Huawei CFO Wanzhou Meng, the daughter of Ren Zhengfei, has lost her first legal battle in Canada and will now have to face an extradition case.
This story had been lost in the throng of news over the last few months, but it will almost certainly start to attract international interest once again. Not only is this a landmark legal case to set precedent, it will act as fuel to be tossed on the embers of the burning US-China relationship.
“For the reasons I will give, I find that the allegations depend on the effects of US sanctions,” a ruling from Honourable Associate Chief Justice Heather Holmes of the Supreme Court of British Columbia stated. “However, I conclude that those effects may play a part in the determination of whether double criminality is established.
“For that reason, Ms Meng’s application will be dismissed.”
Although this is a loss for Meng and Huawei, this is only the first stage. The next court case will be to decide whether Meng can be extradited to the US.
Once arrested and the prospect of extradition to the US to face sanction violation charges emerged on the horizon, Meng’s legal team filed objections to the process on the grounds of ‘Double Criminality’. This is a rule in extradition cases which states that an individual can only be extradited if the law in questions exists in both countries.
The team claimed that as Meng allegedly broke US sanctions against Iran, not Canadian sanctions, Double Criminality could not be satisfied. However, the Supreme Court has confirmed there are relevant laws in Canada, therefore Meng is eligible for extradition.
“Huawei is disappointed in the ruling by the Supreme Court of British Columbia, we have repeatedly expressed confidence in Ms Meng’s innocence,” a Huawei statement reads. “Huawei continues to stand with Ms Meng in her pursuit for justice and freedom.
“We expect the Canadian judicial system will ultimately prove Ms Meng’s innocence. Ms Meng’s lawyers will continue to work tirelessly to see justice is served.”
Meng was originally arrested in December 2018 while in Vancouver airport on layover to China. Canada made the arrest at the request of the US, with the US claiming Meng knowingly violated an embargo against Iran and misled US banks in 2013 by not making connections to Hong Kong firm Skycom, which works with Iranian parties, known.
While this is another sign of US aggression towards Huawei, the Chinese Government is bound to get involved sooner rather than later in protection of one of its domestic champions. Tensions between the two global superpowers could once again be ratcheted up a level, and it would be no surprise to see additional tariffs or corporate exclusions introduced as a result.
The political conflict will continue in the background, but for Huawei CFO Wanzhou Meng, attention will turn to the extradition case. Cynics will suggest that as soon as Meng crosses the border to the US it is game over, so enough money will have to be thrown at the Canadian extradition case if Meng is to return to China in the foreseeable future, if ever.
UK telco Three has announced the appointment of Carlo Melis as Chief Network Officer just as the Huawei saga starts to rear its head once again.
Over the course of the last week, the rumour mill has been churning at full capacity, with Huawei’s name popping up on more than one occasion. Prime Minister Boris Johnson is facing a backbencher revolt unless ‘high-risk’ vendors are removed from networks within years, while the National Cyber Security Centre (NCSC) is once again investigating whether the firm is in a sound enough position to work with UK telcos.
One might have said there were better times for Melis to join the business.
Arriving from Wind Tre in Italy, Melis has been working on network resilience during the on-going COVID-19 landscape though eventually his attention will turn to managing the spectrum portfolio and presumably creating a network which can rival market leaders within the UK. Much work has been done in recent years, though thanks to outside influences, Three is still in somewhat of a difficult position.
“Three has been on an incredible journey, completely overhauling its network and IT infrastructure and laying the foundations for a 5G network that will dramatically transform the experience for its customers, at the same time as delivering major 4G improvements,” said Melis.
“I’m looking forward to joining Three, bringing my expertise to build on the great progress already achieved and to deliver a network that will stand the business in good stead long into the future.”
The last few months have certainly been an eclectic mix of ups and downs for the Three business. The fixed wireless access (FWA) proposition and campus network offering was looking healthy before Ros Singleton left the business. These business units are still functional, but look a little weaker without Singleton involved, however it is the more mainstream 5G programme which looks more precarious.
Announced at almost the exact same time as the departure of Phil Sheppard, who was effectively the company’s CTO, was the conclusion of the Supply Chain Review. Huawei was designated a high-risk vendor, and therefore limited to providing a maximum of 35% of a telcos network infrastructure equipment. This is a significant problem for Three which decided Huawei was going to be the sole supplier of RAN equipment for its 5G network.
These are the complications Melis needs to manage over the next few months. Alongside the teething problems of a new cloud core and ensuring the 4G network remains stable during this period of dramatically increased traffic, the 5G deployment strategy needs to be reimagined. Of course, this becomes difficult when even more uncertainty is introduced by rebellious politicians and the NCSC investigation.
US investment firm KKR has outlined vague plans to fuel growth in the European data centre market with $1 billion for a build-to-suit and roll-up acquisition data centre platform.
While it is difficult to translate the overly enthusiastic PR and marketing language which dominates the press release, it does appear to be an effort to build more data centres in the European region.
“The data centre market in Europe presents a unique opportunity to invest behind the secular trend of increased cloud services adoption and demand for data,” said Waldemar Szlezak, MD of KKR.
The new company, which will be known as Global Technical Realty (GTR), will operate in two ways. First, a build-to-suit programme for the major cloud players. This segment will presumably have an anchor tenant dictating the location, before selling services on to additional cloud players.
Secondly, the team plan to execute a ‘roll-up’ acquisition strategy, a particularly effective business model when economies are facing tough trading conditions. This is a simple, albeit slightly predatory strategy, effectively identifying distressed assets for acquisition, before merging together in a single operation to benefit from scale.
“We are thrilled to have found an investor like KKR that shares our vision for the future of the data centre market,” said GTR CEO and founder Franek Sodzawiczny.
“KKR’s breadth of resources and tremendous expertise will allow GTR to fully participate in this growing market and provide a solid foundation for GTR’s future growth and success.”
Ultimately, KKR and GTR are attempting to capitalise on momentum towards the cloud. The major cloud players have their own data centre footprint of course, which is rapidly expanding, but there is only so much which can be done alone. The built-to-suit programme releases some of the risk associated with data centre investment, while the roll-up acquisition strategy is a quick win for a cash-rich company looking to muscle in on cloud momentum and create an immediate presence.
Today, trends are only heading in one direction. With more companies digitising business processes and workloads, the cloud computing segment is certainly benefiting from societal lockdowns and enforced digital transformation programmes. The big question is how many of these programmes will be returned as the world returns to some semblance of normality.
When we asked Telecoms.com readers how many thought their employers would retain remote working practices 50% said they would have to check into the office once or twice a week and 34% believed they would given the option to work as they please.
It does appear the enforced remote working dynamic has some sustainability in the long run, perhaps kick-starting a wider transformation programme. Nicholas McQuire, SVP and Head of Enterprise Research at CCS Insight told us there has been resistance to the cloud from traditional companies in the past, though once started it should provide a catalyst for greater things.
Aside from these very immediate and unusual drivers for cloud, trends have of course been gradually heading towards a more digitised and distributed world. Netflix, as an example, is very interested in caching as much content in edge data centres, to improve experience for customers, while cloud gaming could also provide greater demand for data centres.
Not only is the world become more digitised, super data centres will have to be supplemented by additional infrastructure to create a distributed cloud. This is an important element to reduce latency and remove choke points when attempting to improve customer experience.
The world is only heading in one direction though the pace of change is unknown for the moment. COVID-19 might have acted as an accelerator for digital transformation, and while this might only be temporary, this is an excellent time for KKR to be throwing money at data centre infrastructure.
Phoenix Tower International has announced an agreement to purchase 650 wireless towers from Irish telco eir, expanding its infrastructure footprint to a new European nation.
With 9,000 towers spread across 15 countries, Phoenix is quickly turning into one of the major players in the telecom infrastructure game. The acquisition of these assets, 100% of eir’s tower portfolio, will further drive Phoenix into the European markets, following hot on the heels of a deal with Bouygues Telecom to acquire 4,000 sites in France.
“Ireland represents an important economic hub for Europe and the world, and we are proud to support eir on their ongoing build-outs across the country,” said Tim Culver, Executive Chairman of Phoenix Tower International. “This transaction further expands PTI’s global footprint and we are excited to be a long-term partner of eir.”
Although operations are primarily focused in the Americas, Phoenix is becoming a much more familiar name for European telcos, several of which are keen to explore ways to access more cash.
While it is certainly a more attractive position to own assets rather than lease off an outside party, the deployment of 5G networks and upgrading broadband to full fibre are two very expensive projects. With the price of connectivity contracts only going down, spreadsheets only tolerating so much debt and investors only able to cough up so much, alternative means to raise funds are needed. The sale of physical infrastructure, the passive part of the network is proving to be a popular way forward.
Phoenix Tower International is one company which realises the potential of asset with (theoretically) consistent demand and zero expiry date, but it is not alone. Cellnex is hoovering up assets across Europe, InfraVia is finding cash to invest, as is Brookfield, a Canadian alternative asset management company. All of these companies recognise that owning the passive infrastructure in a world which is increasingly defined by mobile connectivity is an attractive bet.
But what does this mean for the industry? The influence of the telco on the telco industry is being diluted.
If the telcos no-longer want to own or invest in passive infrastructure, they will have less influence on construction plans, as let’s not forget, companies like Phoenix will have multiple customers to consider. There are of course build-to-suit programmes, but new sites will have to be attractive to multiple telco customers, not just one.
This is a compromise which has to be made. The telcos need money, they have assets to sell, but they will have to accept that they are also trading a slither of control of their own fate. We suspect there will be criticism of this trend in decades to come, when the future leaders of telcos are finding their voices drowned out by other segments of the industry, but it is a case of needs must.
The National Cyber Security Centre (NCSC) has confirmed it is attempting to understand what impact potential US sanction directed towards Huawei would have on UK networks.
With Huawei equipment and components delicately woven throughout the complex tapestry of telecoms in the UK, sanctions from the US which would materially inhibit Huawei operations should be a major concern.
“The security and resilience of our networks is of paramount importance,” a cross-government statement reads. “Following the US announcement of additional sanctions against Huawei, the NCSC is looking carefully at any impact they could have to the UK’s networks.”
There have been reports circulating through the press suggesting UK Prime Minister Boris Johnson is once again considering the role of Huawei in the telecoms landscape. These rumours are a separate story, but directly linked; the US wants to reduce the commercial opportunities for Huawei, and this is yet another attempt.
First, the US Government attempted the diplomatic approach, with Secretary of State Mike Pompeo attempting to prove his debating skills. Secondly, fear was introduced with the US attempted to reignite xenophobic fears of communism. The third strategy was more directly aggressive; work with Huawei or have access to our intelligence data, you can’t have both.
None of these strategies worked, but the latest attempt is an interesting one. If Huawei’s supply chain can be compromised, the UK (and other) Governments might have to turn its back on the Chinese vendor because it does not meet the standards required for resiliency tests.
Should the UK Government be revising its position, it would certainly be a blow to Huawei’s credibility.
“We’ve seen the reports from unnamed sources which simply don’t make sense,” said Victor Zhang of Huawei. “The government decided in January to approve our part in the 5G rollout, because Britain needs the best possible technologies, more choice, innovation and more suppliers, all of which means more secure and more resilient networks.
“As a private company, 100% owned by employees, which has operated in the UK for 20 years, our priority has been to help mobile and broadband companies keep Britain connected, which in this current health crisis has been more vital than ever. This is our proven track-record.”
Looking at the other rumours outside this confirmed investigation into the impact of US sanctions on Huawei, the underlying cause could be directed back tor Conservative backbencher Sir Iain Duncan Smith. Once a prominent voice in the House of Commons, Duncan Smith’s influence has been wilting rapidly, so much so this is one of the first times anyone has paid attention to him for what feels like decades.
In March, Duncan Smith led a small group of Tory revolters in opposition of the Supply Chain Review. Instead of limiting ‘High Risk vendors’ to 35% of any telecoms network, this group wanted them banned completely. These politicians clearly did not understand the complexities of the situation and debates were riddled with inaccuracies, but it appears the pressure has been enough to turn the head of Prime Minister Boris Johnson.
What is worth noting is that while the industry has been in firm support of Huawei in recent years, this staunch stance seems to be softening.
Vodafone Group CEO Nick Read recently discussed the Huawei situation during the telco’s earnings call, and while Vodafone had been warning of catastrophic consequences to prevent work with Huawei, the current rhetoric is no-where near as firm. The executive talked of removing certain firms “moderately” and investments into alternatives. It does appear Vodafone is preparing for the worst-case scenario.
While the rumours are nothing more than rumours, with the US undermining Huawei’s ability to operate as desired some uncomfortable questions will be asked. Top of the list is whether the vendor can maintain security and resiliency credentials for its products and components following such a disruption to its supply chain. This could drastically impact its position in the UK telecoms landscape.
Max Schrems, one of the central figures in bringing down the EU-US Privacy Shield, has penned an open-letter slams the Irish Data Protection Commission for not dealing with Facebook appropriately.
With his privacy campaign organisation, noyb.eu (none of your business) taking on the social media giant, Schrems has heavily criticised the regulator for a lack of action, shrouding investigations with mystery and secret meetings with the firm to create a ‘consent bypass’ situation.
“It sounds a lot like those secret ‘tax rulings’ where tax authorities secretly agree with large tech companies on how to bypass the tax laws – just that they now do this with the GDPR too,” noyb.eu Chairman Schrems said.
The ‘consent bypass’ was an agreement between the authorities and Facebook to switch its policy from ‘consent’ to an alleged ‘data use contract’, allowing the company to track, target and conduct research on users.
“It is nothing but lipstick on a pig,” said Schrems.
“Since Roman times, the law prohibits ‘renaming’ something just to bypass the law. What Facebook tried to do is not smart, but laughable. The only thing that is really concerning is that the Irish DPC apparently engaged with Facebook when they were designing this scam and is now supposed to independently review it.”
According to research quoted by the privacy advocates, only 1.6 – 2.5% of users were aware they were actually entering into a ‘data use contract’. Should these figures be anywhere near accurate, this should not be considered anywhere near good enough.
This entire saga is a bit of ‘he said, she said’ with mud being slung across the wall. On one side of the coin, it is not difficult to imagine secret meetings to figure out how rules can be circumnavigated, but it is also within reason to assume Schrems and his privacy cronies are exaggerating and making a mountain out of a molehill.
Schrems has stated his organisation filed complaints about Facebook during the first few hours of GDPR coming into action, however, the subsequent investigations have not been concluded. This is a fair complaint, these investigations do take time, but then again there has to be a limit. The Information Commissioners Office (ICO) in the UK has delivered dozens of rulings in this period while the Irish DPC celebrated completing the first of six steps last week.
Facebook is a very complicated business with operations spanning across almost every European nation, and while the Irish DPC has been designated lead regulatory authority for several high-profile names, it is not proving itself worthy of this responsibility yet.
Again, you have to take Schrems claims with a pinch of salt, but Silicon Valley is escaping without punishment. We find it impossible to believe all of its residents are acting perfectly within the rules. It would be more credible to blame overly complex bureaucratic processes, a lack of funding, steep workloads and people just not taking privacy as serious as they should; Silicon Valley’s residents at the top of the list.
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.
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.
In 2016, Donald Trump won the Presidential election for numerous reasons, but one very important element was his ability to mobilise the vote of elements of society who wouldn’t have had any interest in politics otherwise. One reason was because of who Trump was and is, a celebrity more than a statesman, but perhaps a more critical element was the message.
Trump ignored political correctness, seemingly appealing to racism and xenophobia as the Make America Great Again slogan was born. He proposed the deportation of all illegal immigrants, the construction of a wall on the US-Mexico border and a temporary ban on foreign Muslims entering the US. The forgotten men and women of the US were the focal point of this campaign.
This campaign, focusing on a single message of foreign people are bad for patriotic US citizens, worked. If Trump is to repeat the success of his 2016 Presidential Election in November, there will have to be another message at the core of the campaign to rouse the masses and build a slogan on.
There has been a suspicion that the success of the economy and low levels of unemployment would have been this focal point. Prior to the COVID-19 pandemic, the economy was on the rise. From Trump’s entry to the Oval office on 6 January 2017, to the final days before lockdown in February, the Dow Jones grew from 19,963 to 29,398, a 47% surge. Unemployment was down to 3.5%, slowly eroding through the three-year period.
The message could have been ‘look what four years of Trump has gotten you, wouldn’t you like four more?’. But then coronavirus hit, and the economy went down the toilet.
The Dow Jones will recover, as will unemployment, but the Trump campaign would be playing with fire by making this the central point of the campaign. Many believe Trump was too slow to act against the coronavirus after spending months claiming it was little more than the common flu. At its worst point, the Dow Jones fell to 18,591 while unemployment is currently as high as 14%, and likely to go higher.
Using the economy as a reason for re-elections is offering ammunition to the Democrat candidate, the opening round of a slug match where Trump can be undermined and embarrassed.
Without this weapon in his arsenal, Trump will have to find a new focal point to build a campaign around; China and Huawei could fit the bill.
Some wacko in China just released a statement blaming everybody other than China for the Virus which has now killed hundreds of thousands of people. Please explain to this dope that it was the “incompetence of China”, and nothing else, that did this mass Worldwide killing!
Trump needs to redirect attention away from his failings as a leader during the pre-coronavirus weeks. People generally need an enemy when times are hard, and the invisible enemy of today will not do; you can’t get people angry about a virus, not in the way that the Trump campaign will want. If Trump can further vilify the Chinese, he can position himself as the hero, the man to champion US values, whatever they might be.
Huawei has been made the proxy of the Chinese Government in the eyes of the US. If the US is scared about the ‘red under the bed’, the idea of communism creeping into democratic societies secretly, the successful telecoms vendor can be made public enemy number one.
This is clearly not a new campaign of hate from the President, but it is one which had quietened off over the last few months. It is an on-going conflict point between the US and Chinese Governments, and fuel was thrown onto the embers last week.
In a new assault from the US Department of Commerce, further efforts were made to inhibit the ability of Huawei to source semiconductor components for smartphones and base stations. The US is perhaps hoping the globalised nature of the technology industry, which has allowed Huawei to thrive, can be weaponised against it as few (if any) companies could operate without a single trace of the US in its supply chain.
“We have survived and forged ahead despite all the odds,” Huawei Rotating Chairman Guo Ping said at a virtual conference this week. “The US insists on persistently attacking Huawei, but what will that achieve for the world?”
Conflict with the Chinese might not sound good for economic reasons, but for political ones, it is fantastic. Trump needs an enemy so he can be the champion of for the forgotten men and women of the US.
While it is clear there are a lot of US politicians buying into the anti-China campaign of hate, we asked Telecoms.com readers how they feel about the on-going aggression towards Huawei:
Telecoms.com Poll: Do you feel the US Government is justified in its action against Huawei?
Yes, it is effectively a pawn for the Chinese Government
Yes, but Government links are not there
Maybe, but show us the evidence of foul play first
No, Trump shouldn’t punish a company just because it is Chinese
No, international competition should be left to sort itself out
Huawei might have enjoyed a brief breather over the last few months, but the signs are there to suggest there might be greater conflict on the horizon. Speaking at the Munich Security Conference this week, Secretary of State Mike Pompeo and Secretary of Defence Mark Esper both drew battle lines.
“Let’s talk for a second about the other realm, cybersecurity,” Pompeo said during his speech. “Huawei and other state-back tech companies are trojan horses for Chinese intelligence.”
“Under President Xi’s rule, the Chinese Communist Party is heading even faster and further in the wrong direction,” said Esper. “More internal repression, more predatory economic practices, more heavy handedness, and most concerning for me, a more aggressive military posture.”
Further sanctions and more aggressive policies against Huawei specifically, as well as other Chinese companies in the international markets, could be on the horizon. Huawei executives have certainly expressed concern, but there are numerous other companies who should also be sitting uncomfortably.
The US Senate recently passed the Holding Foreign Companies Accountable Act (S.945) which could result in numerous companies who do not pass strict criteria being delisted from US stock exchanges. China is of course a target with this legislation.
“The SEC works hard to protect American investors from being swindled by American companies,” said Senator John Kennedy, one of the politicians to introduce the original bill.
“It’s asinine that we’re giving Chinese companies the opportunity to exploit hardworking Americans – people who put their retirement and college savings in our exchanges – because we don’t insist on examining their books. There are plenty of markets all over the world open to cheaters, but America can’t afford to be one of them.”
This legislation would not impact Huawei, it is a private company after all, but it is further evidence of increasing aggression towards China, and suggestions there could be rising tensions.
And while Huawei might be attracting the most attention from US Senators right now, there are certainly more which could fall into the crosshairs. Tencent owns TikTok which has already come under criticism, Alibaba is hoping to expand its cloud computing venture into international markets, while the likes of OPPO and Xiaomi are proving to be quite successful in gaining interest as challenger smartphone brands. These are all companies which would perhaps fall foul of US opinion.
The first Trump campaign rallies will give more of an indication of what will be the focus of his scorn and hatred over the coming months, and where the pent-up frustrations of US citizens could be directed. We suspect Huawei could be in for a rough few months as Trump further vilifies the Chinese Government and looks for an opponent to bureaucratically challenge during the campaign.
Taking down Huawei could be the feather the Trump campaign is looking for in its quest for re-election to the White House.
Some might assume the strategy to combat COVID-19 is being devised on the hoof while patchy delivery suggests there is little communication between departments, and the cynics would be right!
After a week of bouncing from department to department and representatives being unable to offer any clear guidance or in-depth knowledge of the contact tracing application, Telecoms.com is becoming increasingly concerned about the Government strategy, as well as potential implications for privacy and security.
With the information which has been offered from Government representatives to date, it is clear few have any idea what is actually going on.
Last week, the Cabinet Office released new documents which detailed the UK Government strategy to exit the current societal lockdown. Featured in this broad document were 14 projects needed to ensure the country can exit the lockdown effectively, including the creation of a contact-tracing application to monitor the impact and potential spread of the virus.
The following extract is from the bottom of page 39, the section dealing with testing and tracing:
“Information collected through the Test and Trace programme, together with wider data from sources such as 111 online, will form part of a core national COVID-19 dataset. The creators of a number of independent apps and websites which have already launched to collect similar data have agreed to work openly with the NHS and have aligned their products and data as part of this central, national effort.”
Despite this document being published and distributed by the Cabinet Department, and featuring a foreword from Prime Minister Boris Johnson, it was unknown who the ‘independent apps and websites’ are, when the trials of the COVID-19 tracing app on the Isle of Wight would be concluded or how many downloads were being targeted upon release.
Considering the importance of this document and the material in it, one would assume this information would be available, though we were referred to other Government departments, who have not been able to provide insight either.
This is not the first time we have been referred from a department which should have knowledge of the situation and to another. In recent weeks, prior to the beginning of the Isle of Wight trials, the Department of Digital, Culture, Media and Sport (DCMS) stated it was not involved at all with the development of the application, referring us to the Department of Health and Social Care (DHSC), before being directed by representatives of DHSC to the NHS technology unit where communication went unanswered.
Despite the Cabinet Office, DCMS and DHSC presumably being critical Government departments in the development of a contact tracing app to combat COVID-19, there does not seem to be anyone in the know as to what is actually going on.
Unfortunately for everyone involved, the questions posed were not overly complex and should be simple to answer if the information is available, instead one department pointed us to another. Perhaps no-one wanted to muddy their hands with what is quickly turning into a debacle, or maybe no-one could actually answer these simple questions.
If there is little contribution from these departments on the development of the app, how can one ensure there are effective safeguards for cybersecurity or data privacy? The Government has gone against industry advice in pursing a centralised data model, but confidence in its ability to manage this process is increasingly thinning.
The NHS has somewhat of a checkered past when it comes to digital and data projects, and that is putting it politely. Some of these previous attempts to do digital in the NHS has been completely and utterly disastrous, accomplishing nothing, yet the NHS is seemingly blindly trusted as Government departments plead ignorance. The NHS flying solo will have some critics shifting in their seats very uncomfortably.
For the app to work as desired, 60% adoption is a number which has been floated by academia. This is going to be a big ask, therefore delivery will have to be close to perfection. One might hope that the relevant Government departments are a bit more informed moving forward considering the importance of this technology in aiding the UK’s recovery.