued fully 260MHz of spectrum in the 2.6GHz and 4.8GHz bands to China Mobile for 5G testing.
— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano
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