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9 May 2019

Huawei TV denial is actually confirmation

Huawei has hardly been out of the news lately, even this week when denying it was launching an 8K-capable TV designed for 5G video reception. The denial was that Huawei had no intention of manufacturing a conventional TV with the added caveat that this did not rule out big screen terminals. Coupled with Huawei’s declared focus on 5G for new use cases, including the connected car for delivery of infotainment services at high resolution, this adds up to a move towards video delivery.

After all, a large screen has little other purpose. As for 8K, Huawei demonstrated livestreaming at that format on Vodafone Spain’s 5G network at Mobile World Congress 2019, highlighting its strategy of hitting the ground running with premium use cases for 5G.

Huawei could well go down as a case study on how to handle major controversy and adversity in the wake of the global fears over its potential to hijack national security at the behest of the Chinese government. This has had significant political repercussions in at least three major countries, notably the US of course where it has affected the wider trade war with China. It was Canada though where the first eruption occurred where Huawei’s Chief Financial Officer, Meng Wanzhou, also known as Sabrina Meng and Cathy Meng, was arrested on 1 December 2018 in Vancouver, seemingly at the request of the US Justice Department.

While that case was still ongoing, the UK then came into the spotlight last week when defense secretary Gavin Williamson was sacked after an inquiry into a leak from a top-level National Security Council meeting. The leak suggested that Prime Minister Theresa May had overruled her cabinet by arguing there was no security risk deploying Huawei equipment within the country’s forthcoming 5G infrastructure.

Huawei has decided that the best defense to these charges is to come out fighting and use the publicity to turn the situation around by presenting itself as a champion of security. Huawei’s founder and CEO Ren Zhengfei took tongue in cheek by thanking the US for giving its products and technologies such a high profile worldwide. He argues the US had banned his products in government contracts out of fear that Huawei would otherwise shut out US rivals through the superiority of its technology. He drew attention to European divisions over the issue as further evidence that many saw Huawei’s platform as superior and likely to give their 5G networks an edge.

It is certainly true that Huawei has benefited from its intense focus on 5G and particularly the expertise and resources it has amassed through its dominant position in its domestic Chinese market.

Feedback from major operators suggests it is not so much Huawei’s technology but its prowess at upgrading existing 4G infrastructure to 5G that sets it apart from its principle European rivals Ericsson and Nokia, besides China’s other major player ZTE.

Huawei is just faster and more efficient at upgrading and testing the new RAN (Radio Access Network) equipment installed on rooftops or other elevated positions, which add up to major cost and time savings.

In Europe alone there about 370,000 4G sites that will need upgrading and that is not all because 5G network will be denser to ensure ubiquitous coverage at the higher frequencies being added for services such as Ultra HD video. The 5G air interface defined by 3GPP, otherwise known as New Radio (NR), is subdivided into two frequency bands, FR1 below 6 GHz and FR2 or mm Wave above 24 GHz and extending theoretically up to 300 GHz at which the wavelength actually is 1mm.

So, it boils down partly to logistics and as the old adage goes, Huawei has the staff. But while the US does not even compete with Huawei over 5G at the RAN level, being confined to backbone roles where Cisco in particular supplies routers and switches, its big tech players are dominant in other areas with one emerging common theme, security/privacy.

Apple was first to play the security card in an attempt to distance itself from Google and more latterly Facebook as the company that put privacy ahead of short-term commercial gain.

Apple deployed a number of features, the most notable being differential privacy for anonymization, where random bits were added to personal data on the device before being uploaded for analytics. This prevented Apple from being able to link the data with a device or individual user and yet enabled the information to be recovered in full once aggregated with data from other users, because the random bits would cancel out statistically when the numbers were large enough.

Apple also claimed to have adopted a privacy culture and where possible would confine the most sensitive data to the device itself and avoid bringing it up to the cloud at all. Of course, this stance has encouraged its rivals to catch up and also exposed the company to charges of hypocrisy.

Rivals have been quick to point out for example that Apple sets up the web browser Safari that comes with every iPhone to route web searches through Google by default. Google paid Apple around $9 billion in 2018 set to increase further this year, contradicting the idea of putting privacy before profit.

Then only this week Google CEO Sundar Pichai decided to play the security card itself by arguing that Apple customers are being forced to pay through the nose for privacy which should be there by right. Pichai wrote in the New York Times that “privacy cannot be a luxury good offered only to people who can afford to buy premium products and services.” Google had just unveiled a new smartphone starting at $399 compared to Apple’s latest budget model from $749.

This comes at a time when Apple has indeed been feeling pricing pressure on the iPhone. Overall, we come to a split verdict over whether Apple’s privacy stance has benefited the bottom line because its recent results are good in parts.

In posting quarterly revenue of $58 billion for its second quarter of fiscal 2019, down 5% from the same quarter a year earlier, Apple saw iPhone sales off 15% in revenue terms, while services continued to gain. It hopes Apple TV Plus being launched in the Fall of 2019 will accelerate the rise in services, but it is unlikely that the company will enjoy any further privacy bounce. Its rivals seem to have acted effectively to close that window of opportunity.