Since Washington announced that it was banning US companies from selling software and components to Huawei last month, the Chinese telecom giant has been scrambling for alternative options.
According to Bloomberg, the firm has as many as 10,000 of its developers working around the clock on finding ways of eliminating the need for American software and circuitry.
One of the most pressing initiatives is to release an operating system that can substitute for Google’s Android. Citing unnamed sources, the Global Times reported last week that Huawei is close to unveiling a homegrown alternative – called HongMeng in China, or Oak in overseas markets – as soon as September. New York brokerage firm Rosenblatt Securities has suggested that a million handsets have already been installed with the new OS and an eight-minute micro-movie released by Huawei (and shot entirely on its P30 phone) showed the date September 22 in a move analysts saw as signalling HongMeng’s launch date.
Local media has reported that Alibaba, Tencent and Baidu are all redesigning their popular apps to run on the new Huawei OS.
Also coming to Huawei’s rescue is Russia. Last week, its largest telecoms operator MTS signed a deal with the telecoms equipment maker to develop 5G technologies and launch a superfast network in Russia within a year. That brings the number of overseas 5G commercial contracts that Huawei has signed to 46 in 30 countries. The deal comes at a time when Washington has been putting pressure on its allies to refuse to do business with Huawei for 5G rollouts, even though the Chinese firm is generally cheaper than rivals. US pressure has had an impact: Finland’s Nokia has signed 12 new 5G contracts in the last two months, compared to just three for Huawei, for example.
Huawei’s customers will also be affected. According to a report from telecoms lobby group GSMA, a ban on buying telecoms equipment from Chinese firms (assuming that companies like ZTE were added to the restricted list) would add $62 billion to the cost of constructing 5G networks in Europe and delay the implementation of the next-generation standard by about 18 months.
“Half of this (additional cost) would be due to European operators being impacted by higher input costs following significant loss of competition in the mobile equipment market,” the report said. “Additionally, operators would need to replace existing infrastructure before implementing 5G upgrades.”
Beijing surprised analysts earlier this month by approving its first batch of 5G licences for commercial use in China. Three network operators – China Telecom, China Mobile, China Unicom – and cable network company China Broadcasting Network were given the green light to deploy the 5G technology. The approvals came months earlier than expected, pointing to Beijing’s determination to show its support for Huawei – which will provide the lion’s share of the new network’s infrastructure.
Back in March, China Mobile, China Telecom and China Unicom announced initial plans to invest Rmb17 billion ($2.5 billion), Rmb8 billion and Rmb9 billion respectively in developing their 5G networks this year, Caixin suggests. The China Academy of Information and Communications Technology is predicting a much larger $223 billion in spending on 5G by the three main telcos over the next five years. Rollouts on this kind of scale could give the domestic telecoms equipment makers an upper hand in other markets. “China speeding up its 5G deployment will definitely attract a lot of global telecoms equipment manufacturers to participate. But there is no doubt that Huawei, ZTE and other domestic companies will be the biggest beneficiaries. Not only will contracts at home help improve their profitability, but they will also boost their competitiveness globally,” predicted National Business Daily.
Smartphone makers, too, have been waiting anxiously for the rollout of China’s 5G network. After years of slowing growth at home, they hope the new standard will give consumers more reason to upgrade their handsets. Oppo, for instance, is already primed with a phone to promote, its 5G Reno. “From a consumer point of view, to enter the 5G era, trading in for a new phone is a must. That’s because 4G handsets can’t receive 5G signals while 5G smartphones can use 4G networks,” reckoned the Global Times.
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