A look back at the biggest stories this week

Whether it’s important, depressing or just entertaining, the telecoms industry is always one which attracts attention.

Here are the stories we think are worth a second look at this week:

Facebook reignites the fires of its Workplace unit

Facebook has announced its challenge to the video-conferencing segment and a reignition of its venture into the world of collaboration and productivity.

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Trump needs fodder for the campaign trail, maybe Huawei fits the bill

A thriving economy and low levels of unemployment might have been the focal point of President Donald Trump’s re-election campaign, pre-pandemic, but fighting the ‘red under the bed’ might have to do now.

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Will remote working trends endure beyond lockdown?

It is most likely anyone reading this article is doing so from the comfort of their own home, but the question is whether this has become the new norm is a digitally defined economy?

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ZTE and China Unicom get started on 6G

Chinese kit vendor ZTE has decided now is a good time to announce it has signed a strategic cooperation agreement on 6G with operator China Unicom.

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ITU says lower prices don’t lead to higher internet penetration

The UN telecoms agency observes that, while global connectivity prices are going down, the relationship with penetration is not as inversely proportion as you might think.

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Jio carves out space for yet another US investor

It seems the US moneymen have a taste for Indian connectivity as General Atlantic becomes the fourth third-party firm to invest in the money-making machine which is Jio Platforms.

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Telecoms.com Daily Poll:

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ZTE and China Unicom get started on 6G

Chinese kit vendor ZTE has decided now is a good time to announce it has signed a strategic cooperation agreement on 6G with operator China Unicom.

For a country with such a novel approach to contract law, they do like to make a public show if signing agreements over in China, almost as if they’re trying to convince themselves they’ll be honoured. The ceremonial signing of the agreement also seems to double as a public show of strategic intent and corporate ambition.

They don’t go so far as to say what 6G actually is, however, other than one more G. There’s talk of technical innovation, integration with satellite networks and various flavours of IoT, so at this early stage we’re basically looking at 5G on steroids, which is fair enough. The announcement does move on to list some potential key technologies, which include three dimensional connectivity, Terahertz communication, and integrated communication/sensing, which all sound fun.

“ZTE and China Unicom will also verify the feasibility of these technologies through both the verification tests and the prototyping trials to achieve the 6G network performance targets, such as the peak data rate of 1 Tbps, the user experienced data rate of 20 Gbps, the volume traffic  capacity of 100Gbps/m3,” says the announcement.

There is a certain symbolism to banging on about 6G when the previous generation has only just got started and the world is preoccupied with more immediate concerns. On the other hand, the announcement could just be a massive trolling exercise designed to wind up the internet nutters. ‘If you thought 5G was bad, get a load of this,’ they seem to be saying.

Huawei and ZTE win 88% of joint China Telecom/Unicom 5G tender

Apparently seeking to demonstrate even greater patriotism than their larger contemporary, the other two Chinese MNOs went big on domestic vendors for their 5G rollout.

Neither company seems to have made any formal announcement of their own, with the information originally channelled through the paywalled Shanghai Securities, then reported on by Sina Tech. We are once more indebted to our China correspondent for an accurate account of what was reported.

The long and short of it is that China Telecom and China Unicom, having decided to pool their 5G network resources last year, jointly put out a bunch of 5G RAN business for tender. Huawei and ZTE between them accounted for 88% of the business, an even greater share than they won of China Mobile’s 5G work in its recent tender. Ericsson got most of the rest, which puts it in a similar position across all three giant Chinese MNOs.

The split between Huawei and ZTE doesn’t seem to have bee published but we do know that out of the 250,000 base stations included in the tender, 110,000 will be built by China Unicom and the rest by China Telecom, at a cost of CNY 32.27 billion. Additionally, the total spending of CNY 76 billion ($10.6 billion) by all three operators equals 42% of the three operators’ total 5G CAPEX budget for the year.

Once more Nokia was totally frozen out of the process, leading some to ask whether Nokia’s 5G business may be finished (pun opportunity missed there, alas) in China. The linked piece goes on to note that things may be a lot better on the fixed line side and that may be a reason for the RAN snub. Who knows?

While the UK and EU set out their positions with respect to ‘high risk vendors’ earlier this year, the coronavirus pandemic probably means all bets are off and China knows it. It would be very surprising if this global crisis, combined with China’s stated economic expansionist ambitions, don’t result in greater restrictions on the participation of Chinese interest in foreign economies. In response China will strive to be as autonomous as possible and a global Balkanisation is the inevitable result.

China Unicom and ZTE Made Spectrum-Sharing Breakthrough Using SuperDSS

Recently, China Unicom and ZTE enabled SuperDSS, the industry’s first Tri-RAT dynamic spectrum sharing solution, in China Unicom Henan Branch live network, which implements fast 5G deployment and legacy 3G service guarantee simultaneously. The test result shows average 35% throughput improvement within same bandwidth comparing with LTE/NR DSS while maintaining legacy 3G voice experience, greatly improving spectrum utilization efficiency.

SuperDSS offers a great solution for those operators who are enthusiastic about rolling out 5G with DSS but are unable to do so with limited spectrum as 2G or 3G legacy services still matter. SuperDSS enables quick 5G roll-out while offering smooth transition of legacy voice service, empowers 2G or 3G, 4G and 5G triple RAT dynamic sharing over the same spectrum with flexible and efficient scheduling capability, in which, 2G or 3G bandwidth can be adjusted according to service requirements, so more bandwidth can be used for LTE and NR sharing and improve LTE and NR user throughput accordingly. Taking 20MHz bandwidth for example, to have 2G/3G service, at least one GSM frequency or UMTS carrier will be reserved, so the LTE/NR DSS can only be performed in 15MHz bandwidth, which is not the optimal way of spectrum utilization. With SuperDSS, 2G or 3G, 4G and 5G can share all of the 20MHz bandwidth dynamically according to service requirement, so as to maximize spectrum utilization.

China Unicom spares no effort in exploring innovation for field network modernization, among which, dynamic spectrum sharing is without doubt the hottest topic. Since 2015, ZTE has been working closely with China Unicom in spectrum sharing involving 2G, 3G, 4G and 5G, from GSM/LTE dynamic spectrum sharing to UMTS/LTE dynamic spectrum sharing, and now SuperDSS with UMTS/LTE/NR dynamic spectrum sharing, helping China Unicom Henan improve user experience based on our deep understanding of the network and user behavior.

ZTE has the industry most comprehensive multi-RAT dynamic spectrum sharing solution Magic Radio Pro, supporting up to seven scenarios inter-RAT sharing (GSM/LTE, UMTS/LTE, GSM/UMTS, LTE/NR, UMTS/LTE/NR, GSM/LTE/NR and etc.) with five radio technologies(GSM, UMTS, LTE, NB-IoT and NR) as ZTE is dedicated in the innovation of spectrum sharing field since 2014. Besides inter-RAT dynamic spectrum sharing among FDD modes, ZTE further explores the spectrum sharing possibilities and capabilities, SuperDSS is the key innovation of ZTE Magic Radio Pro solution in 5G era. In China Unicom Henan, the sites empowered with ZTE Magic Radio Pro solution are more than 10,000 and will further increase in the 5G evolution.

Based on our technology know-how and valuable experiences in commercial deployment of dynamic spectrum sharing, ZTE spectrum sharing solution will continue to help operators explore new possibilities and flexibility in 5G and network migration, bringing the most advanced technologies for even the most subtle yet important requirements. We have every reason to believe that SuperDSS will benefit China Unicom and global operators to address the challenges of 5G evolution and business development sustainability.

Nokia China boss apologies for missing out on mega contracts

Nokia China CEO Markus Borchert has written an open letter to apologise for missing out on a significant chunk of 5G business, as well as a mysterious letter which appeared in the press.

Last month it was announced China Mobile, the worlds’ largest telco, would award the vast majority of its 5G contracts to Chinese firms, with Ericsson collecting a small slither. Nokia was left out of the equation, a bitter pill to swallow considering the cash which would be spent by China Mobile over the coming months and years.

In the letter which was published in People’s Post & Telecommunications News, Borchert stated it would remain a committed partner to China Mobile, and perhaps there was a bit of damage limitation also.

“We hereby solemnly declare that the letter ‘Nokia Bell from Shanghai to China Unicom on March 31’ circulating online recently does not represent our position and attitude,” Borchert also stated.

The letter Borchert is referring to painted a relatively gloomy picture for competition in China. With a Nokia Shanghai Bell letter head, it was supposedly written by an employee who described ‘drastic price cuts’ as a reason Nokia missed out on the China Mobile contracts. The letter also questioned the ‘historical performance’ of various vendors.

While Borchert has said the letter does not represent the opinions and position of Nokia China, it comes at a time where the wider business is under severe pressure in the 5G world. Nokia missing out on a major contract might not raise than many eyebrows, but the coming weeks will give more insight into how much of a future the Finnish company has in China.

Over the course of 2019, Nokia China brought in €1.84 billion in revenue, an 18% year-on-year decline, though this sales drop was 25% for the final quarter. This was the only region in negative growth for 2019, and considering China Unicom is about to go through its own 5G tender, the next few weeks will be a very nerve-racking time for the team. Failure with China Unicom could see the end of Nokia as any sort of force in the worlds’ largest telecoms market.

5G growth isn’t enough to compensate Chinese operators’ subs loss

The total recent decline in mobile subscriptions reported by China’s mobile operators totaled 20 million and the ongoing Covid-19 pandemic isn’t the only reason.

China’s three incumbent mobile operators have reported their latest results in the last few days. The numbers do not make happy reading. Put together, the three operators lost a total of 19.5 million mobile subs in February. Here is the breakdown:

Source: company reports, Telecoms.com summary

If the trend is nothing new, as the total subs have been going down for a while, the magnitude may be a surprise. A number of factors have contributed to the fall and the size of it.

The elephant in the room is apparently the coronavirus pandemic. Since late January China’s economy, and society as a whole, has been under a hard brake. In addition to the lack of demand from migrant workers and consumers holding their purse strings more tightly in general, mobile operators, beware of their balance sheet, have been controlling their subscriber acquisition cost and have largely scaled back their marketing investment. Another possible factor related to the pandemic is that, facing weak earning prospects, operators can be more active in clearing the inactive accounts on their networks, as a means to shore up ARPU by reducing the denominator. This is a normal “trick” used by operators everywhere.

A positive angle to read the numbers is to realised that the operators’ focus of investment has shifted to 5G. This has reflected in both strong 5G growth: China Mobile has clocked up over 15 million 5G subscribers four months after launch, including 8.7 million in February alone. China Telecom has signed up 10.7 million 5G subs, including close to 3 million in February. Such shift of focus has also reflected in fast reduction of subs on legacy networks. China Mobile lost 12.5 million 4G subs and close to 11 million 2G subs. China Telecom has stopped reporting its 4G subs numbers altogether.

Another recent contributing factor to the fast reduction and slow increase of subscriptions could be related to a new policy that came into effect on 1 December 2019. Facial recognition was added on top of photo ID when a new mobile account is opened, to ensure that the one opening the account is the same person as the legal ID cardholder. Operators may have also been retrospectively taking those subs that do not meet the new requirement off their database.

In general, we can expect to see continued reduction of total subs numbers reported by the Chinese mobile operators in the near future but the size of the reduction may become less drastic, as the effect of the new policy as well as investment focus shift will become normal business operations in the months and quarters to come.

Short-term improvement is expected when the worst of the Covid-19 impact in China is coming to an end. This may come less from the expected increase in migrant workers – since domestic roaming charge was done away with in 2018, there has been a marked reduction in demand for multiple local numbers – than from economic life gradually coming back to normal. The Financial Times reported that China is going to relax the restrictions on movement in Hubei, the earlier epicentre of the pandemic.

However, there may still be some caveat. On one hand, China’s economy relies heavily on export. While Europe and North America are in the thick of battling the coronavirus with lockdown measures expanding to more places by the day, there is little prospect for China’s export-oriented enterprises to resume active business any time soon.

On the other hand, there is a question mark over how credible to official line of “zero new cases” is. Caixin, a business media outlet that prides itself for independent reporting, and is speculated to have backing from high places, reported that, Wuhan, where the virus originated, has kept finding new asymptomatic Covid-19 cases but is not recording or reporting them. Information like this may well dampen consumer confidence, however upbeat the official narrative may be.

Chinese operators lose millions of subscribers

All three of the big Chinese mobile operators are reporting significant declines in their subscriber numbers, presumably due to the current exceptional circumstances.

BNN Bloomberg has been taking a look at the numbers and reports that in the first two months of this year China Mobile lost 8 million subscribers, China telecom lost 5.6 million just in February, while China Unicom experienced a 1.2 million decline in January. One likely treason for this is extra accounts held by migrant workers for their workplace, which became redundant while they were on lockdown to prevent the spread of coronavirus.

While the numbers seem big, they need to be viewed in the context of the subscriber totals, which are in the hundreds of millions. Having said that it’s distinctly abnormal for Chinese operators to experience subscriber declines of any sort, so this is definitely significant. It seems very unlikely, however, that people will choose this time to cancel all their mobile subscriptions.

There is going to be a lot of financial hardship thanks to people being unable to work, but in a time of social distancing and self-isolation staying digitally connected to the world is more important than ever. For that reason it would be surprising to see similar declines in western markets, where the same domestic economic factors don’t apply. Having said that it is reasonable to expect some ARPU declines as everyone tightens their belts.

Four operators take the lead on GSMA edge initiative

Last week, the GSMA announced an initiative to standardise the edge, with Telefónica, KT, China Unicom and Telstra the first to step up to lead the way.

In signing a Memorandum of Understanding (MoU), the four telcos the aim will be to test Edge Computing functionality and interconnection capability, as well as verifying the ease and simplicity of a MEC platform for application developers to leverage.

“Together with these Tier 1 operators, we are making available to the industry the means to build and deliver a global telco-based Edge Cloud service, providing the necessary mechanisms that complement current MEC standards to enable the federation of operator’s edge computing platforms,” said Juan Carlos García, SVP Technology and Ecosystem at Telefónica.

“With this, telcos will be able to deliver a universal Edge Computing service that will facilitate application developers and Enterprises the deployment of their services globally through a simple and single interface.”

The aim of the GSMA initiative is to standardise platforms for edge computing, ultimately driving towards interoperability in the telco community. Although standards might not be the most exciting part of the industry, they are critical to ensure smooth progress and also realising the telco rank in the pecking order.

The collaboration will take place over four phases:

  • Phase One: development of basic Edge Computing capabilities such as interconnection of MEC platforms, smart edge discovery and smart resource allocation
  • Phase Two: enabling mobility features
  • Phase Three: service availability to roamers, to enable the use of edge when customers moves from their home network and visit a different network
  • Phase Four: federation capabilities

Ultimately the aim is to create global consistency, a telco platform without the need to develop custom integrations for each and every market. Such interoperability and consistency is critical to ensure the effective development of a sustainable edge ecosystem. It also provides confidence to customers to deploy applications in any data centre, with policies designed for privacy, security and enhanced performance.

“Through our partnership with Telefonica, Telstra and China Unicom, all from different regions across the world, we set out to explore the most effective way to build a globally federated edge platform and tap into the full potential of telco-based Edge Computing,” said Jongsik Lee, SVP & Head of Infra R&D at KT.

“Leveraging MEC standards and key technologies, we aim to provide a reference model the industry can build on and developers and enterprises can take advantage of.”

Nokia gets a bunch more cash from Chinese operators

Nokia is so keen for everyone to know how well it’s doing in China that is it makes an announcement every time it wins some business.

Earlier this year we heard all about a ‘framework agreement’ signed with China mobile that was worth around €1 billion. Today Nokia has announced some more ‘frame agreements’, which are presumably the same thing and refer to a kind of pre-contract that amounts to a formal commitment to do a bunch of business in future.

This time we’re talking €2 billion, but split between all three Chinese MNOs – China Mobile, China Telecom and China Unicom. Presumably the China Mobile bit is fresh cash, not just a recycling of the previous bil. The agreements cover delivery for the next year or so of radio, fixed access, IP routing and optical transport equipment, as well as some SDN and NFV goodness. Nokia is excited by all this transitioning and leveraging.

“We are excited to continue our close collaboration with these important customers in China, to drive new levels of network performance as they transition toward 5G,” said Mike Wang, president of Nokia Shanghai Bell. “Leveraging the breadth of our end-to-end network and services capabilities, we will work closely with China Mobile, China Telecom and China Unicom to deploy technologies that meet their specific business needs.”

It wouldn’t be surprising to see some kind of equivalent announcement by Ericsson before long as the two Nordic kit vendors clearly like to compete over this sort of thing. Not long after its first China Mobile announcement Nokia said it was getting £3.5 billion from T-Mobile US to help out with 5G. Within a few weeks Ericsson had countered with an almost identical announcement of its own.

China Unicom triples profit across 2017

China Unicom has released its financials for 2017 and it is looking like a money making machine again. Revenues were up marginally, profit tripled and free cash flow grew 1628% compared to the previous 12 months.

Total revenues for the years stood at $43.488 billion, a marginal 0.2% increase, with mobile service revenue increasing by 7.9%. The winner for improvement here though was net profit, standing at roughly $289 million, a 192% increase from 2016. This number may well have been higher if not for a one-off asset write off of 2.9 billion Yuan, roughly $460 million. Investors might want to see a higher margin, but at least trends are heading in the right direction.

“Looking ahead, the Company is embarking on a new historic journey and will seize firmly the brand new opportunities brought by global technological and industrial reform, China’s economic development model reform and mixed-ownership reform, aiming to instil into China Unicom new DNA, new governance, new operation, new energy and new ecology,” said Wang Xiaochu, CEO of China Unicom.

While the company has attributed some of the increased profits to increased subscriber numbers as well as a significant reduction in the CAPEX across the year, it certainly is a good sign for a company which is undergoing some pretty notable changes. The Chinese government is using China Unicom as a testbed for a new ownership structure. Following a private placement earlier this year, Alibaba, Tencent, Baidu and JD.com have become new shareholders and board members of China Unicom’s parent company China United Network Communications.

The team has pointed towards leveraging external resources and capabilities as one of the key aspects of the successful year, which is a promising sign for the industry in China moving forward. That said, a lot of corporate jargon was including in the statement, which could end up meaning very little in the long-run.