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18 December 2019

O2 Germany sticks with Huawei, but Telenor switches to Ericsson

The year ended with Huawei’s position in European 5G deployments scarcely more certain than it had been at the start, when the USA was stepping up its efforts to persuade allied countries to bar Chinese vendors from 5G contracts (see Special Report).

In the past week, more developments have occurred, each significant, but not sufficiently momentous to break the deadlock.

China’s ambassador to Germany threatened that his government would “not stand idly by” should the European nation decide to ban Huawei from its 5G procurements. Germany had initially taken the line that it would tighten up security safeguards across all infrastructure procurements rather than singling out any particular vendor, but Deutsche Telekom recently suspended decisions on 5G network contracts until the situation became clearer, amid fears that a tougher line would be taken. A bill seeking to bar “untrustworthy 5G suppliers” on national security grounds will be debated in the new year.

According to Bloomberg, Ambassador Wu Ken told guests at a Handelsblatt event that China would retaliate against a ban on Huawei, though he did not specify the potential actions, though he did note that German car makers sell 28m cars a year to China.

One German operator should be helping to keep the peace – Telefónica O2 Deutschland has chosen Huawei and Nokia as 5G RAN suppliers despite the uncertainty surrounding the former.

“Telefónica Deutschland plans to work with Nokia and Huawei on its 5G access network, under the condition that the providers comply with security requirements which are to be determined by German regulators,” said a spokesperson.

Huawei and Nokia already supply its RAN equipment, so the operator is avoiding the expense of migrating to another vendor. It has not yet chosen a 5G core supplier.

Telefónica said it aims to complete 5G roll-out in Berlin, Hamburg, Munich, Cologne and Frankfurt by the end of 2021 and a year after that, it is targeting coverage of 30 cities and 16m people.

In Norway, Telenor has chosen its 5G RAN vendor, opting for new supplier Ericsson, even though Huawei is incumbent in its 4G network. It said it would continue to use Huawei equipment to maintain the LTE system and to “upgrade to 5G coverage in selected areas of Norway” over an envisaged 4-5 year timeframe to migrate the whole country to 5G.

Telenor’s CTO, Sigve Brekke, did allude to security concerns when explaining the choice of supplier, saying: “When selecting the vendor for the radio access network, we have considered important factors like technical quality, ability to innovate and modernize the network, commercial terms and conditions, as well as carried out an extensive security evaluation. Based on the comprehensive and holistic evaluation, we have decided to introduce a new partner for this important technology shift in Norway.”

The company also emphasized that the core network was being upgraded by Nokia and Ericsson (many countries feel that they can allow Chinese equipment into the RAN but may exclude it from the core, which would be more vulnerable to security hacks. Huawei denies all allegations of cyberspying via its network equipment).

Petter-Børre Furberg, CEO of Telenor Norway, said: “As the first mobile operator on 5G in Scandinavia, Telenor will ramp up the roll out of 5G to our customers in Norway in 2020. The full modernization of the mobile network in Norway is an ambitious undertaking, and something we are excited to get started on.”

Telenor will be taking on added cost and complexity that a vendor swap entails when moving from 4G to Non-Standalone 5G (because both share the common 4G core). Vendors have complained that, if they want to replace an incumbent, they are often asked to shoulder most or all of the cost of the rip-and-replace and modernization, which can take several years.

While it is likely that many governments and operators will steer a middle ground in policy towards Huawei, allowing it into the RAN but not the core (as the UK’s BT has done), Ericsson is questioning whether this distinction still holds true, in security terms, in 5G. The company argues that network intelligence is moving out of centralized core networks and closer to the RAN as cores may be deployed in a distributed way along with edge compute and private networks. In these future edge networks, operators are likely to host valuable data at aggregation points near base stations.

Arun Bansal, the head of Ericsson’s business in Europe and Latin America, told Light Reading: “5G will blur the distinction that has previously existed between the core and the radio access network. That boundary will disappear in 5G simply because of the way the architecture will be done, and it will be very hard to say this is core and this is radio.”

There is already retaliation under way in China, for escalating US sanctions and bans (though there were some signs of a slight thaw in relations as we went to press for the holiday). China has introduced a ban on government and public departments using foreign IT and telecoms gear, and indeed, they must rip out such equipment if it is already in use (possibly a total of 20m to 30m pieces of kit).

The US recently announced that it would bar any telco using Huawei equipment from accessing the new $8.5bn fund to extend rural connectivity. It is also working on legislation to force US carriers to strip out equipment from Chinese suppliers.