ITEM: With the US government’s laying the smack down on ZTE and Huawei lately, speculation is naturally rife about what this means for both companies, with some speculating that this could delay development of 5G in China and globally.
According to Reuters, the US Commerce decision to ban US companies from selling components to ZTE – coupled with the FCC’s proposed plan to ban universal service funds from being used to buy Chinese equipment and a proposed bill to ban all government departments from buying ZTE or Huawei gear – “bodes ill” for 5G because it could ultimately make it more expensive to deploy:
Huawei and ZTE account for more than half of telecom kit sales in their home market. Using parts and software from elsewhere instead of US suppliers probably would be expensive and derail China’s ambitious timeline. Likewise, if domestic operators need to turn to the likes of Nokia and Ericsson, it could greatly increase costs.
There are a few problems with this assessment. For a start, the Commerce Dept ban only applies to ZTE, not Huawei, who is the larger player of the two. Also, ZTE is just one vendor in a broader 5G network ecosystem that also includes Huawei, Nokia and Ericsson – all three of whom are actively working with Chinese operators to put 5G technologies through their paces. While China might prefer its operators to buy local, it clearly doesn’t object to overseas vendors helping it pursue 5G.
While we’re at it, the current global 5G timeline is not 100% dependent on China rolling it out by 2020. China is an important 5G market in terms of economies of scale, but any delay isn’t going to make a huge difference. There are plenty of other markets planning to go early with 5G.
And in any case, the current 5G timeline has been way overhyped. Pick a market where 5G is going to launch between 2019 (when KT is expected to go live) and 2020, and in just about all cases those rollouts will be very targeted and limited to things like fixed-wireless access and maybe a few industrial apps. 5G-capable devices won’t reach the street until 2020, and will still be a small slice of the market even by the early 2020s.
Even Huawei is walking back its own hype. After spending the entire MWC saying “5G is now” and bragging about its end-to-end 5G portfolio, rotating CEO Eric Xu said at the company’s analyst summit in Shenzhen that 5G is just one technology option in the vast mobile ecosystem, and that really 4G will do most of the heavy lifting for those advanced apps that 5G is purported to enable, reports Computer Weekly:
“If you look across our entire portfolio, 5G is just one product,” said Xu. “It’s just a natural evolution of the technology from 2G to 3G to 4G, and now we’re going to have 5G, but you don’t have a fundamental difference between 5G and 4G.”
In fact, said Xu, there are only really three big material differences between 4G and 5G – faster speeds, more connections and lower latency, and the average consumer would only really perceive a difference in speed. When it came to features such as lower latency – critical for use cases such as autonomous cars – he pointed out that current 4G technology is already good enough for this in many cases.
He’s not wrong. LTE has always been intended to be the core platform for launching limited 5G deployments, which means it has to be able to support 5G devices roaming out of their 5G service islands to the point that customers don’t notice any drop-off in service quality.
That’s also why the race to 5G – for vendors and operators alike – is as much about bragging rights and marketing as the technology itself. It’s about being the first on the block to sell 5G gear and launch 5G networks, even if 5G is only available in a few select downtown shopping malls and only one or two handsets can use it.
The US ban on selling components to ZTE, and the government’s apparent worries about Huawei dominating 5G, isn’t going to make a scrap of difference in that regard. With or without ZTE, 5G will happen when it happens – any delays will be the result of reality setting in as the 5G hype fades away.