AWS sues US Government for Trump hatred

Amazon has launched a legal challenge against the Department of Defense’s preference to Microsoft Azure, suggesting the decision is linked back to President Trump’s hostility towards CEO Jeff Bezos.

The animosity between the pair has been anything but private, and now it appears the public display of difference is causing complications for the White House. Amazon is suggesting the Department of Defense’s decision to award the $10 billion Joint Enterprise Defense Infrastructure deal, known by the acronym JEDI, to Microsoft was compromised by the actions of Trump.

“This case demands an expanded AR [administrative record] so that the Court may fully assess AWS’s well-grounded claims of bias and bad faith,” the filing states.

“President Donald J. Trump has repeatedly demonstrated his willingness to use his position as President and Commander in Chief to disrupt the orderly administration of government functions-including federal procurements-to advance personal motives. There is no question he did so here.”

Amazon is requesting greater access to internal documentation to further build a case against the US under the assumption the President’s hatred towards Amazon CEO Jeff Bezos saw pressure placed on the Department of Defense to award the contract elsewhere. Aside from Amazon and Microsoft, IBM and Oracle were also in the running for the cloud infrastructure and migration services contract.

The contract itself was awarded to Microsoft back in October, though it was not without controversy at the time. Several Senators wrote to President Trump asking the decision to be re-evaluated in favour of splitting the contract to more than one supplier. These pleas were ignored, and AWS even released a statement questioning the logic of the decision on the grounds it believed it was the market leader.

To make matters a bit messier, a Seattle Judge ruled Government employees were unfairly favouring AWS in July. This ruling followed a lawsuit filed by Oracle which claimed there were conflicts of interest with past employees which led to AWS gaining an upper hand due to the way the contract was drawn up.

This has been a scruffy process from start to finish, and thanks to the President’s apparent personal feelings towards Amazon CEO Jeff Bezos, it might be extended further.

The conflict between the two has been on-going for years, and AWS is now alleging the President pressured Government officials to ensure the Amazon company did not profit from Government contracts. The President reported ordered former Defense Secretary James Mattis to ‘screw Amazon’ out of the contract. Following these comments, procurement reports allegedly leaned towards Microsoft.

Amazon now claims the Department of Defense committed ‘numerous and compounding prejudicial errors’ which led to the team disfavouring AWS. These errors included relying on an outdated, superseded version of AWS’ proposal, misstating facts from the proposal, downplaying failures in the Microsoft proposal and fabricating areas of superiority in the final stages of evaluation to favour Microsoft.

This is only one incident, though Trump has a history of targeting Amazon and its CEO Jeff Bezos.

Prior to entering the White House, Trump had warned that it would be bad news for Amazon if he assumed power, while the filing aims to prove many of his actions have been used to punish enemies or advance his own personal agenda. The decision to award a $400 million contract to build the controversial wall to Fischer Industries and intervention to prevent the relocation of the FBI headquarters away from the nearby Trump International Hotel in downtown Washington are two more examples offered by AWS to demonstrate inappropriate influence and pressure from the Oval Office.

Another example is the removal of press credentials for CNN’s Jim Acosta just hours after the President branded the reporter a ‘rude, terrible person’. Although these examples are not directly relevant, if AWS is able to prove the President unduly influences Government decisions based on grudges or personal grudges it might be able to gain some traction.

The end game has not been explicitly mentioned in the filing, just that AWS lawyers want to begin a ‘discovery’ process which would be used to fuel future legal action. AWS clearly feels it has something to gain here, either by halting the President’s alleged bias against the firm or forcing the Department of Defense to restart the

Cloud becomes the golden child as Google reports yet more profit

When looking at the financial results of companies like Google, the question is not whether it has made money, but how much are the bank vaults overflowing.

Financial for the full year demonstrated slightly slowing growth, but few should worry about having to search the sofa for the pennies right now. Over the course of 2019, Google brought in $161.8 million, up 18.3% year-on-year, though it was YouTube and the Google Cloud business units as opposed to the core business which collected the plaudits from the management team.

“Revenues were 2.6 billion for the fourth quarter, up 53% year-over-year, driven by significant growth at GCP and ongoing strong growth and G Suite,” said Alphabet CFO Ruth Porat. “The growth rate of GCP was meaningfully higher than that of cloud overall. GCP growth was led by our infrastructure offerings and our data and analytics platform.”

Company Quarter Revenue (most recent) Year-on-year Growth
Google Cloud $2.6 billion 53%
Microsoft Intelligent Cloud $11.9 billion 27%
Amazon Web Services $9.9 billion 23%

Despite being a business unit which brings in an impressive $10 billion annually, it is impossible not to compare the performance of Google Cloud to AWS and Microsoft Azure. Google is realistically the only rival which can keep pace with the leading pair, though it does appear it is losing pace.

That said, the fortunes of the cloud are only beginning to be realised; this is a marathon not a sprint. Moving forward, the Google team believes strength in AI and software gives it an advantage to provide seamless experiences to users across multiple devices. There is also the blunt force approach to acquiring market share moving forward; Porat highlighted the objective is to triple the size of the cloud sales team.

Over at YouTube, the team is capitalising on the increasingly consumer appetite for video, though also what appears to be a more experimental attitude to subscription. YouTube TV is growing healthily at 2 million, while the core YouTube platform has more than 20 million music and premium paid subscribers.

This is positive momentum, though it will be interesting to see what impact partnerships have on these figures. Google is partnered with Verizon, forming a content option in its bundled products, though rivals are placing a much greater emphasis on these relationships, leaning on an already established link with the consumer, albeit sacrificing some profit in the process.

Perhaps these two business units demonstrate why Google is such an attractive company to investors and potential employees. The core business can do what it does, but Google is always searching for the next big idea. Google Cloud is arguably the most successful graduate of its ‘Moonshot Labs’ initiative, while YouTube is one of the biggest acquisition bargains at $1.65 billion in 2006. It now brings in more than $15 billion annually in ads sales.

During the earnings call, CEO Sundar Pichai pointed to some of the other investments which are absorbing the $26 billion annual R&D budget. Verily and Calico are linking together AI and cloud technologies to improve clinical trials, research, and drug development. Waymo is attempting to scale driverless vehicles in the US. Loon is another Moonshot graduate, endeavouring to stand on its own currently.

Google is one of the most interesting companies around, not only because it is a money-making machine, but the R&D business could produce some gems over the next few years.

Nokia raises its OSS game

In the build up to MWC 2020 Nokia has got one of its announcements in early, in the form of the ‘cloud-native’ Network Operations Master software.

Turns out 5G is pretty complicated and at times there’s so much going on that you can’t possibly expect flawed, obsolete humans to stay on top of it. That’s why you need greater automation, we’re told, and that has to start with the network operations software, or OSS in old money. Nokia prides itself on its software, so the launch of a new OSS suite is presumably a fairly big deal for them.

“With 5G forcing traditional functions, like revenue management and customer care, to the cloud and helping drive software deeper into the network, communication service providers need a modern approach to performing network operations that is automated, more efficient and scalable,” said Ron Haberman, CTO at Nokia Software. “The Nokia Network Operations Master delivers these capabilities and allows our customers to perform lifecycle operations with ease, efficiency, and confidence.”

Network slicing will make automation and a much higher level of cloudy flexibility critical features of any network software. NOM also covers AI, machine learning, etc and is designed to just take care of all the plumbing, allowing network operations centres to focus on the stuff only people can manage, if such a thing still exists.

“5G networks will require significantly more operations automation than past networks in order to achieve promised levels of efficiency and new service support,” Nokia got Dana Cooperson, Research Director at Analysys Mason, to say. “Nokia’s Network Operations Master is a cloud-native network management system that is underpinned by machine learning and automated actions and provides the types of tools mobile network operations teams need now for 5G.”

Here are a couple of vids that may tell you more.

Amazon and Microsoft are proving to be a different class in the cloud game

Amazon and Microsoft have unveiled bumper financial results and now it is over to Google to prove it can keep pace with the two clear leaders in the cloud segment.

For years, it was Amazon’s cloud business unit, AWS, which was incomparable to the rest of the cloud segment. No-one could get anywhere near this trailblazer, though Microsoft has closed that gap recently. The question is whether anyone else has? The likes of Google, IBM and Oracle claim to be in the same league, but there is little evidence to support this, but Google has a chance to set the record straight next week.

Amazon and Microsoft have now revealed their numbers for the final three-month period of 2019. The story is not quite complete without Google’s numbers, realistically the only competitor who has a credible claim to be in the same league, but the numbers are eye-watering.

At group level, Amazon increased revenues by 21% during the last quarter, with the cloud business bringing in $9.9 billion, an increase of 23% year-on-year. While net income only increased 19% to $2.6 billion, this was actually 79% of the total net income across the group. The cloud business unit at AWS is a profit machine.

Over at Microsoft, group revenues increased by 14% to $36.9 billion, while net income was up 38% to $11.6 billion. Revenue in the ‘Intelligent Cloud’ unit increased 27% to $11.9 billion with Azure’s revenue up 62% for the quarter. Cloud products and services of course factor into the other Microsoft business units, but the ‘Intelligent Cloud’ group is showing the most aggressive growth.

Business unit Total revenue Growth
Intelligent Cloud $11.9 billion 27%
Productivity and Business Processes $11.8 billion 17%
More Personal Computing $13.2 billion 2%

Although revenues are only one part of the picture, market share estimates also tell another story.

Looking at the most recent estimates from Synergy Research Group, Amazon is leading the cloud segment with 39%, Microsoft sits in second with 19%, Google is on 9% and 5% for Alibaba. Salesforce now has 4% and IBM is on 3%, while no-one else has more than a 2% share. These figures are for the Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) segments.

As mentioned before, the landscape is not complete until Google releases its numbers next week, though IBM and Salesforce have released theirs. At IBM, total cloud revenues stood at $6.8 billion, up 21% year-on-year, while Salesforce reported group revenues of $4.5 billion for the last quarter, an increase of 33%. These numbers are attractive, investors might well be pleased, but Microsoft and Amazon look like they are sitting alone in the top tier of the cloud industry.

Another factor to consider are the deal wins.

While Amazon has been hoovering up deals with SMEs and the emerging digital businesses, Microsoft has extensive existing relationships with almost every major corporation in the Western world. The firm claims to currently be working with 95 of the Fortune 100 companies on cloud infrastructure. These companies like the look of Microsoft, thanks to a stronger focus on hybrid-cloud, whereas Amazon has a better reputation for the speed and scale of cloud-only strategies.

During the last period, Microsoft secured the US Department of Defense $10 billion JEDI cloud contract, which will cover 1,700 data centres and the transition of millions of devices from on-premise servers to the cloud. AWS lost out on this deal, but it has got plenty of significant customer wins to boast of; Western Union, media firm Fox, the NFL, pharmaceutical giant Novartis and Best Western Hotels & Resorts.

Interestingly enough, the rapid expansion of these internet giants might well start to encroach potential revenues which have been earmarked for the telcos.

The last few months have not only seen CAPEX investment from the likes of AWS and Microsoft, but also picking up industry executives. An excellent example of this is Alex Clauberg, a former Deutsche Telekom executive.

As the connected world starts to spread to more corners of society and the ‘edge’ develops, there are plenty of opportunities for telcos to make more money from what is quickly becoming a commoditised service. However, there is no guarantee the newly created ‘service’ revenues will be reserved for the telcos themselves. Clauberg’s move is evidence the internet players are attempting to muscle in on telco revenues.

Clauberg is a well-known name in the SDN and NFV sector and is the current Chairman of the Telecom Infra Project (TIP). He was previously VP and CTO at T-Systems International, the global services and consulting arm of DT, but now works as Solutions Architects Leader, at AWS. There is not a huge amount of information as to what this new job actually is, but it is demonstrative of the ambitions of the likes of AWS in the telco world.

These are companies which are growing rapidly in their traditional playing grounds and pushing aggressively to steal profits in places they should be considered secondary. Google still has an opportunity to place itself at the top table of the profitable cloud segment, but it does look like AWS and Microsoft are in a league of their own.

Wearables and services are paying off for Apple

The iPhone is still the biggest contributor to the monstrous profits Apple claws in each quarter, but efforts in wearables and services are balancing out the company.

While Apple is not a company which is going to go bust at any point in the foreseeable future, the dependence on the performance of the iPhone was leaning onto the unhealthy side. With more consumers leaning towards second-hand, refurbished devices, or extending the life of products due to the eye-watering price of new iPhones, there was a threat to profitability.

For the most recent quarter, there are no worries about the profitability of Apple, however. Total revenues for the three-month period, including Christmas sales, stood at $91.8 billion, a 9% increase from the same period in 2019. Net income set a new record of $22.2 billion, while international sales accounted for 61%.

That said, efforts over the last few years to supercharge alternative revenue streams and diversify the profit channels have certainly been paying off. The iPhone is still king at Apple, but it is evolving into a different company.

Quarter Product Revenue Software and Services Revenue Ratio
Q1 2020 79,104 12,715 86.2/13.8
Q1 2019 73,435 10,875 88.2/12.8
Q1 2018 79,768 8,471 90.4/9.6

For the purpose of continuity, we have only selected Q1 for the above comparison. This is a quarter which contains the Christmas period and therefore revenues are almost incomparable to the rest of the year.

As you can see, there is a clear trend of Apple become less reliant on hardware for revenues and profits, with the Software and Services becoming more than a bolt-on bonus for investors. $12.715 billion is an amount most companies would be happy to call group revenues for the year.

Interestingly enough, even in the ‘product’ segment, the team is becoming less reliant on the iPhone to drive revenues and profits.

Quarter iPhone Mac iPad Wearables and Home
Q1 2020 55,957 (60.9%) 7,160 (7.8%) 5,977 (6.5%) 10,010 (10.9%)
Q1 2019 51,982 (61.6%) 7,416 (8.8%) 6,729 (8%) 7,308 (8.7%)
Q1 2018 61,576 (70%) 6,895 (7.9%) 5,862 (6.6%) 5,489 (6.2%)

In short, diversification of revenues is an excellent way forward for the Apple business and demonstrative of the power of the Apple brand.

Apple is a brand which certain consumer identify with, and such is the innovation and creativity of the Apple marketing department, loyalty has been almost cult-like. Cross-selling alternative products when the consumer is so heavily invested in the brand and ecosystem is a much simpler task, this will be one of the reasons Apple’s services division is becoming so successful, but it also explains the growing wearables segment.

Wearables is a family of technologies which has struggled through the years. The first smart watch, in its current form, was released in 2011, though the segment has never really gained the traction to make it an attractive business. Apple has been persisting with its own portfolio of smart watches for years, but it does now appear to have turned a corner.

“Apple Watch had a great start to fiscal 2020, setting an all-time revenue record during the quarter,” CEO Cook said during the earnings call. “It continues to have a profound impact on our customers’ lives and it continues to further its reach as over 75% of the customers purchasing Apple Watch during the quarter were new to Apple Watch.”

Apple is no-longer simply satisfying product refreshment cycles but attracting new customers into the smart watch bonanza. The more smart watch customers there are, the more normalised the product becomes, which then compounds the success, especially with more digital natives entering their 20s and collecting bigger salaries.

Apple is a company which is defined by iPhone. This will not change, such is the success of the product and the importance of the smartphone in today’s society, but diversifying the business was always viewed as critical to expanding the profitability of the firm. Apple is doing a remarkable job of capturing new revenues.

Will telcos follow Big Tech in pursuit of a greener life?

Microsoft has stated its green ambitions, delivering a plan to be carbon neutral by 2030, halving the carbon emissions of the business.

By the mid-point of the decade, Microsoft plans to have its own direct carbon emissions almost down to zero, while it will work to drive the same efficiencies through its supply and value chain. The business will also invest $1 billion to accelerate the development of carbon reduction, capture and removal technologies.

“While the world will need to reach net zero, those of us who can afford to move faster and go further should do so,” said Microsoft President Brad Smith. “That’s why today we are announcing an ambitious goal and a new plan to reduce and ultimately remove Microsoft’s carbon footprint.

“By 2030 Microsoft will be carbon negative, and by 2050 Microsoft will remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.”

While many executives might claim to have a green agenda, the technology, media and telecoms industries are being led by the US Big Tech giants. This is one example, though Apple claims to have transitioned to 100% renewable energy for the electricity it uses in its offices, retail stores and data centres in 43 countries. In the last three years, Apple has reduced its carbon footprint by 35%.

The question is whether telcos have the same attitude as Big Tech in driving towards a more sustainable future. And according to Paul Gowans, Wireless Strategy Director for Viavi, there are some significant business benefits as well as corporate social responsibility.

Gowans pointed out that the network is energy guzzling asset for every telco, and depending on where you are, this can have a very different impact on the spreadsheets. For example, the world average price is $0.15 per kWh, though this decreases to $0.11 per kWh in South Korea and increases to $0.35 per kWh in Germany, more than 3X the cost. The economics of running a network vary, therefore the appetite for increasing the energy efficiency of networks does also.

There are of course numerous ways to tackle this issue, though Gowans pointed to an algorithm written by Viavi which powers down certain parts of the network during certain times of the day. It seems like the most obvious answer, but powering down certain cell sites in residential, commuter towns between 9-5 or the Square Mile in London over the weekend, can have an impact on the bottom line without impacting customer experience; most of the users will be elsewhere.

This is where green and clean technologies might make more of an impression for the budget holders at telecoms companies; appealing to the wallet might be much more successful than appealing to their sense of social responsibility. Their primary objective is to make more money for shareholders after all.

With 5G pressurising balance sheets, and for some scaled telcos with vast numbers of cell sites such as China Mobile or Verizon, introducing green strategies is not just a hippy-style to save the environment, there is could be some serious cost efficiencies to be realised.

BT seeks stickiness and diversification through Google Stadia partnership

UK ISP BT says it’s the first European network to partner with Google over its Stadia cloud gaming service, which it will bundle with some broadband offers.

The press release features a needless amount of banging on about ‘moving the cloud gaming industry forward’, and ‘initiatives designed to build awareness, access and availability of it in the UK,’ as if cloud gaming is some kind of philanthropic initiative. But the long and short of it is that BT is offering Stadia for free with some bundles for a couple of weeks and then from 7 February will bundle Stadia Premier Edition with special cloud gaming add-ons to some of its fibre packages.

“We continually look to provide our customers with the most exciting products and experiences, and by partnering with Google on Stadia, we’re able to help them push the limits of gaming,” said Marc Allera, CEO of BT’s Consumer Division. “We’re also investing in the UK’s fastest 4G, 5G and fibre networks, so our superfast home broadband service is the perfect accompaniment for those wanting to make the most from this innovative streaming gaming platform.”

“We’re excited to continue our cross-product partnership with BT in the UK to further drive the cloud gaming industry forward,” said Michiel van Eldik, General Manager of Devices & Services at Google EMEA. “BT has an established track record of leading the industry in delivering next-generation services and products to their customers. Through today’s announcement, we are able to make the best gaming content even more accessible, and to continue to change the way people access, play and enjoy their favourite games.”

Exciting times then. BT seems to think gaming is where the smart ISP diversification money is at these days, having recently announced its sponsorship of the Excel Esports team. How excited BT customers will be with all this, however, remains to be seen as initial reviews of Stadia concluded it’s a bit rubbish.

US Government and Big tech on collision course over backdoor entry

Attorney General William Barr has suggested Apple has not offered ‘material’ assistance as authorities investigate the deadly shooting which took place at a Pensacola naval base last month.

Although Apple disputes the claim from Barr, the conflict between the firm and the Attorney General’s office sets the technology industry on a collision course with the Government. Barr seems to be calling for backdoors to be build into digital products and services, a move which has been robustly opposed by the technology industry.

“We have asked Apple for their help in unlocking the shooter’s iPhones,” Barr said during a press conference. “So far Apple has not given us any substantive assistance.

“This situation perfectly illustrates why it is critical that investigators be able to get access to digital evidence once they have obtained a court order based on probable cause. We call on Apple and other technology companies to help us find a solution so that we can better protect the lives of Americans and prevent future attacks.”

Apple rejects the statement and has claimed it has assisted in the investigation.

“We reject the characterization that Apple has not provided substantive assistance in the Pensacola investigation,” Apple said in a statement.

“Our responses to their many requests since the attack have been timely, thorough and are ongoing. We responded to each request promptly, often within hours, sharing information with FBI offices in Jacksonville, Pensacola and New York. The queries resulted in many gigabytes of information that we turned over to investigators. In every instance, we responded with all of the information that we had.”

Apple has not unlocked the devices, but there are ways and means to access some information without doing so. The firm has assisted authorities through data taken from the iCloud (for example) in other cases.

Over the first six months of 2019, Apple received numerous requests from the US Government for customer information and data. The table below outlines the requests.

Request type Requests received Percentage where data was provided
Device 4,796 84%
Financial Identifier 918 81%
Account Identifier 3,619 90%
Emergency 206 90%

For devices, the Government is requesting device identifiers such as serial number or IMEI number. Examples of financial identifiers are credit card or gift card information. The account identifier could be the customers Apple ID or email address. And ‘Emergency’ describes requests received from a government agency seeking customer data in an emergency matter.

The Apple statement also reiterated its position on privacy:

“We have always maintained there is no such thing as a backdoor just for the good guys. Backdoors can also be exploited by those who threaten our national security and the data security of our customers.”

This is an argument which has reared its head numerous times, and it does appear the pieces are falling into place for it to do so once again.

Apple has regularly been a critic of Governments for refused to enable police and intelligence agencies access to phones. In 2015, Apple defied a court order to assist the FBI by unlocking an iPhone which belonged to one of two terrorists who killed 14 people in San Bernardino. The firm has regularly used the argument of privacy in defending its actions, seemingly not wanting to create precedent for future cases.

And while these two cases have focused on the security measures embedded on devices, the services industry has also found itself in conflict in a very similar fashion.

Over the course of 2017, the then-Home Secretary Amber Rudd launched a sustained attack on the technology industry in an attempt to force the creation of backdoors into messaging services such as WhatsApp. The prevention of terrorism and paedophilia was used as justification to break down the defences offered by end-to-end encryption, but industry refused demands to create backdoors to circumnavigate the security features.

Rudd even went as far as to state users do not care about security, but use these messaging applications for simplicity and convenience.

Barr is not taking the same simple-minded and short-sighted approach as Rudd, but this could be viewed as a challenge. What we could see over the coming months is the US Government heading into conflict with the technology industry once again over access to data on secured products and in encrypted services.

What is worth noting is that there are very valid arguments on both sides of the fence. Governments and regulators should be entitled to enlist the assistance of the technology industry in combatting crime, whereas the technology industry should also be able to draw a line through ideas which would create collateral damage.

The creation of backdoors and designed weaknesses in security features is not something which should be considered. Technology companies, whether software or hardware, have designed security features to be robust enough that not even the manufacturer or developer can circumnavigate them. This ensures security but also prevents abuse.

If backdoors are inserted, this is vulnerability by design. It is effectively waving a red-flag in front of the hacker community, inviting them to find the weakness. Accessing an individual’s phone or WhatsApp account will offer reward for hackers, and whether by accident or design, the vulnerability will be eventually found and exploited.

This is not a viable solution for the sustained health of the digital economy, but this fact directs Big Tech and the US Government on another collision course over access. This is a battle which has been fought before and won by no-one, but it is once again on th

China Mobile reportedly chasing cloud JV with Vodafone Idea and Bharti Airtel

Reports have emerged suggesting China Mobile is attempting to create a joint-venture in the Indian market to capitalise on the growing cloud segment.

Although these are nothing more than rumours for the moment, Live Mint has suggested senior officials from China Mobile have been in separate meetings with both Vodafone Idea and Bharti Airtel to set-up a joint-venture to tackle the cloud market.

“The top executives of China Mobile met senior managements of Bharti Airtel and Vodafone Idea separately in December,” stated an anonymous source. “China Mobile is interested in the Indian market and wants to come as a holding company with either of these two companies or even both.”

China Mobile has been aggressively growing its presence in the Chinese cloud market, though now it appears to be looking overseas for increased opportunities. India will of course look like an interesting opportunity, not only because of the size but the current market dynamics.

It is not overly complicated to understand the potential of India cloud market. As the second-most populous country on the planet, there are plenty of customers, though the drive towards digital has been very aggressive in recent years thanks to the disruption of Reliance Jio, effectively democratising digital. Attention has largely been paid towards the fight for consumer subscriptions, though the cloud market has also been growing.

As it stands, Bharti Airtel has a cloud services unit in ‘Airtel Business’, while it is also expanding its data centre footprint through ‘Nxtra Data’. Vodafone and Idea brought together their business units following the overarching merger between the telco parent companies and have also been working closely with Microsoft in recent months. Finally, Reliance Jio has a cloud business which was launched in August.

But it is the untapped potential which is getting foreign corporations excited. The digital economy is in its embryonic growth stages today, and the right investments could lead to significant gains in the future. Unfortunately for the Indian telcos, the current financial climate is not particularly helpful to speculative investment or aggressive expansion.

The Indian telcos are almost broke. A three-year long pricing war has crippled the spreadsheets, while the spectrum licence fee bill from the Government is eye-wateringly large. The Indian telcos are not in an attractive financial position, but this presents bargain opportunities for foreign investors who have deeper pockets.

China Mobile certainly fits into that category, and this could be a very co-beneficial relationship. China Mobile want to spread its cloud wings abroad through its investment arm, China Mobile Investment Holdings. India has an opportunity and the Indian telcos do not have the cash to capitalise on the potential today. Chinese money would certainly be welcomed to fuel the initial venture into the Indian cloud.

Interestingly enough, this could also have an impact on the geo-political tensions which have dominated the news for months.

The US does not like China, this is somewhat of an understatement, and it has been pressurising the Indian Government to break ties with Chinese infrastructure vendors. The emergence of a joint-venture, partly funded by a state-owned Chinese telco is not likely to have a positive effect on the already strained relationship between the US and India.

US Senator tables bill to ban intelligence sharing with Huawei friendlies

The Republican Senator for Arkansas, Tom Cotton, has tabled a bill which would ban US agencies from sharing data with countries do not ban Huawei.

With the UK reportedly on the verge of making a decision on whether Huawei should be allowed to sell network infrastructure equipment to its telcos, the US has once again piled on the pressure. Cotton, one of the more actively-aggressive politicians towards China, has introduced a bill which would ban US agencies from sharing information with Governments which have given the greenlight to Huawei.

“The United States shouldn’t be sharing valuable intelligence information with countries that allow an intelligence-gathering arm of the Chinese Communist Party to operate freely within their borders,” Cotton said.

“I urge our allies around the world to carefully consider the consequences of dealing with Huawei to their national interests.”

While there has been numerous promises to end intelligence sharing agreements to those governments who do not follow the US lead, this is the first official step towards making the threat a reality. This is the strongest statement made by the US to date directed towards European allies who have thus far refused to ban Huawei from providing equipment for 5G networks.

With many European telcos having already signed memoranda of understanding (MOU) or commercial contracts with the under-fire Chinese firm, this proposal from Cotton will certainly raise a few eyebrows.

Country Telcos with relationship with Huawei
UK Three, Vodafone, EE
Germany Deutsche Telekom, Telefonica Deutschland
Switzerland Sunrise
Bahrain VIVA
Austria T-Mobile Austria
Spain Telefonica
Indonesia Maxis
South Korea LGU+
UAE Du
Finland Elisa

Huawei has stated it has now signed more than 50 commercial 5G contracts with telcos around the world, though not all customers have been named to date. The firm has said 60% of these contracts are with European telcos. This will present numerous headaches from an intelligence and national security perspective.

Alongside the named customers, various countries have also suggested they would not ban Huawei. India, Italy, France and Norway are amongst these countries without having a telco in a named 5G relationship with Huawei.

Interestingly enough, the proposed bill only mentioned 5G equipment. Those telcos who have purchased equipment from Huawei for their 3G and 4G networks will not necessarily have to go through the expensive rip and replace process, unless the wording of the bill is changed as it progress through the various branches of US Government. There might be requirements from a backwards compatibility perspective, but this has not been included in the wording of the bill.

For countries like the UK or Germany, allegiances and confidences will be tested, as the US once again attempts to bully allies into line.

Although this could be viewed as the most serious threat to Huawei’s business to date, it is always worth noting that this could backfire quite spectacularly for the US. Although Governments will rely on the US for intelligence, the same dynamic works the other direction. Should the bill pass to law and should the US’ allies continue to ignore its demands, the US will find itself very isolated in the intelligence community.

One of the differences between the US and other nations seems to be the way the network is viewed. Some countries, the UK and Germany for example, view the network as having intelligent segments (the core) and ‘dumb’ ones (radio and transmission). One possible solution to the Huawei conundrum has been to allow Huawei products in the ‘dumb’ segments of the network but not the intelligent ones.

Some might believe that risk can be mitigated should Huawei be allowed to contribute to the ‘dumb’ segments of the network, though these semantics are largely irrelevant if the US views the network as a single entity. If this bill passes, it is Huawei or no Huawei, no compromises.