The award for last year's most counterintuitive deal definitely goes to KPN of the Netherlands. As other service providers were ejecting Huawei, worried about a US-led campaign against the controversial Chinese vendor, the Dutch operator dropped Ericsson like a whiffy rollmop. Showing its rebellious side, KPN plumped for Huawei instead.

In retrospect, it might also win the award for last year's most regrettable deal, one that could even cost the decision makers their jobs. If Huawei found itself in a bear pit last year, someone has now kicked the bears and put hot sauce in their food. A tightening up of US sanctions against the firm could drive it out of business in just a year, according to analysts at New Street Research. Outside China, only masochistic Huawei customers are not carrying out a risk assessment.

So far, the main beneficiary has been Ericsson. In at least five confirmed cases, and two that are probable in Canada, the Swedish vendor has already become a substitute for Huawei in either the radio access or core network. Notwithstanding KPN's trend-bucking rejection, it has staged a technological comeback at the dawn of 5G and is highly regarded by analysts and service providers for the quality of its goods.

On the radio side, it has also benefited from a lack of alternatives. After years of consolidation, about 80% of the market for radio access networks (RANs) is controlled by just three players: Huawei, Ericsson and Nokia. Open RAN, a new crop of technologies promising more competition and lower costs, is still too immature to mount a serious challenge. Samsung, a South Korean vendor, lacks muscle in important markets. ZTE, like Huawei, is cursed by its Chinese heritage.

A recent radio cock-up and supplier problems at Nokia have helped Ericsson, too. The Finnish vendor mistakenly opted for programmable components when it started to build its 5G products, instead of the application-specific stuff preferred by Ericsson and Huawei. While promising flexibility, these programmable chips are expensive and have torn into Nokia's profit margins. Product delays at a major supplier – thought to be Intel – have also hurt the Finnish firm. Desperate to fix the problem, it does not expect to complete the transition to more profitable 5G products for another two and a half years.

Many service providers had previously balked at swapping Huawei for Ericsson. Doing so would delay 5G in Europe by two years, said Vodafone CEO Nick Read in 2019. It would also cost billions, said other stakeholders, including Huawei. Incompatibility between vendors – a problem open RAN aims to fix – will force operators to phase Huawei out of 4G if they are using a different 5G supplier.

Yet the costs of not replacing Huawei could be far greater if it ends up in China's intensive care unit, unable to procure vital components from Taiwan's TSMC because of US measures. Amid the coronavirus pandemic, China and Chinese companies are well out of favor in the West. And delays to 5G spectrum auctions, triggered by the virus lockdowns, give service providers time to reconsider their supplier choices.

Previously reliant on Huawei, two of Canada's operators this week announced deals that could eventually terminate their relationships with the Chinese company. Unveiling Ericsson as a 5G vendor, Bell Canada told Light Reading it would not be working on the new technology with Huawei, which has previously supplied 4G equipment, unless authorities explicitly permit it. "Huawei has been a reliable and innovative partner in the past and we would consider working with them in 5G if the federal government allows their participation," said a spokesperson for the operator.

Rival Telus, similarly, has named both Ericsson and Nokia as 5G vendors. Its announcement came just weeks after Doug French, the operator's chief financial officer, said it would launch a 5G service later this year on Huawei equipment. Has this now been ruled out? Ibrahim Gedeon, the operator's chief technology officer, declined to comment when approached by Light Reading. But just like Bell Canada, Telus will also have to consider government restrictions as well as Huawei's vulnerability to US trade sanctions.

Core attractions
Shifts are happening in Europe, too. Telefónica Deutschland announced a contract with Ericsson for its core, the cockpit of the network that could bring down the entire system if the wrong sorts gain entry. In 4G, Huawei has been the pilot, as it has for Germany's other service providers. But those companies are also sealing the door to Chinese vendors.

Timotheus Höttges, the boss of Deutsche Telekom, says he is working toward a "Chinese-free core network infrastructure." Vodafone is spending €200 million ($224 million) to extract Huawei from its core networks throughout Europe. Now likely to be seen as a high-risk vendor by regional authorities, Huawei can possibly bid adieu to its core network business throughout Europe. It already has that unwelcome, high-risk designation in the UK, where BT is similarly substituting Ericsson for Huawei in the mobile core.

Worldwide, the Swedish and Chinese firms account for slightly more than half of a mobile core market worth about $8 billion annually, according to market-research firm Dell'Oro. But as an alternative to Huawei, Ericsson is becoming a less obvious choice here than in the RAN. Competition is mounting fast, and security concerns could even drive operators toward local players. In March, shrinking IT specialist HPE announced its entry into the 5G core market, and it was followed this month by Oracle, which hopes to capitalize on the growing enthusiasm for running core network functions in the cloud. Now Japan's NEC has joined the party, naming local firm Rakuten as a high-profile customer. Many service providers will pray the RAN sector can become just as competitive.

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— Iain Morris, International Editor, Light Reading