Europe Will Reject Chinese Telecom Providers in 2020: Report  

News Analysis

Europe’s top telecom analyst Strand Consult issued its twentieth annual forecast that warns: ”Too many have a naïve view of the China debate and have not considered the ramifications of turning over key technologies to the autocratic country.”

Copenhagen-based Strand Consult has advised the European telecommunications industry regarding technology innovation, regulatory structures and capital investment strategies since 1994, when Scandinavia’s Nokia and Erickson were the pioneering leaders in design and production of mobile switching equipment and handsets. But European innovators were displaced by China’s Huawei and ZTE in mid-2010s.

Strand Consult calls 2019 a year that 5G became a mainstream topic and rebooted the discussion of the value that telecommunications bring to society including innovation, security, and inclusion. Key to that dialogue has been a review of the business practices and ethics of China’s state-sponsored champion Huawei and its efforts to dominate the European 5G rollout by being first to market and offering state-subsidized financing.

Since its founding in 1987 by former People’s Liberation Army engineer Ren Zhengfei, Huawei has grown to become the world’s top provider of telecom equipment, with over $100 billion in revenue and 180,000 global employees. But Strand Consult highlights suspicions that Huawei’s extraordinary success has been tied to intellectual property theft, including 2003 charges of stealing Cisco router technology, 2008 collapse of its 3Com acquisition over Chinese military ties, and 2014 T-Mobile claims of robot arm theft.

Strand Consult expects that 2020 will be the year that the discussions regarding the embedded surveillance and intellectual property theft risks regarding Huawei equipment will broaden to include “companies that are owned or affiliated with the Chinese government including but not limited to TikTok, Lexmark, Lenovo, TCL, and so on.”

Strand Consult warns that the “Chinese propaganda machine has succeeded in misleading many journalists and press outlets, particularly with the unchecked claims that Huawei’s products are technologically superior.” Strand Consult argues that conflicts of interest at globally syndicated media explains why “few media will dare to publish an analysis comparing the operating conditions foreign companies get in China compared to the favorable treatment Chinese companies enjoy abroad.”

As an example, Strand Consult calls attention to claims made by Global System for Mobile Association (GSMA), a global trade lobby group representing 800 mobile operators and 300 supplier companies. In a June 2019 report titled, “The Real Cost to Rip and Replace Chinese Equipment in Telecom Networks,” GSMA cautioned that banning telecom equipment from China’s state-controlled Huawei and ZTE would add an additional $62 billion in cost and delay for an extra 18 months the deployment of 5G networks in Europe. The report was funded mostly by Huawei suppliers and widely reported in Western tech media.

The Epoch Times reported that Strand Consult refuted the GSMA claims and found that due to standard 3-year equipment technical obsolescence, coupled with European telecom capital investment in radio frequency equipment of over $100 billion a year, the marginal cost of rapidly booting Huawei and ZTE useable equipment would only be about $2.9 billion a year.

But financial costs to European telecom providers would be more than offset by the financial gain from restricting the capabilities of “100,000 Chinese hackers attacking their corporate customers” each day. Strand Consult added that the “standoff between the free people of Hong Kong against the Chinese government led by Secretary General Xi who prides himself on total control,” should “demystify the statistic of why the majority of world’s cyberattacks originate from hackers in China.”

Strand Consult’s 2020 forecast comments that although the performance of most EU countries on 5G is disappointing, the customer demands for the deployment of Internet of Things (IoT) technology will create huge new demand for the type of reliable fixed wireless access solutions currently dominated by traditional European telecom companies.