Nokia to finally boot Huawei out of Deutsche Telekom 5G sitesNokia to finally boot Huawei out of Deutsche Telekom 5G sites

After being unceremoniously dumped for Ericsson several years ago, Nokia is to make what seems like an overdue return to Deutsche Telekom's radio access network (RAN) in Germany. Its comeback, moreover, is at the expense of Huawei, the Chinese vendor deemed "high risk" by European Union (EU) authorities but used across about two-thirds of Deutsche Telekom's RAN.

A deal to replace Huawei at about 3,000 sites was first reported by Light Reading in February, after an interview with Tommi Uitto, the head of Nokia's mobile networks business group. But the update was followed by apparent inactivity. Far from replacing Huawei, Deutsche Telekom seemed more interested in lobbying to retain it. Government rules announced in the summer have made that possible, provided telcos switch out part of Huawei's management system. For several months, it seemed as if Nokia had jumped the gun with its original announcement.

But Deutsche Telekom has now directly confirmed the rollout is finally going ahead – something it did not do in February – and will involve the substitution of the Finnish vendor for the Chinese one. Judging by slides Deutsche Telekom shared at its recent capital markets day, the actual rollout covers more than 10% of the operator's network footprint in Germany and will therefore reduce Huawei's presence by roughly 15%. But there is an expectation a much bigger number of Huawei sites may eventually be up for grabs. "Why give somebody just 3,000?" said Uitto back in February.

Backdoors and basestations

The timing of the update, weeks before the Huawei-bashing Donald Trump returns to the White House, is curious, and there is known to be EU dissatisfaction with the German government's proposed Huawei workaround. In conformity with that, Deutsche Telekom has apparently been working on its own management system for use with Huawei's RAN. Yet it has admitted this involves considerable effort, and Huawei would need to open its RAN interfaces to an external management system for the government plan to prove feasible – something the Chinese vendor, still opposed to the concept of "open RAN," may be unwilling to do.

Critics of the plan, meanwhile, have continued to point out that it does not address the security concerns aired about Huawei. The Chinese company would still, theoretically, be able to insert "backdoors" in its basestation software and use those for skulduggery at the behest of the Chinese government. Evidence of such backdoors, it should be noted, has never been uncovered, and Huawei – which declined to comment on today's news – has long denied having close links to China's authorities.

Yet ripping out Huawei equipment and replacing that with gear from another supplier obviously carries a cost. Barclays, a bank, has estimated in the past that replacing all of Huawei's products in the Deutsche Telekom RAN would cost about €1.1 billion (US$1.2 billion). On that basis, swapping out 15% of it would gobble about €165 million ($173 million). As small as that sounds in the bigger scheme, the deal with Nokia might have previously been held up by negotiations over how much of the burden the Finnish company will shoulder. Initial swap-outs are not typically very good for equipment vendor margins and the profits usually materialize in later-stage work.

A more comprehensive removal job would clearly be difficult to manage, with 5G technology from Deutsche Telekom now available to about 98% of the German population. It would also bring geopolitical risk for the government, which counts China as Germany's largest trading partner. Last year, Germany's Federal Statistical Office put the value of all trade with China (exports and imports) at €254.5 billion ($267.6 billion). Any Chinese backlash could potentially hurt German car companies and makers of machine tools.

Open RAN credentials

Whatever the financial implications, this is an important deal for Nokia, which appeared to serve about a third of Deutsche Telekom's RAN in the pre-5G era before it was replaced by Ericsson. Its return will see it contribute purpose-built 5G baseband technology as well as radios for massive MIMO, an advanced 5G system.

The deal should also help burnish Nokia's credentials in open RAN, designed to help telcos pair one vendor's baseband with another's radios. Outside the massive MIMO footprint, Japan's Fujitsu is providing midband 5G radios, which will be linked to Nokia's baseband using interfaces from the O-RAN Alliance, the telco-led group in charge of specifications.

Nokia is also stumping up MantaRay, its own network management system. What's currently unclear is whether this will sit beneath the management system Deutsche Telekom has been developing internally for Huawei's RAN, or even eclipse it. The slides presented at its capital markets day suggested the telco wanted a single platform to handle multiple vendors. And Deutsche Telekom now has three RAN vendors to manage in its domestic network.

Then again, after today's update, the odds will inevitably have shortened on Huawei's complete disappearance from Deutsche Telekom's German RAN by 2029 – when operators are required by government rules to have replaced its management system. If Telefónica and Vodafone, Deutsche Telekom's Huawei-using competitors, were to have similar plans, the Chinese vendor would be facing eviction from Europe's biggest economy this decade.