Ren Zhengfei wants to create a competitor for his company.
5G technology—central to Huawei’s future revenue growth—is what founder and CEO Ren said he was ready to share, in a two-hour interview with The Economist on September 10th.
For a one-time fee, a transaction would give the buyer perpetual access to Huawei’s existing 5G patents, licences, code, technical blueprints and production know-how. The acquirer could modify the source code, meaning that neither Huawei nor the Chinese government would have even hypothetical control of any telecoms infrastructure built using equipment produced by the new company. Huawei would likewise be free to develop its technology in whatever direction it pleases.
Mr Ren’s stated aim is to create a rival that could compete in 5G with Huawei (which would keep its existing contracts and continue to sell its own 5G kit). To his mind, this would help level the playing field at a time when many in the West have grown alarmed at the prospect of a Chinese company supplying the gear for most of the world’s new mobile-phone networks. “A balanced distribution of interests is conducive to Huawei’s survival,” Mr Ren says.
No kidding. A months-long assault by America has pummelled the firm, whose global networks it suspects of allowing China to spy on others. America has also attempted to press allies not to use Huawei’s equipment as they begin to build their own 5G networks. In May American companies were barred from selling components and software to Huawei on the grounds that it posed a national-security risk. Last month America restricted government agencies from doing business with it (the firm is challenging this ban in court).
At first glance, Mr Ren’s gesture has much going for it. If the sale eventually gave rise to a thriving competitor, countries such as Australia (which has banned Huawei’s gear) would no longer have to choose between, on the one hand, technology in their networks that is both cutting-edge and cheap, as Huawei’s is, and, on the other, fears of Chinese eavesdropping. They could have the best technology from an ally instead. Decisions on the purchase of telecoms equipment could then return from politicians to pragmatic boardrooms.
The gesture may also convince those suspicious of Huawei’s tech that the firm’s business intentions are hard-nosed. Mr Ren says money from the deal would allow Huawei to “make greater strides forward”. The value of the firm’s entire 5G technology portfolio, if it were sold, could run to tens of billions of dollars. In the past decade the company has spent at least $2bn on research and development for the new generation of mobile connectivity.
In saying he wants to create a fairer technological race, Mr Ren is also attempting to dissociate American security fears from those of Huawei’s market dominance. His offer is “essentially calling their bluff”, says Samm Sacks of New America, a think-tank in Washington, DC. As she points out, America’s government is working out how to create a rival to Huawei, whether by fostering American firms or helping bolster its two main global competitors, Ericsson, a Swedish firm, and Nokia, a Finnish one. Moves are also afoot to make certain components of mobile networks interchangeable with each other, to let carriers mix and match suppliers more easily. OpenRAN, a standards body, wants infrastructure manufacturers like Huawei to agree on standards for the technology in their networks that shuttles data around to ease interoperability. Huawei has so far declined to join.
Yet questions over the feasibility of the deal abound. Would China accept hiving off a core part of one of its few globally powerful corporations? For better or worse, 5G has become a proxy for superpowerdom. As Mr Ren told The Economist, “5G represents speed” and “countries that have speed will move forward rapidly. On the contrary, countries that give up speed and excellent connectivity technology may see economic slowdown.”
Even if the Chinese state gave its blessing, who might be the buyer? Mr Ren says he has “no idea”. Analysts suspect that giants such as Ericsson and Nokia would balk at an offer out of pride, and would question the value of Huawei’s tech. (Having posted losses last year, they are also short of cash.) The technology may not help a smaller firm compete on an equal footing with Huawei. The Chinese firm is so well entrenched with big operators, say consultants, that it would not make financial sense for most of them to take on a new supplier. Samsung, a South Korean electronics giant, has deep pockets and a smallish but growing networking-gear business—and without rival bidders, it could drive a hard bargain. A consortium of buyers is possible; who would make one up is unclear, however.
Suitors may be put off by other considerations. If Huawei really is ready to transfer the entirety of its technology to another company, then, as Mr Wang points out, “it has to accept the risk of a major competitor in the future.” But Huawei’s dominance owes as much to technology as to its low prices and the speed at which it can roll products out, says Ms Sacks. Its willingness to serve places Western firms steer clear of is also a factor: who else besides Huawei would wade through malarial swamps in Africa and haul base stations up the flanks of Colombian mountains? Mr Ren knows this. Asked whether he thought that an American firm, with Huawei’s precious know-how in hand, would be able to pull it off, he said, with swagger, “I don’t think so.” But potential buyers know it, too.
Lastly, few believe that a sale would placate America’s national-security apparatus, at least in the short run. A new competitor would almost certainly still need to make equipment in China, which makes half of America’s telecoms kit. Concerns about Chinese meddling would not go away. And Huawei’s latest offensive is not all charm. Last week it accused American officials of committing infractions while posing as Huawei workers, in order to “bring unsubstantiated accusations against the company”. It also accused America’s government of targeting it with cyber-attacks. That may sour relations.
Could Mr Ren’s proposal, then, be a sign of desperation? Not a bit of it, he says. He claims that Huawei has found alternative suppliers for its network-infrastructure business that are unaffected by its blacklisting by America. He denies that the company will make a loss in the coming year.
Nonetheless, the consumer business is under pressure. Half of the company’s $105bn in sales last year came from the 208m smartphones it sold around the world. So did an outsized share of profits. This business is in deep trouble. Phones that Huawei sells outside China are desirable communication devices largely thanks to proprietary software available exclusively from Google. Android, Google’s mobile operating system, which Huawei uses, is open-source and freely available. But the American tech giant’s own apps are not. Because Google is American and its apps are compiled in America, the Commerce Department’s ban on sales of American technology to Huawei applies to them.
Mr Ren says that Google has been lobbying the Trump administration to allow it to resume supplying Huawei with proprietary Android software, but so far to no avail. Unless American policy changes, Huawei will remain stuck with the open-source version of Android, without any of the apps that consumers have come to expect. The Chinese firm is in the process of developing its own operating system, Harmony OS, but it will be no rival to the mature Android ecosystem for years to come.
This means that all new Huawei phones will ship without Gmail, Google Maps, YouTube or, crucially, Google Play Store. The Play Store is what allows Android users to download apps like Whatsapp, Instagram and Facebook easily. WhatsApp in particular has become a standard mode of communication in much of the world outside America. Unless its government lets up, Huawei’s new smartphones will be little more than decent cameras that make phone calls. The firm will launch the Mate 30, the first top-end phone since its blacklisting, on September 19th in Munich. Huawei claims its hardware features will buoy sales. But a phone which lacks basic functions is unlikely to be a hit. A weakened consumer business would dent profits.
Huawei’s share of the Chinese smartphone market, where it has never relied on Google’s apps, is growing fast. But two-fifths of its annual phone sales, or roughly $20bn, come from outside the country. Though the firm’s executives repeatedly declined to share any projections, firm-wide revenue growth in the nine months to August slowed to 19%, year on year, from 23% in the first half of 2019. If the Mate 30 and its successors flop, Huawei stands to lose billions of dollars in annual revenue.
Similar supply-chain challenges affect other parts of its business. Its coders are busily writing Huawei’s own version of software tools known as compilers and libraries, themselves used to create the software that powers all manner of electronic devices, not just smartphones. As with Android, Huawei would have to create its own version of these, and a technological ecosystem around them. Such ecosystems take years to evolve, and there is only so much one company can do to stimulate this evolution, which relies on third-party developers, with their own goals and incentives. Huawei’s expertise in high, hard technology is of little use here.
And, Mr Ren’s assurances notwithstanding, Huawei’s finances are being squeezed. Even he concedes that its relations with large Western banks such as HSBC and Standard Chartered have been disrupted. Still, the firm has plenty of cash and he says that smaller banks remain willing to lend to Huawei. The Chinese Development Bank, which has reportedly extended credit lines to Huawei and ZTE, a Chinese competitor, in the past, may stump up if needed. Mr Ren and his underlings repeatedly claim that cashflow is “healthy”, pointing to the firm’s furious building work. It has just finished a 120 hectare, $1.4bn research campus.
Huawei is being forced to transform itself from a company that makes and sells hardware into one that also makes many components that it used to buy from others. This kind of shift strains a firm. Its cash cow is under threat even as it has to invest heavily to replace the suppliers and software it can no longer get from America. Mr Ren might hope that his proposed sale of Huawei’s 5G technology will give him sufficient fuel for Huawei to fly ever higher. But peer behind the showy frescoes in Shenzhen, and his showier gesture, and Huawei’s future looks decidedly hazy.
Huawei’s 5G network equipment business:
Ren Zhengfei, Huawei’s founder and CEO, says that his company will produce more than 2 million base stations over the next 18 months, regardless of whether the US decides to remove it from the Entity List. Zhengfei said that while the US’ decision to add Huawei to the entity list was profoundly unjust, it would have little impact on the company’s productivity – particularly with regards to its 5G network equipment.
How many more will they ship after IMT 2020 RIT/SRIT has been standardized by ITU-R in late 2020?
“First of all, please note that adding us to the Entity List was not fair. Huawei has not done anything wrong but was still placed on this list. This list didn’t have that much impact on us. Most of our more advanced equipment does not contain U.S. components, despite the fact that we used their components in the past. These newest versions of our equipment even function 30% more efficiently than before,” he said.
“In August and September, we will undergo a run-in period before we can mass produce these new versions. So, we can only produce around 5,000 base stations each month during that period. Following that, we will be able to produce 600,000 5G base stations this year and at least 1.5 million next year. That means we don’t need to rely on U.S. companies for our survival in this area,” Ren explained.
Ren Zhengfei, Huawei’s founder and CEO says the conflict with the U.S. has exceeded what he had previously thought.
While the impact on Huawei’s network infrastructure business is expected to be minimal, being added to the Entity List does create problems for Huawei’s handset business, particularly as the company looks to reel in its rival Samsung and claim top spot in the market. If Huawei were to be permanently added to the Entity List, it would lose access to Google’s Android operating system, which the company uses as standard on all its smartphone handsets.
“I could never have expected this controversy to be so intense though,” Ren said in a recent interview with Sky. “We knew that if there were two teams climbing up the same mountain from opposing sides, we would eventually meet on the peak and we may clash. We just didn’t expect this clash to be so intense and lead to this kind of conflict between the state apparatus of a country and a company.”
Ren has reportedly sent out another memo detailing the fallout of the conflict, which does finally seem to be hitting home. Job cuts are on the horizon, with replicative staff facing the axe and a simplified management structure promised. Contracts and payments will face higher scrutiny also, to keep an eye on free cash flow, while R&D seems to have been impacted also.
Android vs HarmonyOS on Huawei smartphones:
Huawei’s preference has always been to continue to use the Android operating system on its handsets, however, the US’ latest political campaign has forced the company to bring forward the release of its own OS, HarmonyOS.
“Google is a great company. We have a sound relationship with Google. We have signed many agreements with Google over the years. We still want to use Google’s system in our devices and develop within its ecosystem. Because of this, we hope that the U.S. government will approve the sale of Google’s system to us. There are billions of Android system users and billions of Windows system users around the world. Banning one or two companies from using these systems won’t help ensure the security of the U.S. as a country, so they should keep their doors open.”
“If the U.S. doesn’t want to sell the Android system to us, we will have no choice but to develop our own ecosystem. This isn’t something that can be achieved overnight. We estimate that it will take us two or three years to build this ecosystem. In light of all this, we don’t believe we will be able to become the number one player in the device sector any time soon,” Ren added.
Huawei is already the undisputed leader in optical network and cellular network equipment. They are destined to be #1 in 5G network gear sales, independent of the U.S. sanctions and bans. Huawei is also #2 in global smartphone sales (Samsung is #1). And they’ve introduced a host of new innovative products like the Honor Vision smart screen.
While Americans shamefully excuse the isolation of Huawei as a wise action rooted in “national security” and an aversion to thievery, they don’t realize that Huawei has 80,000 R&D employees (mostly in China) and it spent $15 billion on R&D in 2018 alone. Of course, the Chinese government may have directly or indirectly funded much of that R&D but it is what’s contributed hugely to Huawei’s success.
With a population of less than 39,000 people, Monaco is a tiny independent city-state on France’s Mediterranean coastline known for its upscale casinos, yacht-lined harbor and prestigious Grand Prix motor race, which runs through Monaco’s streets once a year. Monte-Carlo, its major district, is home to an elegant belle-époque casino complex and ornate Salle Garnier opera house. It also has many luxurious hotels, boutiques, nightclubs and restaurants. I visited the country with my son in the summer of 2003 while attending an ITU standards meeting near Valbonne, France.
Monaco is the first fully 5G-connected country in the world. That means if you have a 5G phone, a 5G connection (and therefore super-fast download speeds) will accompany it anywhere in Monaco. It sounds small, but 5G is rolling out in small areas of select cities around the world, so at the moment it’s impossible to get a complete 5G experience outside of Monaco. What drove the country to adopt the next-gen network so quickly?
“It’s the Grand Prix that brings a sense of urgency to launching 5G in Monaco,” Martin Peronnet, CEO of Monaco Telecom, told Digital Trends in an interview at the company’s headquarters, less than two weeks after its 5G service went live.
Monaco is not your usual country as it’s not very big at all. It’s actually smaller than Central Park in New York, but it’s still home to almost 40,000 people and another 70,000 people come to Monaco to work each day — it’s one of the few places that has more jobs than residents.
While 5G will bring new opportunities to everyone there, it was the annual Formula One Grand Prix that shaped Monaco’s 5G endeavour. It launched on July 10 after two months of hard work — an incredibly fast turnaround — made possible by a vital partnership and meticulous planning. Monaco Telecom worked with Huawei to make its 5G network a reality, and it’s solely powered by the Chinese company’s network infrastructure.
“Monaco is sometimes the busiest place in the world, in terms of mobile usage, and that’s typically during the Grand Prix,” Peronnet said. “It’s really one of the most challenging events to cover with telecommunications. There is so much usage, and each year we continuously rework our network to serve the 50% more usage we get. We knew our 4G network would not be enough in two years time.”
Implementing a 5G network is not easy, but Monaco was prepared and has been at the forefront of some serious mobile tech breakthroughs already — key to 5G’s rollout.
“For the last four years, our strategy has been to be in the leading position for new technologies. We were the first to introduce 450Mbps speeds on 4G, and the first in the world to launch 1Gbps on 4G in 2017. We have done a lot of work to modernize the network,” Peronnet added.
This forethought is important, along with the introduction of tech like 4×4 MIMO (multiple-input multiple-output), and key to Monaco Telecom’s 5G launch going smoothly. Long trials were shunned and the focus was always on the commercial launch. Why the rush? Introducing 5G is essential to make sure everyone in Monaco during future Grand Prix will be able to enjoy a good connection. At least 200,000 people attend the Monaco Grand Prix weekend, and as you’d expect, photos and videos are constantly shared, and the level of activity is only going to increase.
The Grand Prix didn’t just dictate Monaco’s need for 5G — it even dictated when work on deploying the Huawei infrastructure and equipment could start. Astonishingly, work began just two months before the July 10 switch-on, and the final base station was installed only two days before that date.
“We couldn’t work on the network before the end of the 2019 Grand Prix,” Peronnet said. “Because it’s so busy, we cannot touch [the network]. In fact, each year we redesign it to make it Grand Prix-ready, and when it’s all over, it’s put back into its normal configuration.”
This tight time frame was oddly advantageous, because it allowed Monaco Telecom to use the newest Huawei equipment and the latest commercial versions of the 5G technology, which only came along in June. Martin admits all this wouldn’t have been possible in a country any bigger than Monaco. However, there are still 23 sites that needed to be equipped with 5G antennas, and six tons of hardware was used, some of which had to reach some challenging places.
For example, one base station is found on the side of a cliff and accessed by climbers, while another is hidden on top of the old town’s cathedral — which required a crane and serious negotiation with authorities to place. Another antenna is on the Monte Carlo Casino, which was problematic due to specific network interference issues. Remember, all this and a lot more was completed in two months.
To launch a full 5G network so fast required hard work, a strong partnership, and plenty of trust. Peronnet described Monaco Telecom as one of the smallest carriers in the world while pointing out its partner Huawei is one of the biggest mobile technology companies in the world. Yet the two teams worked well together.
“They’re very good on mobile; they’re very reliable, and they like challenges,” he said about Huawei.
Apparently, engineers in both Monaco and China didn’t sleep for a week during the final stages of the project — such was the drive to complete it. “It’s good to know you can rely on the company you need to achieve things with, and it gave us confidence,” he added.
He explained that using only one manufacturer’s equipment is important on a small network like Monaco Telecom, as multiple vendors complicate the process. My interview came on the same day the U.K. announced a continued delay in choosing providers for its own 5G network infrastructure and additionally stated concerns over the availability and reliability of Huawei technology due to the firm’s presence on the Entity List in the U.S.. Was this a concern for Monaco Telecom? “Not on 5G,” he said. “But we are concerned. We are a small country, and we can’t influence the world. Nobody really cares about the decisions Monaco is making, as it doesn’t have a consequence for the rest of the world. We are faced with this uncertainty, and in business you don’t like uncertainty.”
“The main issue isn’t about people spying, it’s about security breaches.” Monaco Telecom takes its network security seriously. Like the U.K., it has a security center that tests infrastructure equipment. “Security applies to all,” he said. “The main issue isn’t about people spying, it’s about security breaches. We’ve been working a lot with the government and Monaco’s security agency to try and define a fortress around our equipment, to monitor individually each piece. This applies not only to Huawei, but all.”
Peronnet was quick to add that Monaco is not breaking new ground using Huawei equipment, which puts security concerns into context. “We’re not making a choice that no-one else has,” he said. “Huawei is the number one network provider in Europe, and Monaco Telecom is not big enough to help it achieve that.”
The launch will make the 2020 race the first 5G Monaco Grand Prix. Does that mean there will be specific 5G-centric plans for the race? Peronnet believes it’s a little too early for that, but is open to doing something.
“If there are some use cases that make the race safer because of 5G, why not?” This would still need the Formula One Association and the Automobile Club of Monaco’s involvement. However, he sees greater advantages coming in 2021.
“By this time there will be roaming agreements between operators, so visitors will be able to roam on 5G,” he said. “The line-up of handsets will be much larger, and the costs will have dropped. The line-up of handsets will be much larger, and the costs will have dropped.” For these reasons, he expects 5G phones to take at least 10% of the traffic during the race weekend, which will also take load away from the 4G network, resulting in a better connected experience at the 2021 Monaco Grand Prix for everyone. How about the network itself? Increasing the density of coverage outside and advancing the indoor coverage is on the agenda.
The 5G network operates on the 3.5GHz bandwidth, making it difficult for the signal to penetrate buildings. “We still have a long way to go in order to provide great indoor coverage with 5G,” Peronnet said. “It will need specific hardware, which is coming, but not ready yet.”
How about the smartphones that receive the 5G signal? Currently, Monaco Telecom offers the Huawei Mate 20 X 5G and the Xiaomi Mi Mix 3 5G smartphones. However, while both are very good devices, Peronnet told me that Monaco adores the iPhone, and inhabitants may be waiting for Apple to enter the 5G race. foxconn china tariffs could make iphone more expensive manufacturing Apple “[It will be] huge. Decisive,” Peronnet said about the potential of a 5G iPhone.
“Monaco is 80% iPhone. When Apple releases a 5G iPhone, 5G in Monaco will skyrocket.” Apple is rumored to launch a 5G iPhone in 2020, so for now the line-up is Android only, but there are no current promotions running to convince people to adopt Android instead. Peronnet believes people should make their own choice, and that feeling at ease with their phone is more important than pushing them to make a switch. While Monaco has early adopters, they are not ones who are keen to test or deal with bugs. This emphasizes the importance of launching a reliable 5G network quickly.
Over the course of an afternoon, evening, and following morning I tested out Monaco Telecom’s 5G network on a Huawei Mate 20 X 5G. The experience displayed the promise we all expect from 5G, but has not always been evident in early tests elsewhere. The speeds were consistently impressive, ranging between 500Mbps to over 1Gbps, but what was most noticeable was the reliability and breadth of coverage.
I walked around Monaco’s main town, taking in the Monte Carlo Casino, the world-famous harbor which becomes the pit lane during the Grand Prix, and up the hill past La Rascasse and towards more residential areas, throughout which the 5G signal remained constant. Each test I performed along the way showed I was getting 5G, rather than 4G speeds with a 5G network indicator on the phone. Although I could only browse and view YouTube videos on the phone, rather than anything more complex, it was seamless, speedy, and a wonderful thing to use. The 5G signal struggled to work indoors, and my hotel only served 4G speeds, but a 5-minute walk saw 5G quickly return.
Not that 4G is a problem in Monaco, and the speeds I achieved still regularly reached 300Mbps. It’s a deeply impressive feat to have 5G coverage like this so quickly, in a challenging environment, and Monaco truly provides the first proper glimpse of the 5G world we have been teased with for several years.
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“It’s really frustrating,” said Kevin Nelson was recently in the middle of his 1,538 ha farm in north-east Montana, about the poor cellular reception. “We keep being told it’s going to improve, it’s going to improve.” NOT LIKELY ANY TIME SOON!
Plans to upgrade the wireless service near Mr Nelson’s farm halted abruptly this month when US President Donald Trump issued an executive order that banned the purchase of equipment from companies “posing a national security threat.” That order was meant to bar network equipment from Huawei, the Chinese telecommunications giant, which is a major supplier of equipment to rural wireless companies.
The CEO of the wireless provider in Mr Nelson’s area said that without access to inexpensive Huawei products, his company could not afford to build a planned tower that would serve Mr Nelson’s farm. Nowhere will the changes be felt more acutely than in rural America, where wireless service is spotty despite years-long government efforts to improve coverage. They also add to the economic uncertainty created by the White House’s trade war with China. Farmers are fearful of an extended hit to their exports.
Huawei is essential for many wireless carriers that serve sprawling, sparsely populated regions because its gear for transmitting cell signals often costs far less than other options.
Mr Trump’s ban is forcing carriers such as Nemont, which serves Opheim, to scrap expansion plans. In addition, some of the companies already using Huawei equipment fear that they will no longer receive government subsidies meant to help get service to remote areas.
U.S. intelligence officials have accused Huawei of being an extension of the Chinese government, and said that its equipment could be vulnerable to espionage and hacking. President Trump also appears to be using Huawei as a bargaining chip in his escalating trade battle with China. “Huawei is something that is very dangerous,” he said last Thursday. “It’s possible that Huawei would be included in some kind of trade deal.”
Huawei has denied that it is a security risk, saying that it is an independent business that does not act on behalf of the Chinese government. It said that 500 carriers in more than 170 nations use its technology. “Restricting Huawei from doing business in the US will not make the US more secure or stronger,” Huawei said in a statement. “Instead, this will only serve to limit the US to inferior yet more expensive alternatives.”
Much of Mr Trump’s focus has been on the next generation of wireless technology, known as 5G. But Huawei already provides equipment to about a quarter of the country’s smallest wireless carriers. The Rural Wireless Association, a trade group that represents 55 small carriers, estimated that it would cost its members US$800 million to US$1 billion to replace equipment from Huawei and ZTE, China’s other maker of networking gear.
Nemont, based near Opheim, is one of those companies. Its footprint is 36,260 sq km, bigger than Maryland, and requires huge amounts of wires, towers and other costly infrastructure. But the company has only 11,000 paying customers. Nemont first reached out to Huawei nine years ago, when its members decided to upgrade their cellular network. With subsidies from the federal government, Nemont was prepared to spend about US$4 million on networking equipment such as routers and other gear to put on dozens of cell towers across the region.
Even at the time, officials in the Obama administration voiced concerns about Chinese equipment makers and their ability to break into US networks to steal intellectual property or hack into corporate or government networks. Defense Department officials and lawmakers said that they were concerned that the Chinese government and military could use the equipment to intercept American communications.
The officials were vague about their concerns over Huawei, then a little-known firm. But Mike Kilgore, the chief executive of Nemont, said that he had outlined Nemont’s plans to buy Huawei equipment in a letter to Senator Jon Tester, and asked whether Mr Tester had security concerns. Mr Kilgore said that he was ready to go another route if Huawei’s equipment would put customers at risk. “I was begging for them to say, ‘No, don’t buy it,'” he said.
Mr Tester’s office called him and said that it did not see any major concerns with picking Huawei, Mr Kilgore said. A spokesman for Mr Tester said that an aide had told Mr Kilgore to contact the Federal Bureau of Investigation (FBI) and other intelligence officials for advice. After the call, Mr Kilgore chose Huawei, which offered to customise its equipment and charge 20-30 per cent less than competitors.
Nemont, a wireless provider that serves an area larger than Maryland, scrapped some expansion plans after a recent executive order by President Trump. Photo Credit: Lynn Donaldson for The New York Times
Nemont has since expanded its high-speed wireless network using almost all Huawei equipment. Mr Kilgore even visited Huawei’s headquarters in Shenzhen, China. He is the president of the Rural Wireless Association, the trade group. Huawei has a representative on the group’s board without voting rights, one of two board members who do not represent a wireless carrier.
“The other vendors hardly gave us the time of day, and now they have been acquired or are out of business,” Mr Kilgore said. “We took a gamble, but we clearly made the right bet.”
The technological upgrade changed lives. Kevin Rasmussen was recently in the cab of his tractor using an iPad connected to high-speed Internet beaming from a nearby cell tower. The connection worked with software on the iPad to help direct where the tractor poked holes in the soil and dropped seeds and fertilizer.
“I can sit up here in my tractor and do my banking, monitor six weather apps and read up on things like trade and Huawei, all on my phone,” Mr Rasmussen said. “Rural America needs this so badly.”
Many companies that extend wireless broadband to rural areas, like Nemont, depend on subsidies from the Federal Communications Commission (FCC). Ajit Pai, the FCC’s chairman, has proposed cutting off that money to carriers using equipment from Huawei or ZTE.
“We believe that it is important that networks are secure not just in urban areas, but in rural areas as well,” the agency said in a statement. “There are currently many rural broadband providers that use equipment that does not pose a national security risk.”
Mr Kilgore estimated that it would cost US$50 million to replace his Huawei equipment. If that is the only option, he said, he might have to shut down the company, leaving his customers without wireless service. Mr Rasmussen said that would be a big blow to his farming operation. “We’re getting squeezed on all sides,” he said. “The tariffs and trade affect our prices, and now this could affect our ability to farm.
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At the Huawei Global Analyst Summit 2019 this past week in Shenzhen, China, Huawei announced its new brand strategy for IP networking and unveiled four new engine series products for the IP network in the intelligence era. These announcements signify Huawei’s efforts to build ubiquitous connectivity, release 100 percent AI computing power by using an ultra-broadband lossless network, and help users march rapidly into a fully connected, intelligent world.
Kevin Hu, President of Huawei Data Communication Product Line, said: “Huawei has more than 20 years of expertise in the IP field. We are committed to building differentiated innovative products and continuously applying digital technologies, such as 5G, cloud computing, and AI to IP networks. We believe that the intelligent IP networks built with the four engine series products can continuously empower users with business intelligence.”
“The intelligent world is already here. We can touch it,” Hu said. “As an industry, we’re at the threshold of enormous opportunity. Huawei is determined to build a world with ubiquitous connectivity and pervasive intelligence, delivering intelligent experiences across all scenarios, and make sure that every person, home, and organization has access to the benefits,” he added.
With the advent of 5G, cloud, and AI, hundreds of billions of production and office terminals will collaborate and unite with each other, 100 percent of enterprise services will migrate to the cloud and, with AI adoption expected to reach an estimated 86 percent by 2025, there will be many potential security issues to be addressed. All these trends are posing greater challenges for digital transformation of enterprises. The network is the basis of enterprises’ digital transformation, but needs to overcome some core challenges, such as how to carry and flexibly deploy enterprise services, how to ensure uncompromised experience for migrating these services to the cloud, and how to ensure ICT security. Huawei believes that the future network must be simple and AI-capable, so that it can proactive detect service changes and predict network risks in time. These expectations will drive enterprise ICT infrastructure transformation, helping enterprises reshape business models and continually improve the customer experience for optimal outcomes in the future.
Huawei’s four new engine series products for the IP network are AirEngine, CloudEngine, NetEngine, and HiSecEngine.
- AirEngine: Huawei first Wi-Fi 6 commercial product builds on 5G strengths of Huawei. It has passed the highest performance verification of the Tolly Group, an international authoritative test organization. Huawei 5G smart antenna and intelligent application acceleration technologies increase the Wi-Fi coverage area by 50 percent, shorten the Wi-Fi network latency to 10 milliseconds, and achieve an optimal mobile experience.
- CloudEngine: Huawei’s embedded AI chip and unique AI algorithm enable zero packet loss and the fastest forwarding performance in the industry, successfully leading data center networks into the AI era. Huawei campus switches stand out with the highest forwarding performance, and they build on AI-powered application identification and dynamic network algorithms to build a packet loss-free, high-quality campus network. The distributed AI O&M architecture can reduce fault identification from minutes to seconds, shorten automatic fault location from hours to minutes, and reduce OPEX by 40 percent.
- NetEngine: Huawei NetEngine intelligent metro routers have the largest capacity in industry, are SRv6 ready, and offer full-lifecycle intelligent automation. With NetEngine, one network can carry B2B, B2C, and B2H services. It provides intelligent connections and application-level SLA assurance for many vertical industry applications, building a solid digital foundation for the 5G era. Huawei next-generation NetEngine AR6000 series SD-WAN routers use a brand-new architecture and are designed with rich hardware acceleration engines and unique Ultra-Fast forwarding algorithms, improving SD-WAN performance to three times the industry average. All these merits make them ideal WAN edge routers with the fastest speeds and optimal experiences.
- HiSecEngine: Based on core concepts of Huawei’s HiSec security solution, this high-performance network security engine accurately identifies unknown threats to ensure always-on core services. It provides an intelligent defense system to protect the fully connected, digital world.
At the Summit, China CITIC Bank shared innovative practices on how to build their intelligent data center network with Huawei CloudFabric Solution. China CITIC Bank successfully reinvents their IT and data center network systems, paving the way for fast FinTech innovation and intelligent operations. CloudFabric assists the Bank with one-click disaster recovery switchover and fast completion of the network configuration in minutes. With an AI-based intelligent O&M platform, the solution ensures 99.999 percent service continuity and security of financial transaction systems.
Guo Xiaodong, Director of Guarantee Department of Qingdao Campus, Shandong University, introduced the joint innovation project between Huawei and Shandong University on campus network practices. Huawei’s all-scenario Wi-Fi is deployed in multiple campuses, such as the central campus of Jinan. The network intelligent analyzer CampusInsight is also used to improve the campus teaching experience. CampusInsight monitors the user experience in real time to ensure zero authentication failure and zero network faults. This technology allowed the 8,000 people at the 2018 graduation ceremony, held at stadium in Shandong University, to simultaneously have wireless access.
In the data communication field, Huawei will continue to build more intelligent connections, bringing digital to every person, home, and organization for a fully connected, intelligent world. Meanwhile, Huawei will collaborate with more enterprise customers in network innovation design and in-depth service practices. We believe that Huawei Intent–Driven Network (IDN) will help more enterprises succeed in digital transformation for the AI and cloud era in the future.