Nokia downplays report claiming it’s struggling to deliver 5G kit in South Korea

A report has alleged that Nokia is struggling to fulfill its 5G commitments to the three South Korean MNOs, but Nokia sort of insists everything’s cool.

Now it must be stressed this is just one report from a website called Business Korea that we’re not familiar with and we have yet to see the same claims made independently anywhere else. Having said that, if there is some substance to it then that’s not great news for Nokia and could have brand as well as financial consequences.

The headline reads ‘Mobile Carriers in Trouble for 5G Equipment from Nokia’. It starts by claiming that shipments of Nokia 5G gear are three months behind schedule and then goes on to say “Nokia’s equipment is lower in quality than those supplied by Samsung Electronics, Ericsson and Huawei. The former has shown some problems in interoperability testing and massive traffic processing.” It concludes by speculating that operators may need to take emergency measures to compensate for these failings.

We asked Nokia what it makes of all this and it responded with the following statement: “Nokia is actively delivering our 5G equipment to operators in Korea and we are confident that we will fulfill the 5G equipment needs of all customers. We have already started delivering 5G units to customers there and are increasing our 5G production capabilities. As a leading global communications company, we are committed to delivering best in-class products to all our partners and customers.”

That’s not the strongest rebuttal is it? The report doesn’t suggest no gear is being delivered, just that it’s late and not very good. Expressing confidence is not the same as saying the report is wrong and vowing to increase production capabilities sort of indicates they’re not currently up to scratch. Having said that it’s quite possible that everything’s fine and this report is barking up the wrong tree. The coming weeks may reveal more.

Reviewers report major faults with Samsung’s new foldy screen

A number of tech reviewers have reported the screens of their Galaxy Fold review units breaking soon after they started using them.

Reviewers for The Verge, CNBC and Bloomberg all had major problems with the groundbreaking foldable screen soon after they got their hands on it. The Bloomberg case seemed to result from the removal of a protective film over the screen, which it wasn’t made clear shouldn’t be done. The other two don’t seem to have made that mistake, however, and report different faults, which must be seriously worrying for Samsung.

Here’s the statement Samsung gave those sites: “A limited number of early Galaxy Fold samples were provided to media for review. We have received a few reports regarding the main display on the samples provided. We will thoroughly inspect these units in person to determine the cause of the matter.

“Separately, a few reviewers reported having removed the top layer of the display causing damage to the screen. The main display on the Galaxy Fold features a top protective layer, which is part of the display structure designed to protect the screen from unintended scratches. Removing the protective layer or adding adhesives to the main display may cause damage. We will ensure this information is clearly delivered to our customers.”

That all seems fair enough but, given the catastrophe that was the Galaxy Note 7 Samsung must be getting some traumatic flashbacks. The screen itself seems to be holding up so long as you don’t peel the film off, but some of the underlying circuitry and structure seems to be struggling. If these cases turn out to be isolated then they will all be forgotten but if any more such reports emerge then the launch of the Galaxy Fold is in a lot of trouble.

 

 

 

FCC is likely to deny China Mobile’s licence application

Ajit Pai, Chairman of FCC, has called on his colleagues to vote against granting a licence to China Mobile, citing national security concerns.

In a public statement tilted “FCC Chairman Opposes China Mobile’s Telecom Services Application”, Pai said that he believed, after reviewing the relevant evidence, “China Mobile’s application to provide telecommunications services in our country raises substantial and serious national security and law enforcement risks.  Therefore, I do not believe that approving it would be in the public interest.” He went on to request the Commission team to “join me in voting to reject China Mobile’s application.”

This should not come as any surprise. One piece that stood out among the “input provided by other federal agencies” Pai referred to in his statement already set the tone. It was a brief statement issued by David J. Redl, Assistant Secretary for Communications and Information, U.S. Department of Commerce. “After significant engagement with China Mobile, concerns about increased risks to U.S. law enforcement and national security interests were unable to be resolved. Therefore, the Executive Branch of the U.S. government, through the National Telecommunications and Information Administration pursuant to its statutory responsibility to coordinate the presentation of views of the Executive Branch to the FCC, recommends that the FCC deny China Mobile’s Section 214 license request.” The statement was released through the National Telecommunications and Information Administration (NTIA), a part of the Department of Commerce.

China Mobile Limited, the world’s largest mobile operator by subscriber numbers, is partially listed (27.28%) on the Hong Kong Stock Exchange. The Chinese government, through the parent company China Mobile Communications Group Co., Ltd., controls the rest of the company. Its US subsidiary, China Mobile USA, registered in Delaware, filed an application in 2011 to offer international telephony service between the US and other countries. But it had remained dormant until it was reviewed by the Trump administration last year.

China Mobile would have to operate as a virtual network anyway as it lacks the infrastructure. That worries the US officials that the operator, ultimately the Chinese government, would be able to exploit the American telecommunication networks for intelligence gathering purposes, therefore compromise the security of the government and the public. “There is a significant risk that the Chinese government would use the grant of authority to China Mobile USA to conduct activities that would seriously jeopardize the national security and law enforcement interests of the United States,” an FCC official told the reporters, quoted by Reuters.

The vote by the FCC Commissioners will take place at the May 2019 Open Commission Meeting to be held on 9 May. The result will likely go Pai’s way if the commissioners vote along party line. Three out of the five commission seats are occupied by Republicans, as is Pai himself.

Huawei responds to study questioning who really owns it

A recent academic study cast doubt on Huawei’s claim to be owned by its employees, but Huawei itself says the conclusions are “completely unsubstantiated”.

The study, which Telecoms.com reported on earlier this week, is called “Who Owns Huawei” and is written by a couple of Professors. It claims to use publicly available data to call into question Huawei’s ownership and therefore who ultimately controls it. In the context of all the heat Huawei is getting from the US and its allies, which are calling into question its closeness to the Chinese state and thus whether or not the presence of its kit in Western networks constitutes a security risk, this is a very sensitive topic for the vendor.

It’s hardly surprising, therefore, that Huawei felt moved to respond to our report. We have reproduced the statement it provided to us in its entirety below and will conclude with some analysis.

“This report, released by Professor Christopher Balding and Professor Donald Clarke, was based on unreliable sources and speculations, without an understanding of all the facts. They have not verified the information in the report with Huawei, and their conclusions are completely unsubstantiated. Huawei is a private company wholly owned by its employees. No government agency or outside organization holds shares in Huawei or has any control over Huawei.

“Through the Union of Huawei Investment & Holding Co., Ltd, Huawei implements an Employee Shareholding Scheme that complies with applicable laws and regulations. The Representatives’ Commission is the organization through which the Union fulfills shareholder responsibilities and exercises shareholder rights. As Huawei’s highest decision-making body, the Representatives’ Commission elects members of the Board of Directors and the Supervisory Board.

“In addition, the Commission makes decisions on important company matters, like capital increases, issuance of new shares, and profit distribution. Members of the Representatives’ Commission are elected by shareholding employees that have the right to vote. Daily operations of the Representatives’ Commission, Board of Directors, and Supervisory Board, including the selection of their members, comply with Huawei’s Articles of Governance.

“They do not report to any government agency or political party, nor are they required to do so. We welcome experts and researchers who have an interest in this topic to visit Huawei’s exhibition hall of shares and exchange their thoughts and ideas.”

The first couple of sentences are fairly standard PR FUD, which seek to undermine the integrity of the study without addressing any of its points. Then, while the report doesn’t directly claim the government owns or controls the company, the statement quickly moves to address that question regardless, which is telling. This paragraph taken from the conclusions of the original study is the closest it gets to such a claim.

“If Huawei Holding is in fact controlled by a trade union committee, then given the way such bodies are supposed to operate in China, it makes sense to think of it as state-controlled and even state-owned. If the formal picture does not represent reality, then Huawei, which controls the relevant information, can clarify this.”

The Huawei statement is presumably an attempt at clarification but it still leaves some important questions unanswered. The key section concerns how the Representatives Commission, which seems to control the company, is elected. “Members of the Representatives’ Commission are elected by shareholding employees that have the right to vote,” we are told.

So who are these shareholding employees that have the right to vote? How many of them are there and how do we know what, if any, political affiliations they have? Maybe the answers lie in this ‘exhibition hall of shares’ the Huawei statement speaks of, but if so why not make that information more broadly available?

It’s hard to know how transparent Huawei needs to be to put an end to speculation about its relationship with the Chinese state. Maybe it needs to be as open as a Western public company, but there surely needs to be some possible path to redemption and the US could do with being more transparent about what form that might take too.

Europe approves new internet rules designed to rein in Amazon and co

As part of the overall Digital Single Market programme, the European Parliament has voted to approve new regulations claiming to protect European businesses and consumers when using online platforms to trade.

The “Regulation on platform-to-business trading practices” has been almost two years in the making since the publication of a document titled “Online Platforms and the Digital Single Market: Opportunities and Challenges for Europe” by the European Commission in May 2016.

The EU executives were understandably happy with the passing of the new rules. “We are delighted by the overwhelming support to the new rules on online platforms’ trading practices among the members of the European Parliament. As the first-ever regulation in the world that addresses the challenges of business relations within the online platform economy, it is an important milestone of the Digital Single Market and lays the ground for future developments. Not only will it improve trust, predictability and legal certainty, it will also offer new and accessible options for redress and resolution of disputes between businesses and platforms,” said the official statement, jointly signed off by Andrus Ansip, the Commission’s Vice-President for the Digital Single Market, Elżbieta Bieńkowska, Commissioner for Internal Market, Industry, Entrepreneurship and SMEs, and Mariya Gabriel, Commissioner for Digital Economy and Society.

What drove the Commission to undertake such an initiative two years ago was the understanding that there is a lack of a redress mechanism when the European SMEs encounter problems when trading on the global platforms (companies singled out include Booking.com, Facebook, eBay, and Amazon), for example, “delisting without statement of reasons or sudden changes of Terms and Conditions”. The Commission has also assessed the effectiveness of legislative vs. non-legislative measures, but believed an EU-wide legislation is necessary.

The Regulation is aimed to achieve three main objectives as are outlined in the Impact Assessment Summary published a year ago:

  1. To ensure a fair, transparent and predictable treatment of business users by online platforms
  2. To provide business users with more effective options for redress when they face problems
  3. To create a predictable and innovation-friendly regulatory environment for online platforms within the EU

Although it has been approved by the European Parliament, the regulation still needs to be formally passed by the Council of the European Union, which represents the governments of the member states and can be roughly seen as another “chamber” of the union’s legislature. There is no definite timeline on when the Council will make the decision. However, by the reading of the press statement where the Commissioners thanked the member states “for their great efforts to reach a good compromise in a very short period of time. This is yet another positive development ahead of the upcoming European elections,” the Council may not be able to vote on it before the European Parliamentary election in May. After the final approval, the regulation will enter into force 12 months after it is published in the Official Journal.

This is the latest internet-related legislation the EU has made recently. On 15 April the Council passed the updated Copyright Directive “fit for the digital age”, which has proved controversial.  There are also legislation and regulation updates in member states. France has started levying 3% income tax on digital companies with sales in excess of €25 million in France and €750 million globally, without waiting for an EU-wide tax regime as part of the Digital Single Market. The UK, still an EU member state at the time of writing, has not only considered setting up a new regulator to oversee the digital world and started the consultation process of a “code of practice for online services” to protect children, but will also formally introduce the “porn block” on 15 July, which has been called “One of the Worst Ideas Ever” by some critics.

UK advertising watchdog ties itself in knots over broadband marketing

The UK Advertising Standards Authority has ruled that Vodafone’s ‘Gigafast’ service was misleading because some people might reckon that means 1 Gbps.

In reality the brand referred to a range of broadband packages, the fastest of which could still only manage an average of 900 Mbps. Virgin Media thought this was a bit cheeky and so grassed Vodafone up to the ASA, which today upheld the complaint on the grounds that, while some people wouldn’t read much into it, some punters might reckon they would be getting at least 1 Gbps when they weren’t.

“The ASA considered that many consumers would likely understand the prefix ‘Giga’ to be a hyperbolic description of speed, and would therefore generally understand ‘Gigafast’ internet was very fast broadband,” satated the ruling. “However, we considered that a significant proportion of consumers would have sufficient knowledge of broadband terminology to understand Gigafast Broadband as a reference to a service capable of providing speeds of 1 Gbps (1000 Mbps).”

Contrast this with the ASA’s previous ruling on the use of the term ‘fibre’ in broadband marketing. Its conclusion in that case was that hardly anyone would think fibre meant 100% fibre, so it’s fine to just chuck the term around even if loads of the connection was actually over copper. How come people understand giga to mean 1000 Mbps but don’t think fibre means fibre?

To be fair to the ASA there was an additional complicating factor in this case, which is that Vodafone apparently kept banging on about the £23 price point in its Gigafast marketing, when that price only gets you an average speed of 100 Mbps, with the 900 Mbps one costing £48 per month. That seems to be the thing that the ASA most objected to, implying it’s fine with a 900 Mbps average service being called gigafast despite having previously ruled that ‘up to’ claims weren’t allowed.

“Although we considered that the website made clear that Vodafone Gigafast referred to a range of packages which were not all capable of providing 1Gbps, because it implied that consumers could get a service that offered speeds of 1Gbps for £23 per month, when that was not the case, we concluded that it was likely to mislead,” concluded the ruling.

The ASA seems to be increasingly confused about broadband marketing. It seems fine with labelling a package of services, the fastest of which only averages 900 Mbps, as Gigafast and with calling a partly copper connection fibre. At the same time it objects to the use of ‘up to’ in describing broadband speeds and is touchy about ambiguous pricing claims. It needs to either be laissez faire or authoritarian, but right now it seems to jump between those positions on a case by case basis.

T-Mobile Sprint merger cast into doubt once more

The US Department of Justice might not let the merger go through in its current form, according to reports.

The WSJ has the scoop, citing those handy people familiar with the matter once more, who also seem to have been chatting to Reuters. According to the latter, which isn’t paywalled, the DoJ has concerns about the deal as it’s currently structured. The news caused shares in both companies to fall and their respective CEOs to tweet coded dissent.

Both John Legere and Marcelo Claure said the article is, respectively, untrue and not accurate. While on the surface these might appear to be absolute rebuttals, it’s actually a bit more nuanced than that. Legere says the premise of the article is untrue without detailing what he thinks that premise is, while any small part of the piece could be inaccurate without the overall claim being so.

Here’s the opening paragraph of the WSJ story: “Justice Department antitrust enforcement staff have told T-Mobile US Inc. and Sprint Corp. that their planned merger is unlikely to be approved as currently structured, according to people familiar with the matter, casting doubt on the fate of the $26 billion deal.”

There’s not much else to say at this stage but the process certainly seems to be dragging on. Presumably there has been some discussions between the two companies and someone on the DoJ side decided to up the pressure on TMUS and Sprint to compromise via this mini-leak. Let’s see.

 

 

Ericsson rides US 5G wave to another solid quarter

Swedish networking vendor Ericsson served up its third quarter in a row of organic growth, thanks largely to the rollout of 5G by US operators.

Chatting to Telecoms.com on her last earnings call before moving on Helena Norrman, Ericsson’s marketing head, flagged up the organic growth as her highlight. The single biggest reason for this growth is the US 5G rollout, she explained, with Ericsson having added US Cellular to the big four MNOs as part of eight new 5G deal winds since we last checked in with it.

Ericsson Q1 5G deal wins

Other than the sales growth Norrman pointed towards the healthy gross margin of 38% (last quarter was abnormally low thanks to its BSS write-down), strong operating income of SEK 4.9 billion, only 1.6 of which was due to exceptional items such as the sale of half of MediaKind and getting RCom to cough up what it owed. This all contributed to a decent cashflow number, so maybe Ericsson will ramping up its investment a bit more.

Ericsson Q1 table

“For the third consecutive quarter we showed organic sales growth, this quarter by 7%, said CEO Börje Ekholm in his comments accompanying the earnings report. “Growth was mainly driven by North America. Our strategy, to work with lead customers in lead markets, is generating both 5G business and hands-on experience in 5G rollout and commercialization. To date we have publicly announced commercial 5G deals with 18 named operator customers, which, at the moment, is more than any other vendor.

“5G services, including mobility, have been launched in South Korea and North America. While Switzerland has released spectrum allowing Swisscom to offer commercial 5G services, using our equipment, the development in other parts of Europe is considerably slower primarily due to lack of spectrum, poor investment climate and additional uncertainties related to future vendor market access.”

Ericsson Q1 segments

Ericsson announced the Swisscom 5G switch-on in a separate press release and the only fly in the ointment from this set of results is the near conclusion of the investigation Ericsson has been under in the US for several years.

As previously disclosed, we have been voluntarily cooperating since 2013 with an investigation by the United States Securities and Exchange Commission (SEC) and, since 2015, with an investigation by the United States Department of Justice (DOJ) into Ericsson’s compliance with the U.S. Foreign Corrupt Practices Act (FCPA),” said Ekholm

“We continue to cooperate with the SEC and the DOJ, and have recently begun settlement discussions. These discussions are in a very early stage and therefore we are not able to estimate their length. Further, as this is an ongoing legal matter we cannot provide any detail. However, based on the current status of the discussions it is our assessment that the resolution of these matters will result in material financial and other measures, the magnitude and impact of which cannot be reliably estimated or ascertained at this time.”

This wasn’t enough to prevent a manor spike in Ericsson’s share price, which was up 3% at time of writing. Ericsson should be careful not to over-rely on the US RAN gravy train, however, as that will run out of steam eventually and it had trouble recovering when the same thing happened in the 4G cycle. Getting Digital and Managed Services to contribute more to growth will be key.

Apple capitulates to end war with Qualcomm

Qualcomm and Apple agreed to settle all the ongoing litigations with the iPhone maker paying the chipset maker an undisclosed amount and signing a six-year licensing agreement.

On Monday, Qualcomm and Apple went to court over the allegation that Qualcomm has been abusing its monopoly position to over-charge for its chips. The stakes could have run up to tens of billions of dollars, with the OEMs Foxconn and Pegatron already demanding compensation of $9 billion dating back to 2013. The case at the Southern District Court of California in San Diego was meant to last for five weeks.

On Tuesday, the two companies released a brief statement to announce a settlement. “Qualcomm and Apple today announced an agreement to dismiss all litigation between the two companies worldwide. The settlement includes a payment from Apple to Qualcomm. The companies also have reached a six-year license agreement, effective as of April 1, 2019, including a two-year option to extend, and a multiyear chipset supply agreement.”

This is definitely good news for the two companies especially for Qualcomm, and good for the industry and consumers. Specifically, for Qualcomm it means its business model will remain intact and the company can put an end to a multi-year legal saga; for Apple, in addition to avoiding the punitive $31 billion penalty, this settlement will be able to quicken its steps to launch a 5G iPhone, making up the gap already expanding between itself and the leading pack.

A few hours later, Intel announced that it intends “to exit the 5G smartphone modem business and complete an assessment of the opportunities for 4G and 5G modems in PCs, internet of things devices and other data-centric devices. Intel will also continue to invest in its 5G network infrastructure business. The company will continue to meet current customer commitments for its existing 4G smartphone modem product line, but does not expect to launch 5G modem products in the smartphone space, including those originally planned for launches in 2020.”

It must have been a blow to Intel’s mobile ambition, especially after it announced only late last year that it would bring the launch of its first 5G modem forward by half a year to the second half of this year, an act to prove the doubters wrong. That originally planned 5G modem to be launched in 2020 referred to in the announcement, presumably a second generation, was supposed to power the first 5G iPhone, after Apple all but officially declared that it would enter into an exclusive relationship with Intel.

Putting the two things together it may be reasonable to infer that Apple agreed to settle after it had realised that it does not have other options than coming back to Qualcomm for the supply of 5G modems (assuming Intel had updated Apple about its imminent decision to withdraw from the market).

In addition to leaning in on Intel, Apple has also been reported to be strengthening its in-house modem development capability, ultimately aiming to rid itself of reliance on external suppliers. Based on the terse announcement released together with Qualcomm, it looks Apple does not believe the home-grown modems will be good enough to compete with Qualcomm in the next few years. Huawei is another supplier that has launched its own 5G modem, but it may be safe to estimate that the chance of Apple going for Huawei chips is slim.

In keeping with the normal practice of settlement cases like this, the companies did not disclose the amount Apple will pay. However, Qualcomm updated the SEC shortly after the settlement announcement was made, as the settlement would have material impact on the earnings. The company expected an EPS incremental of about $2 “as product shipments ramp” without giving a specific timespan. As a reference, in the quarter ending 30 December 2018, Qualcomm delivered an EPS of $0.87 on the back of a total revenue of $4.8 billion. Therefore, assuming Qualcomm’s operational efficiency remains largely constant, the payment Apple will make could run into the $10 billion range.

Payment aside, there must be some soul-searching going on inside Apple, including by Tim Cook, the CEO, who came from a supply chain management background: how could Apple have let itself be cornered so badly in the first place? It’s hard to view this as anything other than complete humiliation for Apple, especially when you consider how aggressively it pursued this case.

On top of the millions it will have paid to lawyers Apple’s negotiating position in arriving at this settlement, considering what was widely assumed about its 5G modem situation, must have been very weak. So it’s quite possible Apple has ended up paying considerably more for Qualcomm’s chips than it would have if it had never initiated this war. Having said that, Apple’s share price seems completely unaffected by the news, probably indicating offsetting relief that it’s back in the 5G game. Qualcomm’s share’s however, surged 23% on the news.

Qualcomm and Apple settle lawsuit so Intel drops 5G smartphone chip

Qualcomm and Apple have settled their lawsuit so Intel is ditching plans to launch a 5G modem expected for the 2020 iPhone.

Apple looked set to skip a 5G iPhone this year amid its legal battle with Qualcomm and use a modem from Intel next year. However, Apple and Qualcomm have today settled their legal battle.

The lawsuit began in 2017 when Apple and its partners accused Qualcomm of abusing its market dominance to charge excessive royalties for use of its technology. Qualcomm countersued Apple, which resulted in more than 80 court battles around the world.

In a joint statement on Tuesday, Apple and Qualcomm announced "an agreement to dismiss all litigation between the two companies worldwide," including claims against Apple's contract manufacturing partners.

Qualcomm has produced a 5G chip ready for devices launching this year. Amid its legal battle with the company, Apple began transitioning away from Qualcomm to Intel for its modems starting with the iPhone 7.

Intel, however, wasn’t due to launch a 5G modem until the end of this year which is too late for the 2019 iPhone. Apple looked on course to skip this year and use Intel for a 5G iPhone in 2020. Within hours of Apple’s settlement announcement with Qualcomm, Intel scrapped its plans to produce the modem.

Bob Swan, CEO of Intel, said in a statement:

“We are very excited about the opportunity in 5G and the ‘cloudification’ of the network, but in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns.”

Meanwhile, the only other major chip manufacturer ready to produce 5G chips for devices this year was Apple’s biggest rival Samsung.

In a testimony as part of the Qualcomm trial, Apple supply chain executive Tony Blevins confirmed his company had considered sourcing chips from Samsung but the discussions were "not an ideal environment" for Apple.

Samsung is due to produce one of the world’s first 5G smartphones. Earlier this year, Verizon announced it would have temporary exclusivity of the Galaxy S10 for its 5G network launch sometime “in the first half of 2019”.

While Apple often prefers to allow new technologies to mature before adopting them, being a year behind rivals in 5G could harm iPhone sales and damage the company’s image with consumers.

Fortunately, the settled lawsuit with Qualcomm now paves the way for Apple to launch a 5G iPhone this year. Of course, that’s no guarantee that Cupertino will – but the sudden lawsuit settlement hints at some urgency.

Interested in hearing industry leaders discuss subjects like this? Attend the co-located IoT Tech Expo, Blockchain Expo, AI & Big Data Expo, and Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London, and Amsterdam.