In recent months, the current trade and technology war between the US and China has dominated the news, creating a strong sense in Europe that the Old Continent has fallen behind China and the US. 5Gis a key technology for the Internet of Things (including self-driving cars) and is therefore the basis for the next stages. digital revolution we are experiencing.
The belief that I continue to hear (and that I myself have internalized) from many policymakers, business leaders, experts, and analysts in Spain and elsewhere in Europe is that China and huawei In particular, we are far ahead of “us” in this field. Thanks to the financial strength of the Chinese state, China started investing in this technology a decade ago and is now a world leader. People added around the same time that President Trump had already laid out a national plan to roll out 5G across the country, and that the US wasn’t far behind as Europe appeared to be falling further behind.
Similarly, when you talk to people involved in telecommunications networks such as Vodafone or Telefonica, the answer tends to be that Huawei’s 5G equipment is better and cheaper than Western alternatives. That’s why European carriers like Vodafone, which is rolling out its first 5G service in Spain this weekend, tend to rely on Huawei. This argument appears to be supported by the evidence. Huawei claims to have more 5G-related patents than any other company in the field (see Figure 1 below).
This is the standard story and I bought it, as did many others. However, I recently came across the following story to the contrary. Ericsson, Huawei’s main competitor, has started to change its mind. Berger Ekholm, Ericsson’s president and CEO, said the idea that Huawei is leading the field is highly questionable. In his own words:
“There is a myth that we are behind in 5G deployment and 5G technology. Of course, another definition of a myth is one that is not true. The documented fact is that our technology has launched 5G services. It is commercially available to customers. We have partnered with multiple carriers in the US and South Korea, and in Europe with Swisscom, which was the first company to launch the service in the region. Our Swisscom Partnership is the only supplier partnership with a nationwide scale. We aim to achieve 90% 5G population coverage by the end of the year with support for spectrum sharing that reuses existing 4G bands. None of this is up for debate. It is a fact that there is no. With 5G, it’s impossible to fall behind if there’s no one in front of you‘ (emphasis added).
Those are really bold words. However, there seems to be solid support. Does anyone seriously think that Swisscom, Switzerland’s deep-pocketed telecom giant, would deploy its second-best 5G technology to cover the whole country? I highly doubt it. I also looked into whether Huawei was banned from Switzerland for geopolitical reasons due to US pressure, but that doesn’t seem to be the case. Rather, what emerges from this preliminary study is that Ericsson is as advanced as, or even more advanced than, Huawei in 5G technology. it’s just that the service is expensive.
In fact, Ericsson argues that a patent application is not the same as post-grant patent ownership. Currently, all network providers have submitted many patent applications and standardization documents for 5G based on the so-called 3GPP framework, but to know who the technical leaders are, it is important to know which proposals will be approved. It will take years to find out. But still, in a report published in October 2018 titled “Forecasting the Future 5G Patent Landscape,” Ericsson provided preliminary evidence to suggest that it is ahead of its competitors. (See Figure 2 below).
Given this information, one might wonder why everyone believes Huawei is in the lead. There are several reasons. The PR and media campaigns launched by Huawei have been aggressive and effective, and President Trump’s obsession with Huawei has helped further raise the company’s profile. Huawei is also much flashier and more modern than the good old – but rather boring – Ericsson, which doesn’t have any cool smartphones. Industry insiders also say that Huawei frequently invites journalists to events and trips and gives them Huawei products as souvenirs, thereby influencing coverage. Ericsson’s internal policy strictly prohibits such gifts.
Finally, carriers themselves may have an inherent interest in increasing Huawei’s technological capabilities. Without Chinese competition, Ericsson will become so dominant that networks will need to use Huawei alternatives to negotiate lower prices. This follows a report from telecoms lobby group GSMA warning that if Chinese companies are banned from Europe’s 5G networks, the cost of providing services would increase by $62 billion, which would occur in 18 months. It may explain why it was announced.
In fact, apart from Chinese companies, Europe is the only country in the 5G game, and this is exactly what is happening in the US. Yes, you read that correctly. At the moment, and as reported by the NYT in explaining President Trump’s national plans, there are “no U.S. suppliers in the major exchange networks, meaning the U.S. system is primarily based on European companies like Nokia and Ericsson.” It will be built by companies.” That’s why Europe lags behind the US in 5G.
Nevertheless, while building infrastructure is great, as we all know, in today’s world, it’s the software, not the hardware, that brings in the big bucks. That’s where Europe needs to catch up. So far, the main beneficiaries of the Internet and smartphone era have been US digital platforms such as Google, Facebook, Amazon, and Airbnb, as well as emerging Chinese digital platforms such as Alibaba and Tencent. We still don’t know what will happen at the Internet of Things (IoT) stage. Europeans will take the lead in building physical infrastructure, but will monetization be left to the US and China? It certainly looks that way, but 5G is still in its infancy, and after 5G it will be followed by 6G and 7G. No one knows who will take the lead then.
