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China's Huawei backtracks on 5G shift – Financial Times

China’s Huawei, which has long trumpeted its pioneering role in 5G, has poured cold water on the next-generation wireless technology, claiming most consumers would not notice its benefits and that operators would struggle to make money from it.

The reversal comes as 5G has moved on to the political agenda, with key components ensnared in the US-China trade war and fears of Huawei’s supremacy in the technology prompting US president Donald Trump to block Broadcom’s acquisition of Qualcomm.

Speaking at the tech group’s analyst event in Shenzhen on Tuesday, rotating chairman Eric Xu said that while 5G was faster and more reliable, consumers would find no “material difference between the two technologies”.

The technology has been hailed as a necessity for the coming age of autonomous driving, and the billions of connected devices making up the internet of things. But Mr Xu pointed out that “even today we have the technology that can support autonomous driving”.

Analysts said Huawei’s reversal echoed a broader sense of gloom among telecoms operators and kit manufacturers.

“Pessimism about 5G has been growing behind the scenes in the mobile industry but Huawei is the first large infrastructure company to state it explicitly,” said Ben Stanton, analyst at Canalys. “The reality is that 5G will be incredibly expensive for operators to deploy, requiring tens of thousands of new base stations per country. And the industry is yet to uncover a killer-use case for the 5G network.”

Mr Stanton also noted that it was “becoming clear that oft-cited use cases, like IoT and self-driving cars, are actually more dependent on computing power built into the device itself, rather than the network”.

Despite his doubts, however, Mr Xu said Huawei would continue to invest in the technology, saying failure to do so would cost it business: “If you are not good at 5G, customers won’t buy from you even for 4G.”

Thursday, 5 April, 2018

He said the same applied to the telecoms operators. “If one says, ‘I have 5G-enabled network’, the rest really have to launch 5G even if it’s just for branding or marketing purposes.”

Ericsson, Huawei’s Swedish rival, has predicted that there will be 1bn 5G connections by 2023 as networks start to roll out in urban areas. The company has been very positive on the prospects for the new wireless technology but has started to focus more on the industrial benefits of early adoption.

Nokia has been more circumspect with its ambitions in 5G, saying little more than it believes it is better positioned than its rivals to pioneer the technology.

“It’s a genuine fact that many operators are struggling a little with 5G,” said Peter Richardson, research director at Counterpoint who attended the Huawei event. “Some of the UK operators are saying: ‘Why are we talking about 5G when we still have not made any money out of 4G yet?’”

Mr Stanton concurred. “The industry as a whole will become more pragmatic about 5G in the next few years,” he said. “Huawei is right. Better to give stakeholders a small reality check now than a big shock later on.”

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