Huawei has globally been under the spotlight in recent times. Their equipment has been branded by Western countries as such that can track or spy on its users and send data back to China, given that its founder has ties with the Chinese government. Here is Uganda, all major telecom companies like MTN, Airtel, UTL, and Africell use their 2G, 3G, and 4G-LTE equipment at some point within their networks.
There is no clear evidence so far that can push the government to restrict Huawei from our telecommunications networks. In the USA, security officials say Beijing could force the company or even disable a country’s networks. So far, Australia and New Zealand have moved to block the Chinese equipment vendor in their 5G roll-out, but some European countries have hesitated. The main reason why most of the big networks in Uganda use Huawei in favor of ZTE, Ericsson, Nokia, or any other competition is because they sell cheap equipment plus as I said there is no public evidence that Huawei could use its equipment to eavesdrop.
But even if Uganda somehow bent to US pressure at some point to remove this equipment in the future, it may be close to impossible to extract Huawei from telecom networks, and here is why.
4G Domination
Countries are rushing to test and roll out 5G networks, of course, this won’t happen anytime soon in Uganda. The first phase for many carriers will be the upgrade of existing 4G-LTE networks. That means attaching 5G components to legacy 4G infrastructure, and guess where much of that legacy hardware comes from? Huawei!
In the first three quarters of 2018, the Chinese company had a 28% share of the global telecom equipment market. Nokia and Ericsson were falling behind at 17% and 13.4% market share respectively. In Europe alone, it dominates with a 31% market share pacing Nokia and Ericsson who have 29% and 21% respectively.
So to take Huawei out of any network whether it’s 3G, 4G, or 5G, telecoms will first have to replace existing infrastructure provided by the company and that’s a big chunk of time and money.
High Price of replacement
Carriers globally have opposed banning Huawei, pointing to its superior hardware and lower prices. Let’s take UTL as an example. Most of its network hardware is from the Chinese company and it would cost the already struggling telecom huge sums of money per subscriber to swap and replace the entire network. A small USA carrier called James Valley Telecommunications made these calculations and if their government were to ban Huawei, it would cost them around $5,000 (UGX 18,8 million) per subscriber. So with their 10,000 rural customers, the network replacement costs will total up to $50 million (UGX 187.8 billion). Now imagine Uganda Telecom were to replace their equipment — even if they were given a 50% discount from Huawei it would still be close to impossible to swap.
This goes beyond money, according to tolaga research a wireless technology research firm, says the typical network replacement cycle takes 5-10 years to compete. So even if the USA or any other country would ban Huawei in 5G, carriers can still expect that Huawei won’t be out of the network immediately.
Huawei’s superior technology
Outside of Huawei, Nokia and Ericsson aren’t getting much favor among carriers in Uganda. Wireless providers say that they have been slow to release equipment as advanced as Huawei’s. Some of Huawei’s 5G technology can be up to a year ahead of its rivals according to some senior executives. Huawei’s clout in 5G, stems from its massive research and development (R&D) budget.
In 2017 Huawei spent $13 billion on R&D and that was more than its chief rivals combined the company now owns the most 5G patents in the world which total up to 1,529 patents as of today. Some of these patents are now fundamental building blocks to 5G and include one highly-priced technology called polar coding. Polar coding is a method for correcting errors in data transmission.
Regardless of whether a country chooses to block Huawei, there is no way to avoid paying royalties to license its 5G technology.
With Huawei at the center of the future wireless technology like 5G, governments and carriers aren’t ready to abandon it yet despite the USA’s plea. If more countries continue to follow the US’s advice, knocking out Huawei won’t be easy, especially in developing countries like Uganda.
