‘No more Huawei’: Vodafone CEO expects telcos to dump Chinese suppliers

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Vodafone Hutchison Australia chief executive Iñaki Berroeta believes the government’s decision to ban Chinese telecommunications equipment providers from Australia’s high-speed 5G rollout means Huawei will be phased out from all local mobile networks.

Vodafone uses equipment from Swedish supplier Ericsson in the core its 3G and 4G mobile networks where sensitive information processing takes place, and Finland’s Nokia and China’s Huawei for non-core parts.

The Australian government banned Huawei on security grounds in August, making it the first country of global cybersecurity alliance Five Eyes (including the US, Canada, New Zealand and the UK) to impose an official ban. Since then, New Zealand has followed suit and the US has an unofficial block on Chinese suppliers.

In the months after the ban there were concerns Australian providers would need to immediately rip Huawei kit out of 4G, as 5G initially uses equipment bolted onto legacy networks.

“I’m comfortable with keeping [Huawei] on 4G because we have checked with authorities and that is perfectly ok, so I don’t think we’ll have an issue around keeping that,” Mr Berroeta said.

“What we know for a fact is that on 5G we will be operating with a different vendor.”

Even without having to remove Huawei right away, Mr Berroeta believes the technology will be phased out over time as the new generation of mobile technology supersedes the older networks.

He said the strategy for building 5G and its interactions with 4G was still under discussion within the company, with significant implications for Vodafone’s existing suppliers depending on the outcome of these deliberations.

“On the one side … there is a school of thought that you can keep your legacy and build the new, that’s an option and it has advantages and disadvantages,” he said.

“The other option is to say I’ll just replace everything and look for everything that is all 5G compatible,” he said.

One of the factors that will determine how long Huawei plays a role in existing networks is how quickly Australians take-up the new technology.

In 1993, the second mobile generation 2G was launched in Australia by all three carriers. Telstra turned off 2G in 2016, Singtel Optus in 2017 and Vodafone shut down this network five months ago.

While this took about 15 years, the take-up of each mobile generation has become quicker than the last. At the moment, about 80 per cent of Vodafone’s network traffic is over the 4G infrastructure with the rest over 3G. Australia’s first 3G network was launched in 2003, while 4G was launched in 2011.

“There will be a year, sooner rather than later, where 80 per cent of our traffic will be 5G. There will be a time when it will be zero [on 4G]. When it’s zero there is no more Huawei,” he said.

Huawei might find itself without a role in providing telco’s networks in the future, however is likely to grow its presence in Australia with consumer devices like mobile phones.

“Chinese device manufacturers will be very early 5G entrants,” Mr Berroeta said. Currently, Samsung and Apple have the majority of market share for mobile phones and expect to launch 5G compatible devices around 2020 (Samsung will launch 5G phones earlier in South Korea and the US), however Huawei and ZTE are intending to have phones with this ability in 2019.

“There is not a single supplier in the US that has anything physical [built for] 5G in the US let alone in Australia”.Vodafone CEO Inaki Berroeta

Telstra is widely expected to be first to turn on the 5G network for customer use and does not currently sell Huawei handsets. In a recent interview with The Sydney Morning Herald/The Age, Telstra chief executive Andy Penn said this decision wasn’t to do with any security concerns or issues with the company and didn’t rule out selling the Chinese company’s devices in future.

The race to 5G in Australia is expected to become more tense next year, with the majority of providers still yet to announce their chosen suppliers. Telstra has already signed a partnership with Ericsson.

Mr Berroeta said the government’s choice to ban Chinese providers was “not a decision that is going to create efficiencies in the market”.

“There are virtually now two suppliers of infrastructure in Australia and we’re being asked to have four networks, that’s a pretty interesting concept,” he said. “There is not a single supplier in the US that has anything physical [built for] 5G in the US let alone in Australia.”

Huawei head of corporate affairs Jeremy Mitchell recently claimed Home Affairs Minister Peter Dutton criticised the US government for allowing China to become a global telecommunications power when meeting with the telco supplier ahead of the ban. Mr Dutton has denied he said this during the meeting.

By Jennifer Duke
SMH

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