October 24, 2013
Huawei has displaced Ericsson as TDC's long-term mobile network technology and services partner following a security vetting process by Denmark's national intelligence agency.
But now further details have emerged, including the value of the six-year deal -- US$700 million -- and the security hurdles over which the Chinese vendor had to jump: that Huawei landed the contract is a symbolic vote of confidence in the Chinese vendor from a western European incumbent.
Under the deal, TDC has turned over to Huawei the management and operation of its 2G, 3G, and 4G networks. It breaks new ground in measuring the vendor on customer experience metrics rather than just the traditional network performance targets.
But TDC group chief executive Carsten Dilling said it had gone ahead only after close scrutiny by the Danish Security and Intelligence Service, known as PET.
"We have invited them in [and] they have full transparency on everything we have agreed," Dilling told a media briefing in Shenzhen today.
As the incumbent, and with 70 percent of Denmark's business and government institutions as customers, security was a "substantial responsibility" for TDC. "I was not in a position to make this decision without involving the Danish authorities," stated the CEO. "We have had a very intensive process with the authorities investigating whether it was a good decision to go with Huawei equipment."
Dilling said the government agents were "hard core on security issues" and had introduced new procedures, which were now a part of the Huawei contract. "On the TDC side we feel that we learn a lot by having the intelligence services agency in, and we will keep them in as we are running this partnership."
Dilling said the decision to turn over "the most strategic part of our infrastructure" to Huawei was "the biggest decision I can make as CEO."
In addition to calling in security officials, TDC also sought the views of key customers about contracting out to Huawei.
Management of TDC's mobile network has been outsourced to Ericsson since 2008. Dilling said Huawei was chosen ahead of the Swedish firm this time because it is "a couple of steps further in guarantees."
Huawei has committed to ensuring that TDC's network will have the best user experience in the market, the best operational performance and the best network coverage. The contract sets specific indicators for each.
Dilling said Huawei had also won over his team by their expertise and technology quality, which was "on a par with the best in the world."
However, price was not the main factor: In fact, Huawei's bid was "quite expensive," added the CEO.
Ryan Ding, CEO of Huawei's carrier networks group, said Huawei senior executives had been "excited" by the contract because of its emphasis on customer experience.
Until now, the industry had focused on infrastructure quality, but with the TDC contract "we are looking more and more into the end-user."
Ding said Huawei would employ about 250 staff to service the contract and that it would create 100 new jobs in Denmark.
No TDC staff positions will be cut, but a number of Ericsson employees would be transferred to Huawei, Dilling said.
— Robert Clark, contributing editor, special to Light Reading
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