It started late Friday for me when the Financial Post gave me ‘Fearing Huawei curbs, Deutsche Telekom tells Nokia to shape up‘, the article (at https://business.financialpost.com/pmn/business-pmn/fearing-huawei-curbs-deutsche-telekom-tells-nokia-to-shape-up-2) gives a few items and linking that to another post gave me a lot to consider. First we need to see “Deutsche Telekom has told supplier Nokia it must improve its products and service to win business installing the German group’s 5G wireless networks in Europe, according to internal documents and a source with direct knowledge of the matter“, the issue is twofold, yet the important part is not a given. Here we see the story behind ‘Nokia must improve its products and service‘, yet the story focuses on services, a little less on the product. So as we take notice of “the German group considered Nokia the worst performer among all suppliers in 5G tests and deployments“, yet because of the US bully tactics, Nokia is feeling a little too safe to be worried, which is nice for Nokia, but it is one of a few items hitting the European Telecom providers. The entire Nokia matter is shown with one simple statement “Deutsche Telekom’s willingness to give Nokia another hearing shows the difficulties mobile companies face over pressure from the United States“, it is more than bully tactics, the station we now see is that those giving in to the US are facing 2 larger ones, the first being the implementation by players like Nokia on a European front, the larger issue is not merely Nokia, the larger issues is seen in the IP Watchdog that gives us (as did the news a few days ago) ‘Huawei Sues Verizon‘, we are given that “Chinese telecom giant Huawei filed two lawsuits in U.S. district court, one in Eastern Texas and the other in Western Texas, asserting claims of 12 patents against Verizon Communications. The suits were filed after Huawei “negotiated with Verizon for a significant period of time”“, let me explain why it is a larger issue.
Firstly, the fact that we see ‘negotiated with Verizon for a significant period of time‘ leaves us with the larger setting that this isn’t nothing, in addition, as the US was so proud to give the stage of 5G ready, we see that at least one vendor might not have been ready, no matter how this case slices and dices 5G, a dozen patents are in this, as such they can be checked and if so, the entire 5G bubble will explode (not burst) in the Trump administration face right in the middle of re-election. In addition, the fact that the US has not given one part of evidence setting the stage against the US at present gives a much larger scene over the optional backdrop of failing US equipment whilst they are trying to roll out 5G, in light of all this that earlier speculated 4-6 years delay for national 5G will optionally reach up to a decade, which means that the entire 5G setting is game over for the US (optionally depending on this trial). As I personally see it, the Trump Administration will have to rely on the brightest minds at the USPTO (United States Patent and Trademark Office) to investigate BEFORE the trial commences how big an issue it might be, if that is not done the Trump administration will end up with egg on its face whilst the 5G networking issue will hang around its neck like an anchor keeping them in place, it would be a global setback for them.
Now we cannot state that Huawei has a case or that Verizon is innocent, but a dozen patents will impede it as they need to be examined and the courts will take up to two years, no matter what delays are seen, if Verizon continues, all their revenue will go straight to China with a lot more in penalties, that was never in anyone’s cards.
Returning to the FP we also see: “It is well known that Deutsche Telekom is pursuing a multi-vendor strategy so that we are not dependent on just one supplier. This is an elementary part of our security philosophy,” said Claudia Nemat, Deutsche Telekom’s head of technology and IT. “In 2019 we have made many steps together with Nokia to make Deutsche Telekom’s networks evolve towards 5G readiness, including all network domains, from radio and fixed access to transport and core, and continue to do so in 2020 and onwards.” Federico Guillen, Nokia’s president of customer operations in EMEA and APAC, said: “We continue to work extensively with Deutsche Telekom which is one of our most significant customers, both in Europe and the U.S.”” this all makes sense, there is no hidden agenda (or is there), most larger companies will not be set to the leash of one large giant, there is no opposition to that, but in this case we see that for some reason Ericsson is not considered, a Swedish company that is supposedly ready for 5G deployment, now we can say that Ericsson is a large player and it is (to some extent) the pride and joy of Sweden with as far as I can tell a much larger state of international readiness than Nokia ever was, as such why is the focus on Nokia? In this stage of 5G and the need to grow where a telecom player can, why is Ericsson not regarded as a backup for Nokia? When we realise that “in 2017 Nokia was dropped entirely from that market segment when Ericsson was handed a 30% share of Deutsche Telekom’s spending on it, reports in the trade press said at the time. It was the first of several wins for Ericsson“, Ericsson is indeed the other player, it seems like a desperate setting to have merely to keep Huawei out, so in this, these so called cut-throat players are unwilling to play hard ball. I wonder why? I have seen some of these players play fast and loose and play hardball as well and seeing the optional failure by Nokia and the subsequence unwillingness to consider Huawei, we see a puch from Germany orchestrated by the US, the EU 5G solutions will take a firm beating at present making them (optionally) ahead of the US and optionally behind other players, players that were never in such a high place before and that was before the patent infringement accusations, now the mess becomes a much larger setting.
All whilst we consider “Deutsche Telekom then suspended vendor talks to await the outcome of a debate in Berlin over the security of critical national networks, where senior lawmakers from Chancellor Angela Merkel’s conservative party back the U.S. call to bar Huawei” in this I believe that the US has set the fate of Angela Merkel as well, when the US stumbles even once, and the beginning of that was shown 5 days ago (at CNN) with ‘Angela Merkel lambasts her party’s cooperation with far-right AfD‘, this 5G anchor is not merely around the neck of Merkel as well, it could limit the actions of the CDU and give power to the AfD. Even as we take notice of ““It’s a very big deal … the consensus amongst democrats that there would be no cooperation with far-right parties ended yesterday,” Kai Arzheimer, a professor of Political Science at the University of Mainz, told CNN. “So it was a historic day,” he added“, the impact is larger, when the US bully tactics are seen for what they are, and as the US remains debatable in not presenting any evidence against Huawei, there is every chance that the far right in Germany will get to shout that the CDU has reverted to being a puppet of the US and they will point at Deutsche Telekom, a group laced with cut throat profit makers as evidence, the moment that is accepted, the US will not merely lose Germany, at that point it needs to consider France, the Netherlands and Spain lost as well, Italy is a larger problem (for Huawei) but it is too early to shout on that. In addition, as 2 of the big 4 change course, especially as the patent infringements fire up the others will take money for promises and full steam reverse whatever plan they had, the waters will be too shallow and too dangerous to sail in the US domain.
All this remains an issue when we see the Huawei stage of affair as they give the world “Huawei negotiated with Verizon for a significant period of time, during which the company provided a detailed list of patents and factual evidence of Verizon’s use of Huawei patents. The two parties were unable to reach an agreement on license terms. “We invest heavily in R&D because we want to provide our customers with the best possible telecommunications solutions,” continued Dr. Song. “We share these innovations with the broader industry through license agreements.”“, this does not give any details of who is in the right, but if the Apple Inc. v. Samsung Electronics Co. is anything to go by, the court took almost 5 years and in the end “On December 6, 2016, the United States Supreme Court decided 8-0 to reverse the decision from the first trial that awarded nearly $400 million to Apple” in this there is a larger stage to patent infringements and in this it was a global impact, in the Huawei case it is more than merely infringement, if the US has a 5 years setback there will be a much larger stage and even as the US wants to push through this case, the world is watching. Not only has the US given accusations against Huawei without clear evidence for the world to scrutinise, the Patents will be open to read for all and this changes the stage to a much larger degree. The fact that the Apple issue went past Dutch, Australian, British, German and Japanese courts give rise to that, the Huawei case could be an equally large and for the US a much larger consideration towards indiscriminate judging of American values, the world will scream for evidence in the middle of an election campaign, it does not sit pretty to be part of this administration. OH and the Apple trial was merely about a phone, a 4G phone, the Huawei stage will be about 5G and the infrastructure, the stage where the US is screaming on Chinese intervention whilst Verizon is delivering all over the US equipment allegedly based on Chinese patent transgression would feel uncomfortable in anyone’s point of view.
There is however the other side, Verizon is still on the ‘There’s 5G. Then there’s Verizon 5G‘ horse. I get it, it is their marketing, so when we see ‘Not all 5G is the same‘ where their hype creation department (read: marketing) gives us “Verizon 5G Ultra Wideband has the power to deliver speeds more than 10 times faster than some other 5G networks” here we see a dangerous tune, that is when you disregard ‘Ultra Wideband‘, the stage becomes that they are about to go to court with a dozen patents linked to their name, patents owned by Huawei. And as we were treated last Thursday to ‘Verizon sticks behind ambiguous 2020 DSS rollout plan‘ (source: FierceWireless) we get the stage where their entire marketing needs to sit on their hands, the moment this gets to court and the Patent lawyers will go over every word and punctuation, when the Patent IT people will investigate the claims and this hits the news cycles 24:7, Verizon will need to steer in different directions and the US administration will push them, the last thing this administration needs is a global expose on Chinese patent infringement all whilst they are pushing non-Chinese hardware on a global scale, the entire Verizon issue, whether true or not will be tested in courts and that is a large bone to pick, even today the 9 years old case between Samsung and Apple is on the minds of too many people, this was a setback the US could have done without.
It does not matter at present who is in the right, this will drag on for years to come (as court cases on infringement do) and it will hinder 5G growth in the US and 5G deployment in Europe, in all this Huawei has too much to gain and the lack of evidence on Chinese government interference claims will not help any, not until clear evidence is presented by the US administration, which is unlikely to happen.
This will be a new technology in waves of interpretation, it is so because the US never gave the rest of the world evidence on Chinese government dangers and that is about to backfire. When this hits the media, it is more likely than not that Verizon shares will plummet, it will plummet to below values they had on August 14th 2019 ($55.72), which would make it a 15% drop which in 5G terms translates to the first coffin nail that Verizon will have to swallow, I reckon that at that point corporate reorganisations will be the talk of the day at Verizon for weeks to come.
Can it be avoided?
That is hard to say, we need to see that interpretation goes both ways and the patent infringement accusations are a larger issue, until we see them investigated by qualified senior Patent lawyers (like the USPTO has) we are merely speculating and even after that, as the court starts it will impact and impact larger than expected. Avoiding that stage would have been the issue to a much larger degree and the talks that ended in no resolve might require a push from the US administration to get those resolved, still the accusation is in the air, that had to be avoided (as I personally see it), no matter what deal is struck, we see the accusations against Huawei whilst Verizon was optionally (and allegedly) using Chinese technology in their hardware. That part is now in the open, and questions will be asked internationally, if not by the governments, it will be a good stick for their opponents to use with any of their upcoming elections.
Settling this beforehand was the larger economic need and it was not done (not judging whether the cases will have merit at present). That is what a lot will remember in the end, especially those who needed a big stick, Huawei just gave them a bat to end most matches.