BT shows off its shiny new Nokia silicon

UK telco BT is one of the first customers for Nokia’s catchily-named 7750 SR-14s IP routing platform, which features its special FP4 chip.

Nokia first announced all this shiny new core gear a couple of years ago, but it looks like the sales cycle for this sort of thing is fairly protracted. So this is an important deal win for Nokia, but perhaps even more so for BT as it’s a clear statement of intent when it comes to investing in its core network. Apparently traffic through the BT network is growing by 40% annually so it needs to show it can handle it.

“BT’s FTTP footprint is growing on a daily basis, and we are launching 5G this year in the busiest parts of 16 of the UK’s busiest cities,” said Howard Watson, BT Group CTIO. “These technologies create an amazing customer experience, and drive people to watch more, play more and share more. We have to stay ahead of the massive traffic growth that this will bring, and Nokia are a key part of that, giving us the capacity and automation that we need.”

“Nokia’s 7750 SR-s platform, based on our FP4 silicon, will offer BT’s network the enhanced capabilities and automation needed to address continuously mounting capacity demands as it moves toward 5G,” said Sri Reddy, Co-President of IP/Optical Networks at Nokia. “Our exclusive partnership will allow BT’s converged core network to grow, and move to a programmable, insight-driven network architecture, creating a platform for BT’s growth to continue as demand for its services in FTTP and 5G expands.”

As you can see there’s a fair bit of buzzword-dropping in the canned quotes. The significance of FTTP and 5G in this context essentially amounts to the fact that network traffic is likely to keep growing rapidly for quite a while. For Nokia this is a juicy deal win in a core network market that, admittedly, is largely denied to one of its biggest competitors.

Vodafone puts the brakes on core Huawei spend

There aren’t many things that could rival Huawei’s headaches derived from government bans, but a snub from another one of the worlds’ largest telco groups might be up there.

With 275 million customers around the world, plus another 250-odd million through joint-ventures, this is one of the biggest telcos in the world. With networks spreading across Europe, Africa and Asia, the buying power and influence of Vodafone is considerable. This could a massive blow to the prospects of Huawei, both financially and in terms of credibility.

Speaking on the earnings call last week, CEO Nick Read stated the following:

“Specifically on Huawei, what I was really trying to make clear is, I think we need to move to more a fact-based conversation, I think at the moment is a simplistic political level and there is a big distinction between radio and core. We are predominately using Huawei in radio. We are continuing to use them in radio for 5G. However, in the core, we have put them on pause. They are not significant in the scale of our operations in the core and therefore it’s not a big financial implication.”

This is where Huawei finds itself in a difficult position. In numerous markets it is still fully free to compete for on-going 4G and up-coming 5G contracts, though these telcos will question the risk. Does the benefit of working with Huawei outweigh the risk? Why spend money on kit when you might have to strip it out in the near future?

As it stands, Vodafone does not have a huge level of exposure in terms of Huawei in the core, this is the case for most European telcos, though should the ban extend to radio or transmission this might become a significant issue. A full-scale ban is certainly not out of the question, very little is when you consider how aggressive and antagonistic the current political climate is, and this could send ripples throughout the ecosystem.

Vodafone confirmed to us Huawei equipment is in the core in some minor markets and Spain, and this is where the pause is relevant. Huawei will continue to supply Vodafone with equipment in other areas. In this sense, the fallout should be contained. Just to put things in perspective, Vodafone’s position is similar to that many telcos around Europe are taking.

However, as Read notes, should a ban extend to other areas of the network it could proves to be a sticky situation for everyone involved.

“Clearly, if there was a complete ban at the radio level then it would be a huge issue for us, but it would be a huge issue for the whole European telco sector,” said Read. “And what, Huawei have probably, what 35% market share through the whole of Europe, so I think that is a totally different consideration, but we now need to make a lot more fact-based conversation.”

The point which Read is making is a logical and incredibly important one. Too many people are getting swept up in the political rhetoric and not looking at the facts which are on the table. The negativity surrounding Huawei is starting to snowball, but little (if any) hard evidence has been put on the table. People are forgetting about the facts, instead contributing to the momentum.

What businesses like Vodafone need is certainty. The political see-sawing with Huawei is not providing much confidence for the telco to appropriately invest in networks. If this has a negative impact on the performance of the networks in the future, the politicians will be the first to point the finger of accusation at the infrastructure owners. The perfect storm of disaster and disorganisation is started to develop.