Dwindling band of powerbrokers
But costs are perhaps not the primary concern for today's operators. As the likes of Alcatel, Lucent, Motorola and Nortel have disappeared, service providers have become increasingly dependent on a dwindling band of international powerbrokers. Problems for any one of these companies could be massively disruptive, as the Huawei saga demonstrates. A formal ban on Chinese vendors would leave most service providers at the mercy of just two players: Ericsson and Nokia.
Neither is in the best shape. Ignoring its corruption scandal, Ericsson has recovered from its 2016 slump, when its very survival seemed on the line, but only by ditching assets and employees to focus almost entirely on mobile infrastructure. It lacks a convincing growth story outside 5G, which might not deliver the boost it expects. Nokia has a much broader range of interests but racked up a €545 million ($608 million) net loss for the first nine months of 2019. It has recently slashed profitability targets.
This situation at least partly explains the surge of interest in open radio access network (RAN) technology. Smaller mobile network vendors such as Altiostar, Mavenir and Parallel Wireless are touting products that use open interfaces and common, off-the-shelf hardware as an alternative to traditional gear. And some big operators are eager to bite. On a mission to find new suppliers, Vodafone is carrying out European trials of open RAN technology. If these go well, open RAN seems likely to play some part on the production side, with Vodafone's entire European network currently up for tender. Telefónica is already using open RAN in some commercial networks.
But in a mass-market sense, open RAN is still not ready for prime time, and it could not fill the void left by a banned Huawei. Software developed by some of the main contenders will not yet work on general purpose x86 servers. The market for "white box" radios remains immature. And open RAN still lags traditional products on technical performance, according to analysts at Dell'Oro and Heavy Reading, two market-research firms. If all this weren't enough, multivendor open RAN networks could bring all sorts of operational complexity for service providers, driving up day-to-day costs.
Johnson is therefore right to ask questions about Huawei alternatives. While the debate about security grinds on, without generating any certainties, the UK's operators will have conveyed to the new government just how much worse off they would be in a Huawei-free market. The prime minister's off-the-cuff remarks suggest he has been listening: A comprehensive ban on the controversial Chinese company now seems highly unlikely.
While anything remains possible, the likeliest scenario is that UK authorities will plump for the compromise aired last year, shutting Chinese vendors out of the 5G "core," a particularly sensitive part of the network, but allowing it to sell radio equipment, which accounts for most of the 5G investment. This would cause zero disruption for UK operators, which have either avoided using Chinese core network products or been switching to alternatives. For that reason, it would not seriously upset Chinese authorities, which recently warned that a full Huawei ban would damage relations with the UK.
The UK government probably thinks it can persuade the Trump administration this compromise makes sense. It will not be easy while the US continues to wage war against Huawei, and there is much at stake. Some experts insist distinguishing between core and radio will become harder in future 5G networks. Upsetting Trump could imperil a future trade agreement with the US. And for Huawei's fiercest US enemies, the UK's refusal to ban Huawei would set a dangerous international precedent. After all, if the US cannot win over one of its strongest allies, what hope does it have elsewhere?
- Letting Huawei Into 5G Is 'Madness,' US Warns UK – Reports
- China's UK Ambassador Sounds Warning on Huawei
- Telecom Industry Rift Widens Over Key 5G Security Issue
- Vodafone CEO: Huawei Ban Equals Two-Year 5G Delay
- Short on 5G Options, Vodafone Gets Set for 150K-Site Shake-Up
- Nokia's 5G Chip Choice Leaves It Exposed
- Ericsson Plots China Invasion as Viking Raids Bring Booty
— Iain Morris, International Editor, Light Reading