According to researcher Dell’Oro Group, the U.S. efforts to stop Huawei progress led to 60+ percent of the global wireless gear market to restrict or consider restricting that Chinese company’s products. Now the U.S. government may offer financial support to a domestic cellular equipment industry that has lagged behind for years. In the last five years, said Dell’Oro, Huawei, Sweden’s Ericsson and Finland’s Nokia accounted for 20 percent of the wireless gear market, with no rival even reaching 10 percent of the market. A new competitive landscape and building 5G equipment based on open standards could have a major impact on the industry.
The Wall Street Journal reports that new U.S. policies resulted in “a newly competitive market that is reminiscent of the 1990s, when bygone industry giants such as Lucent, Motorola, Nortel, Siemens and Alcatel fought for a piece of a growing telecom-equipment pie.”
“It’s got a Wild West feel to it,” says former Nokia and Huawei executive Bill Plummer, now working at JMA Wireless, a 5G company. “We haven’t seen this since probably the eve of the dot-com bust — this dynamic and thriving competitive environment in wireless.”
In addition to encouraging innovation and lower costs, “the new competitive landscape is crucial to U.S. efforts to counter China’s influence in developing 5G technology,” said U.S. officials.
“The big change over the past couple of years is pressure on Huawei,” said Enders Analysis telecom analyst James Barford. “Even in countries where there is no formal ban, you’re going to be thinking twice” about buying Huawei gear. Nokia also made a costly mistake in buying “expensive chips for its 5G equipment,” which consumed more power.
Ericsson, however, said “they want more competition to increase innovation and reduce costs.” Among the new rivals in the space is Samsung Electronics, which ranked fifth in 2020, “but won a major victory last year when Verizon Communications switched suppliers from Nokia to Samsung.”
The most significant factor that could upend 5G gear is open-standards software. Open RAN “allows equipment from different makers to work together, which will offer wireless carriers more options as they build their 5G networks and encourage innovation and price competition.” An open standard would allow carriers to mix and match, offering “more options for cost and quality.”
Smaller U.S. companies Airspan Networks, Altiostar, Mavenir, JMA Wireless and Parallel Wireless aim to build 5G equipment based on open standards. The U.S. government supports the open standards efforts, for reasons expressed by FCC acting chair Jessica Rosenworcel. “We may be able to increase security, reduce our exposure to any single foreign vendor, lower costs and push the equipment market to where the United States is uniquely skilled — in software,” she said.
WSJ notes that, “if U.S. companies do indeed become major players in 5G equipment, then they can also play a bigger role in setting global standards for telecom equipment.” Last month, President Biden and Japanese Prime Minister Suga Yoshihide “agreed that the U.S. and Japan would collaborate to advance open 5G networks ‘by fostering innovation and by promoting trustworthy vendors and diverse markets’.”
The UK and European Union are also making efforts to support open-standards 5G equipment.
Is the 5G Race Worth Winning? Amazon Laughs, Bloomberg, 5/26/21
5G Digital Divide: What It Is and How to Help Bridge the Gap, Verizon, 5/27/21
Why the U.S. Rollout of 5G Is So Slow, The Wall Street Journal, 5/25/21
A Guide to 5G Services: What the Different Brand Names Mean, The Wall Street Journal, 5/26/21
The Coming U.S.-China Race Over 5G in Cars, The Wall Street Journal, 5/26/21