Huawei Analyst Summit – looking the MAGA elephant in the room square in the eye

Profile picture for user mbanks By Martin Banks April 22, 2019
The spat between the US and Huawei, was front and centre, to left and right, above and underneath just about every discussion.

The Huawei Analyst Summit in Shenzhen, China, this year called itself the Global Analyst Summit - so GAS for short. It is fair to say much gassing was indeed done and some of it made a good deal of sense when it was about the details or implication of the technologies and applications of 5G mobile communications. However, much of the time was devoted to addressing the obvious elephant in the room - the position of the authorities of the United States of America and President Donald Trump.

Recent months have escalated the on-going concerns the US authorities have that the Chinese Government has significant - and probably direct - control over the company's communications products. This, if anyone has missed the story, includes the claim the Chinese Government has ordered Huawei to put `backdoors' into its network systems so it can spy on the communications of others. This has, not surprisingly, turned the spat into mainstream headline news.

As the conference showed, this has largely been met by high levels of Chinese equanimity, at least in public discussion. It is also being met by a fair degree of querulous logic, largely centered around the thought that in the quest to Make America Great Again, the US will primarily succeed in isolating itself from much of the rest of the world.

An interesting example of this could be seen in an observation made by Peter Zhou, Chief Marketing Officer for Wireless Solutions at Huawei, about the significant differences that exist between the US interpretation of 5G and that of much of the rest of the world.

He talked of how 2G, 3G, and 4G technologies were increasingly universal, and the worldwide value of that universality can be seen in the way an individual can use one phone in most places around the globe, the situation with 5G is different. Yet, while the relevant authorities in China, the UK, Europe and many other countries have selected frequencies in the 3.5GHz waveband for their 5G services, the USA had trouble finding sufficient space in the same band, and has therefore opted for using the 28GHz range.

According to Zhou this will mean the cost of base stations in the US will be far higher because of technical issues building them, compared to 3.5GHz units, while handsets would require two different technologies to be incorporated in a single unit to allow it to be used for both services, if roaming was a required capability.

It is likely, therefore, that roaming services for most people going to the USA, and USAians going just about anywhere else in the world, could become a problem once 5G is in widespread use.

The world according to Madam Chen

Huawei's Corporate Senior Vice President and Director of the Board Catherine Chen spent some time talking through the issues and possible impacts of the position being adopted by the US authorities. For example, the US has made several allegations against Huawei about its cybersecurity. But according to Madam Chen (as she is widely referred to within the company) the company has spent more than a decade trying to communicate with the US government about itself, the technology it works on, and how it manages security risks:

However, it seems that things have not gone all that well.

The US has levelled many accusations against the company, which is now resorting to legal means in response. She indicated she would be interested to see the evidence and facts that support the US case.

In addition to the legal action, Huawei is also responding the allegations with a significant increase in external communication efforts, of which the Analyst Summit is most certainly one example. The underlying premise here is a simple: 'Let the world decide’.

Chen suggested that the US had interfered in Huawei’s business operations, which is quite uncommon:

I read in the media that senior officials, and a few congressmen, have said that since Huawei is a Chinese company, there can be no doubt that we are controlled by the Chinese government and definitely not secure. Some of them are even saying that to have our equipment security tested is pointless, because it's obviously not. Really, if the US doesn't think that technology or third-party testing can solve this issue, then they should propose their own way to resolve this. Are political attacks their only resort?

To some extent the isolationist approach of the USA now starts to beg the question as to why Huawei is that concerned? For example Chen noted that, over the past ten-plus years, the company has hardly been allowed to do any business there anyway, so it not an important market in the grand scheme of things:

Last year, things went to a new extreme when we weren't even allowed to sell our phones there. I think the people who suffer most are US consumers, not us. US consumers have lost an option. According to third-party reports, compared with Asian and European markets, consumers in the US have to pay higher prices for their communications services.

It certainly is possible to see the current US tactics as being counter-productive. Just as 5G communications looks set to become the backbone for future business operations and management, the US seems set on isolating itself from the direction the majority of the rest of the world is planning to take.

The wider business impact

On a wider front, Chen also considered the impact 5G may have on one of its core markets, the telcos. These have a history of selling pure telecommunications services, under strict regulations, that have lifecycles of 10 years or more, whereas with 5G the typical service lifecycle is likely to be significantly shorter, perhaps even measured in months rather than years. This type of change must open new questions that some traditional telcos may not be able to answer.

She sees the Asian countries having the most active Telcos, with both Japan and South Korea claiming they will build the world's first real 5G network. She also sees the UK as one of the most active countries in Europe in terms of 5G deployment:

It is right that carriers will have to make some changes and adjustments as we move to 5G. This is because 5G services are different from previous communications networks, which mainly serve to meet the communication and Internet access needs of people. 5G features larger bandwidth, higher density, and much lower latency, and thus can find applications in industrial settings, for example enhancing the efficiency of machines. This will require adjustments to organisations, services, and network architectures.

Personally, I firmly believe that 5G will play a pivotal role in the future growth of national economies, as well as carriers and enterprises. Moving forward, you either become very competitive, or you get left behind.

My take

Whatever one’s view of this dispute, and I have heard strong views expressed on both sides of the argument, it seems clear that it is more likely than not to be extremely disruptive on business planning. It comes at just at the time when new technologies and developments are opening up entirely new opportunities and prospects for businesses to consider and plan for.

One assumes that is not coincidental. Having to evaluate and plan for the possible uses and advantages of new technology is going to be enough of a problem for most CIOs and business managers. Having to second guess whether using some of it may mean large markets are suddenly closed to your business adds a very unwelcome level of complication.

Then there is the problem of second guessing whether the ploy will work or backfire? With 5G offering the potential to open up significant new markets outside of the USA – Asia and Africa in particular – it is possible to see the USA ending up more than a little isolated