For all the reasons set out above, the coming year will be a critical one for Huawei, especially in Europe, where it needs to lobby governments not to impose US-style restrictions, and to consolidate its position with operators.
The latter will be essential to drive growth in the Chinese firm’s second largest market, western Europe. It is entering a critical period of operator investment – the first phase of 5G-driven capex spending, in which each vendor will get a strong indication of how well its products and messaging will play in the new networks. With some home advantage in Greater China, but no ability to sell 5G in the USA, the two largest early 5G markets are polarized in terms of supply chains. That makes western Europe, assuming the EU does not impose bans on Huawei and ZTE, the true open playing field. It will, as a region, invest more cautiously than the USA and China, but its large number of operators makes it a highly competitive market with many opportunities for vendors.
No wonder, then, that Huawei staged its annual Mobile Broadband Forum (MBBF) in Europe (London) for the second year running, and put on a major charm offensive to convince the region’s operators and governments that their 5G efforts will be far weaker without the ability to work with Huawei.
Ryan Ding, president of Huawei’s Carrier Business Group, said in his keynote address that “actions speak louder than words” when it comes to operator support. Despite the swirling rumors that various European governments could impose restrictions on Huawei (and ZTE), it has already signed 22 commercial 5G contracts, some in Europe.
Ding said: “5G is on. Huawei has earned customer recognition for our leading 5G end-to-end capabilities and innovative products and solutions. So far, we have signed 22 commercial contracts for 5G, and we are working with over 50 carriers on 5G commercial tests.” He also expects the first 5G smartphones to appear in the second half of 2019 – from Huawei among others – and with some novel form factors, such as foldable handsets, helping to drive consumer interest and uptake of the new services.
Ken Hu, the firm’s rotating chairman, echoed the claims about early 5G traction, which are important for boosting confidence among operators and offsetting their nerves about potential sanctions against Huawei. Hu said Huawei had already shipped more than 10,000 5G base stations in Europe, the Middle East and South Korea. Hu said 154 carriers in 66 countries are now testing or carrying out field trials of 5G technology.
Ding was bullish about the pace of adoption, which he expects to be faster than that of 3G and 4G. Some operators may, privately or publicly, still say they could deliver most of the first phase of 5G capabilities by enhancing 4G; but the industry compulsion to do something new has driven 5G well beyond the gradual, incremental enhancement it was once expected to deliver to a largely 4G-based network. Many MNOs will, indeed, retain and upgrade their 4G RANs for many years as their main coverage networks, but they are looking to invest heavily in 5G to support very high capacity consumer services at affordable TCO (total cost of ownership), and to drive new revenues from the (so-far elusive) low latency and IoT business models.
Ding accepted that there are several big challenges before all this accelerated deployment will deliver new revenues or full return on investment for operators.
“The ICT industry is an exciting industry, but our new generation of networks also means we are facing a lot of new challenges,” he said. He identified five main ones, based on the ongoing tests and trials with MNOs round the world:
- The size of Massive MIMO and limitations of traditional technology to support it;
- Cost and availability of sites for smaller cells;
- Power inefficiency at many sites;
- Poor coverage when using high frequency spectrum bands;
- Growing network complexity when an operator needs to support 2G, 3G, 4G and 5G simultaneously.
Addressing these challenges would mean taking a creative new approach to equipment form factors and underlying infrastructure, looking for new space- and power-efficient solutions indoors and outdoors.
Hu was focusing on a different aspect of these barriers, especially regulatory ones. He called on governments in Europe and elsewhere to accelerate the process of harmonizing and releasing continuous, wide bands of 5G spectrum, as well as affordable infrastructure. He said: “As for sites, deploying networks is expensive business. We encourage governments to make more public resources available for site deployment. Shared utility infrastructure, such as rooftops and light poles, can help carriers cut costs and time, and can even open up new revenue streams for public utilities.”
New sites, equipment form factors, and more flexible, virtualized approaches to network deployment, will all be even more important when it comes to new low latency and IoT revenue streams. So far, despite all the hype about these, most operators acknowledge that they cannot make the business case work, nor see sufficient scale of demand for ultra-low latency beyond a very few, specialized markets such as critical infrastructure monitoring. Ding thinks the first proving ground for ultra-low latency will be in consumer experiences such as gaming, virtual reality and Tactile Internet, with enterprise and IoT use cases following later.
“Carriers could begin to explore more and more new business models,” he said. “In the past when we looked at business models in the mobile industry, we mainly focused on traffic, connection and you sometimes could monetize the speed. But now, another key factor we should consider is latency. One business model for latency could be mobile gaming. This is becoming more and more popular. Take for example car racing – a few milliseconds could decide victory or defeat. So carriers could offer a lower latency package to users.”
According to Huawei, 5G will help to drive five fundamental changes in the technology industry and user experience:
- Connectivity will become a platform
- Everything will move online
- The world will go all-cloud
- Devices will be redefined
- User experiences will be truly holistic