Chapter 5 - Europe and 5G

Chapter 5: Europe and 5G
1. I. European Union Action in 5G Race
2. II. Ericcson

Chapter 5: Europe and 5G

While the focus of this paper is the Chinese and U.S. 5G networks, it is important to mention the European networks, companies, and infrastructure that is important in the United States-Chinese race for 5G dominance.

Europe is caught at the cross roads of the 5G battle between the United States and China. The EU is being pressured by its foreign policies and domestic policies because of this cross road between the two countries. Research has found that the EU has to protect its interest and think about these questions: “how to balance the EU between China and the United States, encourage free trade but also stand up to China’s practice of subsidizing companies like Huawei, figure out how to build up its own independence and sovereignty while not enraging far-superior superpowers, and needing 5G technology to bolster their economies while protecting themselves from cyberwarfare and ensure its citizens’ human rights and data are protected.”¹⁰⁵ It is this crossroad that makes it is important to mention Europe as an integral battleground for 5G dominance between the United States and China. To create dominance in a sector, a country would need a region outside of their own country to be on their side. In the case of 5G, the U.S. and China are competing for Europe.

¹⁰⁵ Burdeau, Cain. “Europe Becomes a Battleground Over Huawei and 5G.” Courthouse News Service, 12 Feb. 2020, www.courthousenews.com/europe-becomes-a-battleground-over-huawei-and-5g/.

I. European Union Action in 5G Race

While considering the questions stated above, EU countries have taken different approaches to 5G networks between the U.S. and China. Even close U.S. allies such as Britain and Germany are still deciding which companies will participate in building their 5G networks and are unlikely to ban Huawei altogether. “The reason is simple: for many European countries that already use Huawei equipment in their 4G networks, it would be costly to switch horses in midstream.”¹⁰⁶ Telecom operators had been planning to use their existing 4G infrastructure as the cheapest and fastest way to start the upgrade to 5G, “which will be able to transmit data as much as 20 times faster than current networks.” ¹⁰⁷ However, countries have decided that despite being costly, the need to switch technological providers is real. These countries are turning to Europe’s biggest technology companies: Ericcson and Nokia. Nokia and Ericsson have profited handsomely from this shift away from Huawei, winning deals from former Huawei customers. ¹⁰⁸

II. Ericcson

Companies and countries are choosing Ericcson because of their European location and advancements similar to or better than Huawei’s advancements. “Wireless carriers want Ericsson’s concentrated wireless technology, telecom executives say, because it enables fast connections and allows them to serve more customers using existing cellular towers. Building new towers is unattractive because it is a bureaucratic

¹⁰⁶ Johnson, Keith, and Elias Groll . “The Improbable Rise of Huawei.” Foreign Policy, 3 Apr. 2019, foreignpolicy.com/2019/04/03/the-improbable-rise-of-huawei-5g-global-network-china/.

¹⁰⁷ Mukherjee, Supantha, and Isla Binnie. “Analysis: Europe Plots Catch-up in Global 5G Race to Drive COVID-19 Recovery.” Reuters, Thomson Reuters, 28 Dec. 2020, www.reuters.com/article/us-europe-5g-analysis/analysis-europe-plots-catch-up-inglobal-5g-race-to-drive-covid-19-recovery-idUSKBN2920WJ.

¹⁰⁸ Mukherjee, Supantha, and Isla Binnie. “Analysis: Europe Plots Catch-up in Global 5G Race to Drive COVID-19 Recovery.” *Reuters, *Thomson Reuters, 28 Dec. 2020, www.reuters.com/article/us-europe-5g-analysis/analysis-europe-plots-catch-up-inglobal-5g-race-to-drive-covid-19-recovery-idUSKBN2920WJ.

process that can cost tens of thousands of dollars. Ericsson and Huawei sold 5G equipment with this feature last year, but Nokia didn’t because of delays developing computer chips for its hardware.”¹⁰⁹ It is the speed of Ericcson and delays of Nokia that continues to set Ericcson apart in the European market. Recently, Ericcson “notched a victory this spring when it joined Huawei in winning 5G contracts to supply all three major wireless carriers in China, the world’s second-biggest telecom-equipment market after the U.S. Nokia lost out on the significant Chinese bids.” ¹¹⁰ Ericcson also supplies the 3 major U.S. phone carriers with equipment.¹¹¹ It is the reach of Ericcson combined with sanctions by the United States against Huawei that has allowed Ericcson to gain a greater foothold in the race for 5G.

It is important to ask the question of why European countries are choosing their own companies over U.S. companies. Researchers show this is because of the importance of 5G and the security risks it can present if put in the wrong hands. The German Foreign Minister states, “5G is the nervous system of our digital society and economy. If we make decisions about security risks today based on cost, we will pay for those decisions very dearly in the future.” There is another factor influencing this debate: many Europeans lost trust in U.S. tech companies and the U.S. government after the stunning revelations of Edward Snowden. “Now we are in the realm of trust relationships,” the

¹⁰⁹ Woo , Stu. “Ericsson Emerges as 5G Leader After U.S. Bruises Huawei.” Https://Www.bangkokpost.com, Bangkok Post , 4 June 2020, www.bangkokpost.com/business/1929056/ericsson-emerges-as-5g-leader-after-u-s-bruiseshuawei#:~:text=Ericsson’s%20share%20rose%20from%2026.2,from%2027.5%25%20to%2030.7%25.&text=The%20big%20question%20for%20wireless,carriers%20have%20come%20to%20expect.

¹¹⁰ Woo , Stu. “Ericsson Emerges as 5G Leader After U.S. Bruises Huawei.” Https://Www.bangkokpost.com, Bangkok Post , 4 June 2020, www.bangkokpost.com/business/1929056/ericsson-emerges-as-5g-leader-after-u-s-bruiseshuawei#:~:text=Ericsson’s%20share%20rose%20from%2026.2,from%2027.5%25%20to%2030.7%25.&text=The%20big%20question%20for%20wireless,carriers%20have%20come%20to%20expect.

¹¹¹ Woo , Stu. “Ericsson Emerges as 5G Leader After U.S. Bruises Huawei.” Https://Www.bangkokpost.com, Bangkok Post , 4 June 2020, www.bangkokpost.com/business/1929056/ericsson-emerges-as-5g-leader-after-u-s-bruiseshuawei#:~:text=Ericsson’s%20share%20rose%20from%2026.2,from%2027.5%25%20to%2030.7%25.&text=The%20big%20question%20for%20wireless,carriers%20have%20come%20to%20expect.

Minister said. “Europe had its fair share of trust relations with the U.S. in 2013 after the Snowden revelations.”¹¹² It is these trust issues with the U.S. that has allowed Ericcson to swoop into the previously Huawei saturated European market and increase their influence around the world. Because of Ericcson’s increased hold of the market, they are predicting increased European 5G coverage around the continent. Ericsson forecasts Europe’s 5G coverage should “grow from around 1% of mobile subscriptions across the continent in 2020, to 55% in western countries and 27% in central and eastern states over the next five years, underpinning a longed-for economic recovery.”¹¹³ Because of this, the mobile operators must pay companies like Ericsson, Nokia, Qualcomm, and Huawei billions of dollars for the 5G equipment.

EU companies are pouring money into Nokia and Ericcson instead of Huawei, which has allowed the United States to gain closer to China in the race for 5G implementation. With Europe splintered over which companies to let design and implement their 5G infrastructures, the Chinese lead in the race for 5G has lessened substantially, making room for U.S. advancement.

¹¹² Burdeau, Cain. “Europe Becomes a Battleground Over Huawei and 5G.” Courthouse News Service, 12 Feb. 2020, www.courthousenews.com/europe-becomes-a-battleground-over-huawei-and-5g/.

¹¹³ Mukherjee, Supantha, and Isla Binnie. “Analysis: Europe Plots Catch-up in Global 5G Race to Drive COVID-19 Recovery.” Reuters, Thomson Reuters, 28 Dec. 2020, www.reuters.com/article/us-europe-5g-analysis/analysis-europe-plots-catch-up-inglobal-5g-race-to-drive-covid-19-recovery-idUSKBN2920WJ.