5G dominated the airwaves as much as cable issues at the recent Anga Com show in Germany, but without that much clarity or insight. A few notable points did emerge, such as a tendency to point east towards China and other leading Asia Pac countries rather than west to North America in the context of 5G leadership. At the event’s CTO panel for example, Elmar Grasserhad from Sunrise, the second largest Swiss telco after Swisscom, argued that Europe was lagging behind the leading Asian countries not just over 5G mobile infrastructure but also the associated advances in what he called data-centric thinking.
He then praised his own country for enlightened roll out of 5G even though it will be dominated by Swisscom, with a pledge to reach almost 100% national coverage by the end of 2019. By contrast he reckoned that 5G roll out in larger neighboring countries, especially Germany and Italy, will be shackled for years by the exorbitant prices operators have had to pay for spectrum in national auctions.
The German auction results had yet to be announced when he spoke but more than confirmed his fears when it turned out the bidding raised €6.6 billion ($7.4 billion) in a competitive fight won by Deutsche Telekom, which spent €2.2 billion, Vodafone €1.9 billion, Telefónica €1.4 billion and Drillisch the United Internet AG telco subsidiary for €1.1 billion.
All four auction winners, especially Deutsche Telekom and Vodafone, immediately slammed the process for making spectrum much more expensive than other countries, arguing that it had left a bitter taste and less money over for investment in the infrastructure which would therefore be slower than it would have been. They lamented that lessons from past auctions had not been learned, or more likely forgotten perhaps, having in mind the infamous UK 3G auction of the year 2000 when bidding between BT Cellnet, One2One, Orange, Three, and Vodafone went ballistic. This raised £22 billion (around $30 billion) on licenses for airwaves that were virtually obsolete by the time the smartphone era was getting going, with infrastructure deployment constrained as the operators were financially compromised by the huge sums spent on the licenses. Since then bidding has been more constrained but most recently various 5G auctions have been mired in legal challenges as operators such as Vodafone contest the way spectrum is bundled, but that is another story.
The main point correctly spotlighted by Sunrise’s Grasserhad at Anga is the fragmented and disjointed approach to 5G spectrum and infrastructure not just on a pan European level but also within countries, with a combination of high spectrum prices and legal actions set to retard roll out.
Grasserhad barely mentioned the Huawei question but that was very much in the air at the event, again with a German focus as Chancellor Angela Merkel had recently supported the country’s BDI industry association in refusing to endorse the US government’s decision to blacklist Huawei. Citing national security concerns, Donald Trump had signed an executive order barring US imports of equipment produced by Huawei.
On this question we tend to support the EU and German position, which is not to ban a company just because of its country of origin in the absence of any evidence of security risk and to decide independently which should be allowed to participate in building 5G infrastructure. Although not entirely a red herring, security concerns are really a mask for fears over Huawei’s phenomenal advance and penetration into large numbers of technology sectors.
It is this scale that is itself a potential security risk but more a result of unintended consequences, according to a realistic and impartial assessment of the threat posed by Huawei conducted by Recorded Future, a threat intelligence firm with offices in Massachusetts and Gothenburg, Sweden. The analysis takes as its cue a seminal essay written in 2003 entitled, “Cybersecurity: The Cost of Monopoly,” in that case inspired by the Microsoft monoculture that had grown up around the Windows platform, which it argued aggregated global cybersecurity risk. Today, the monoculture has become more of data ownership, where a small number of companies own the personal and professional data of billions of people, the report argues. It suggests the enormous range of products and services offered by Huawei generates a nearly unimaginable amount of data for one company to possess. This ranges from the personal device level with smartphones and wearables, to the network level with routers, switches, and 5G base stations, onto the global level with undersea cables, fiber optic lines, and “safe city” surveillance systems integration.
This is all true but we cannot agree with that report’s assertion that Huawei offers a broader range of products and services than companies traditionally associated with the Western technology industry, including Facebook, Microsoft, and Apple, and therefore has more data, creating a perfect storm of unintended consequences waiting to happen. It should have mentioned Google and Amazon here since it is hard to argue that they have access to less sensitive consumer data than Huawei.
There are also big infrastructure companies in the west, although it is true these, thinking of Cisco, Nokia and Ericsson, have failed to match Huawei’s expansion across the whole IP and mobile ecosystem, which is precisely why there is so much controversy now over the pressure being exerted by Trump on European governments to block Huawei’s involvement in their 5G infrastructure.
It is telling here that Google, after initially supporting the Trump stance as a US-based company, has backtracked and found another nuance. It had become concerned over possible impact on Android’s global expansion of blocking Huawei platforms, especially smartphones, from having access to future updates. The fear is that this will stimulate Huawei’s alternative OS platform which has been in the wings as a contingency against such action by the US government. This has led Google to warn Trump that US national security could be compromised by going ahead with export restrictions on Huawei and has asked for exemption from any ban after all. Google argues a Huawei-modified version of Android, which the firm would be free to develop from the open source code, could be more vulnerable to hacking risks. So now Google is playing the security card in play for its own interests just like the US government.