China Mobile Hands 5G Work to Ericsson, Nokia Amid Trade War FearsChina Mobile Hands 5G Work to Ericsson, Nokia Amid Trade War Fears
Nordic vendors scoop up a decent share of core network expansion in the first set of 5G-related core contracts awarded by China Mobile, with Huawei predictably emerging as the big winner from this round.
June 17, 2019
Ericsson and Nokia are said to have landed 5G-related core network contracts with China Mobile, the world's biggest mobile operator, despite fears that trade tension between the US and China could hurt their prospects.
Predictably enough, the lion's share of work reportedly went to Huawei, the homegrown equipment maker that has become a punching bag for US hardliners in recent months. Huawei secured 49% of MME/SGSN (Mobility Management Entity/Serving GPRS Support Node) and 54% of SAE-GW/GGSN (System Architecture Evolution Gateway/Gateway GPRS Support Node) equipment work, according to a report from the South China Morning Post that cites a document published on China Mobile's website.
Ericsson picked up 34% of the MME/SGSN work and another 34% on the SAE-GW/GGSN side, with Nokia landing shares of 12% and 9% in those respective areas. ZTE, a smaller Chinese vendor, won just 5% of the MME work and 3% of SAE orders.
While these are not the more lucrative contracts related to the deployment of 5G radio access networks, the deals with China Mobile are worth about $2 billion in total, according to a report from China Daily.
Nokia referred to the contracts as a "4G upgrade" in comments sent to Light Reading: "We're aware of the result of this 4G LTE network upgrade project, and we are delighted to play an important part in helping China Mobile realize its 5G ambitions with the upcoming commercial deployments," said a spokesperson by email. "China is an important market for Nokia -- we have been operating there for 40 years and have always been a trusted, strategic partner."
The deals are for 4G upgrades because the initial 5G radio access network (RAN) technology being deployed is based on the non-standalone (NSA) specifications included as part of the 3GPP's Release 15 documentation, whereby the new RAN interacts with the existing 4G evolved packet core (EPC). The specifications for the 5G core are still a work in progress as part of the 3GPP's Release 16 specifications, which are due to be released in the first half of 2020.
Light Reading was still awaiting a comment from Ericsson at the time of publication.
The deals would appear to show there has not been a knee-jerk response by China's government to the latest moves against Huawei. In the last few weeks, US authorities have added the Chinese vendor's name to a trade blacklist blocking commercial transactions with US companies including vital components and software suppliers. Senior US politicians have also continued to push for bans on Huawei in other countries, arguing its products may include "backdoors" for Chinese government spies.
Some experts had subsequently voiced concern that Chinese officials might respond by excluding Ericsson and Nokia from their own 5G market, although others pointed out this would restrict choice and drive up costs for Chinese operators.
The outcome may also give Ericsson bragging rights over Nokia as the two vendors battle for contracts in the 5G era. Any indication that Ericsson is winning a bigger share of core network deals with China Telecom and China Unicom, the other two big Chinese operators, would be a worry for Nokia, which has staked its reputation on its "end-to-end" capabilities and software expertise outside the radio access networks area.
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