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Following months of speculation it is now being reported in the United States that President Donald Trump will sign an executive order that will ban US companies from using telecommunications equipment made by Huawei.
US aggression towards Chinese telecommunication entities shows no signs of abating following the latest calls from the chairman of the Federal Communications Commission to block China Mobile from operating in the United States.
China Mobile is the world’s largest mobile operator and has nearly 930 million customers. It has been desperately trying to penetrate the US market for the last eight years. It first filed an application for permission to operate in the United States back in 2011, but thus far it has been unsuccessful in its attempts to get a license to trade.
The FCC has five members which are comprised of both Democrats and Republicans and their due to vote on an order that if approved would deny China Mobile’s request to operate. The offensive campaign against China’s ICT firms that has seen Huawei and ZTE subjected to intense scrutiny has actually drawn bipartisan support in the House of Representatives and appears to be one issue that both parties universally agree on.
FCC chairman Ajit Paj released a statement on the China Mobile application and again referenced the importance of domestic security as the main reason to reject the Chinese operators’ efforts to gain access to the US market.
The FCC chairman said, “Safeguarding our communications networks is critical to our national security. Evidence, including that submitted by other federal agencies made it clear that China Mobile's application to provide telecommunications services in our country raises substantial and serious national security and law enforcement risks."
China Mobile’s ambitions to penetrate the US market now appear dead and the water. The US has continued its smear campaign against Huawei and ZTE and has pressured allies in banning them from participating in their 5G buildout.
Australia and New Zealand have prohibited Huawei from their 5G networks, but the US has met resistance in Europe, with Germany and Belgium both saying they’ve found no evidence of any threats from Huawei, whilst Vodafone claimed that barring Huawei from 5G in Europe would significantly delay the commercialization of the next-generation networks on the European continent.
US President Donald Trump and the Federal Communications Commission (FCC) have announced a number of new initiatives and projects that it believes will help accelerate its 5G network growth ambitions in the United States.
US telecommunications behemoth AT&T has been roundly criticized by its rival operators in the United States who have described its 5G marketing as ‘overhyped’ and ‘misleading’.
US operator Verizon has urged those within the industry to resist the temptation to overhype and subsequently under-deliver on the promise of next-generation technology. In a statement released by Verizon, it’s CTO, Kyle Malady pointed out that whilst new technologies including AI, virtual reality and Internet of Things would all be underpinned by 5G, he stressed the importance of being realistic in terms of what operators can actually deliver in relation to the revolutionary technology.
AT&T launched a mobile 5G service towards the end of 2018, and claimed that it was offering the service to select businesses and consumers in 12 US cities via a mobile hotspot device provided by Netgear. The network operator has adopted an ambitious approach to 5G and was also pushing its 5G Evolution program which promised users speeds faster than your standard LTE.
In addition to this, it was also disclosed in a previous statement by AT&T that Android devices from the operator will display a 5G E logo pop-up on the home screen which would indicate they have connected to AT&T’s 5G evolution experience.
However, critics have claimed that the service provided by AT&T should not be considered as a 5G network offering. Verizon’s CTO said, “If network providers, equipment manufacturers, handset makers, app developers and others in the wireless ecosystem engage in behaviour designed to purposefully confuse consumers, public officials and the investment community about what 5G really is, we risk alienating the very people we want most to join in developing and harnessing this exciting new technology.”
Although not mentioned by name, Verizon’s comments appear to be directed at its main rival AT&T.
Verizon is still preparing for its mobile 5G launch after deploying a fixed wireless access service in October 2018.
In another apparent swipe at AT&T’s Android device move, Malady also cautioned on the industry to only commit to labelling something 5G if new device hardware is connecting the network using new radio technology to deliver new capabilities.
The CTO added, “Verizon is making this commitment today: we won’t take an old phone and just change the software to turn the 4 in the status bar into a 5.”
Also turning up the heat was T-Mobile US, which didn’t pass up the opportunity to seemingly mock AT&T on Twitter, while making the same point as Verizon. “Didn’t realise it was this easy, brb updating,” the operator said on its official Twitter account, with the message accompanied by a video of someone taping a 9G sticker on a smartphone.
The CFO at Chinese telecommunications behemoth Huawei has been arrested and detained in Canada, in a move that has been met with vehement criticism amongst authorities in Beijing, who have called for her immediate release.
Chinese telecommunications vendor Huawei has vehemently denied that it collected data from Facebook users after the Silicon Valley social media colossus confirmed that it granted the Chinese smartphone manufacturer with access to user information.
Huawei has been deemed a threat to national security in the United States by a number of leading US intelligence officials and Republican congressman. The Chinese vendor has been subjected to intense scrutiny over the last few months, and this latest revelation by Facebook will only serve to heighten concerns over national security.
Facebook confirmed that Huawei along with several other companies was allowed to access Facebook data to get the world’s leading social network to perform on its smartphones. Following a fierce backlash in the US congress, Facebook mobile partnerships leader Francisco Varela has leapt to the defense of Huawei, saying that the information utilized by the Chinese vendor was stored on the device and not on Huawei’s servers.
Varela said, “Facebook along with many other US tech companies have worked with them and other Chinese manufacturers to integrate their services onto these phones. Given the interest from Congress, we wanted to make clear that all the information from these integrations with Huawei was stored on the device, not on Huawei's servers.”
A spokesperson for Huawei told AFP that it cooperated with Facebook as part of a concerted effort to improve user services, and strongly denied it collected or stored the data of users. In addition to this, it also rubbished claims it had any links to the Chinese government and dismissed fears in the US over national security.
The spokesperson said, “Like all leading smartphone providers, Huawei worked with Facebook to make Facebook's services more convenient for users. Huawei has never collected or stored any Facebook user data. Our infrastructure and computing products are used in 170 countries and we’ve worked hard to become a trusted ICT provider for our customers.”
US Senator Mark Warner, who is also vice-chairman of the senate select committee on intelligence, expressed his concern regarding the revelations by Facebook that Huawei had access to users’ data.
Warner said, “Concerns about Huawei aren't new. I look forward to learning more about how Facebook ensured that information about their users was not sent to Chinese servers."
Contracts with phone makers placed tight limits on what could be done with data, and "approved experiences" were reviewed by engineers and managers before being deployed - according to the social network. Facebook said it does not know of any privacy abuse by phone makers who years ago were able to gain access to personal data on users and their friends.
New Zealand-based company Hawaiki Submarine Cable LP, and TE SubCom, a TE Connectivity company specializing in undersea communications technology, announced that more than half of the 15,000km of undersea fiber-optic cable that comprise the Hawaiki transpacific cable system have been implemented by TE SubCom.
“The start of 2018 finds Hawaiki closer and closer to ready for service”, said Remi Galasso, CEO of Hawaiki. “Landing the cable in its home country represents a major event for our team and I would like to take this opportunity to thank all our New Zealand partners for their continuous support. Hawaiki will bring huge benefits to New Zealand in terms of greater connectivity to Australia and the US, security of supply, diversity and increased business opportunities for the telecom and IT industries.”
With several thousands of kilometers of undersea fiber-optic cable on board, TE SubCom’s cable-laying vessel CS Responder is now berthed in Auckland, poised to begin marine activities for the New Zealand leg of the transoceanic cable system later this month. The operation will include the landing of the Hawaiki cable in Mangawhai Heads.
The Federal Communications Commission (FCC) license was granted to Hawaiki in December 2017. The US domestic segment between Oregon and Hawaii was completed in the last quarter of 2017. The international segment between Australia, New Zealand and Hawaii has been underway since early November 2017.
Cable landings in Pacific City, Oregon; Oahu, Hawaii; and Sydney, Australia have been successfully completed. Cable landing in American Samoa is scheduled in March 2018, and the Hawaiki cable system will be ready for service in June 2018.
Chris Carobene, vice president, Marine Services, TE SubCom said, “We’re proud of the progress to date on the Hawaiki system and look forward to it being ready for service later this year. The project showcases the SubCom team’s expertise in the transpacific market and has been a great example of the kind of partnership that results in a successful venture.”
Hawaiki will link Australia and New Zealand to the mainland United States, as well as Hawaii and American Samoa, with options to expand to additional South Pacific islands. With more than 43 Tb of new capacity available to the market, Hawaiki will introduce true competition and dramatically drop the cost of connectivity across the Pacific region.
As the first and only carrier-neutral cable system between Australia, New Zealand and the U.S., Hawaiki will be in a unique position to meet new market requirements and deliver tailored capacity solution at the most competitive price.
Ericsson released a statement on January 16 noting that it will book SEK 14.2 billion (US$ 1.77 billion) in write-downs in its Q4 2017 financial results. The write-downs, Ericsson said, are related to the company’s Digital Services and Other divisions, in addition to an SEK 1 billion charge related to tax changes in the United States.
The announced write-downs did not come as a surprise however, as Ericsson did warn in December 2017 that it would likely book an impairment charge in its Q4 results, which is due to release on January 31, after an internal review following a previously announced corporate restructure.
In the statement, Ericsson said the write-downs will have no “impact on cash flow, but impairments will have negative impact on reported operating income mainly in segments of Digital Services and Other, while tax asset revaluation will impact income tax expenses, in Q4 2017.”
Ericsson said majority of the write-downs are related to goodwill from its Digital Services segment, accounting for SEK 6.7 billion, and SEK 6 billion goodwill from its Other segment. Goodwill refers to a range of non-physical assets such as brand name and reputation, and is often added to balance sheets after the acquisition of another company.
“The majority of goodwill originates from investments made 10 years ago or more, and has limited relevance for Ericsson's business going forward,” Ericsson said in the statement. “All impairments are non-cash accounting adjustments. The adjustments have no influence on Ericsson's commitment to executing its strategies and to investing in technology to support customers' success.”
The company’s Digital Services division is said to be a priority of CEO Borje Ekholm, and is being refocused towards software services to reflect the changing needs of Ericsson customers. Ericsson’s segment referred to as Other includes its media and broadcast units, which the company is reportedly planning to sell.
Other write-downs in Ericsson’s statement include Segment Managed Services: impairment of SEK 0.3 billion of deferred costs related to “termination of certain transformation activities”. In addition, Ericsson’s Segment Networks division recorded impairment of SEK 0.2 billion of “capitalized development expenses related to technologies that are no longer planned to be used”.
The other significant write-down Ericsson announced is the SEK 1 billion charge related to a change in the corporate income tax rate in the United States. The lowering of the U.S. corporate income tax rate from 35% to 21% (effective 1 January 2018) requires a revaluation of U.S. deferred tax assets.
Ericsson said the current estimated impact will be “a non-cash charge to the Group income statement of approximately SEK 1.0 b. that will impact income tax expenses.”
Ericsson admits that the impairments and the tax asset revaluation will impact reported net income in its Q4 earnings report, but insists that it will have “no impact” on the company’s cash flow and cash position. “Ericsson’s gross and net cash position remain strong,” the company said. “An impairment is not an indication of the performance of the business in the quarter.”
Ericsson announced in 2017 that it was restructuring the business, following an extensive cost-cutting program as it seeks to offset the decline of its traditional network business. In Q3 2017, the company recorded a loss of SEK 4.3 billion, which included a restructuring charge of SEK 2.8 billion and a write-down of assets in Canada amounting to SEK 1.6 billion.
"We continue to execute on our focused business strategy," said Borje Ekholm in a statement following the Q3 results. "While more remains to be done, we are starting to see some encouraging improvements in our performance despite a continued challenging market.” He said the “general market conditions continue to be tough.”
Ericsson’s focus on 5G
It’s not all looking downhill for Ericsson. In November 2017, the company filed a landmark 5G patent application in preparation for the next-generation technology. The patent application, which combines the work of 130 Ericsson inventors, is the largest in cellular communications in terms of number of inventors, anywhere in the world.
Ericsson’s Middle East and Africa president, Rafiah Ibrahim, acknowledges that the company has been going through a rough patch, but remains vigilant, particularly in the Middle East and Africa. Speaking to Telecom Review, she said Ericsson has signed MoUs with leading telecom operators to plan for the introduction of 5G.
Helping operators introduce the next-generation technology is one of Ericsson’s focus points moving forward, she said, while also helping operators to monetize existing 4G networks. Rafiah said the company’s experience and understanding of using automation and processes makes it the ideal partner for telecom operators willing to embrace change.
Japan-based SoftBank Group’s plans to break off negotiations toward a merger between subsidiary Sprint and T-Mobile US amid a failure to come to terms on ownership of the combined entity, dashing the Japanese technology giant's hopes of reshaping the American wireless business.
SoftBank is expected to approach T-Mobile owner Deutsche Telekom as early to propose ending the talks, according to Nikkei. They had reached a broad agreement to integrate T-Mobile and Sprint, the third- and fourth-largest carriers in the US, and were ironing out such details as the ownership ratio.
The German parent had insisted on a controlling stake, according to a source familiar with the situation. Some at SoftBank were initially amenable as long as the Japanese company retained some influence. But SoftBank's board discussed at a meeting that the company would not give up control. The decision was made to call the talks off.
Sprint's position in the US mobile market is weaker than its No. 4 ranking would suggest. The carrier sits well behind the top two Verizon Communications and AT&T in scale and subscribers. The hope was that a merger with T-Mobile would reinforce Sprint's customer base enough to let it challenge the duopoly while allowing for more efficient network investment. In addition, they have sold or mortgaged most assets.
SoftBank tried to buy T-Mobile in 2014, but the idea was abandoned amid opposition from regulators under then-President Barack Obama. The failure of this latest effort leaves Sprint, which was acquired by SoftBank in 2013, to keep working toward a turnaround on its own.
In early morning trading in Tokyo, SoftBank shares fell to 9,830 yen, down 5.8 percent from Monday's closing price. The share price had risen to 10,550 yen on Monday (Nov. 30), a 17-year high since the burst of the dot-com bubble. The shares closed the morning session at 9,921 yen, down 4.9 percent.
"Investors were buying SoftBank partially on the merger hopes, so the news has a negative impact. It will be difficult to maintain the stock price over the 10,000 level," said Tomoaki Kawasaki, senior analyst at Iwai Cosmo.
US communications provider CenturyLink has completed its acquisition of US telecommunications and Internet service provider Level 3 Communications for an estimated $30 billion. The combination of CenturyLink and Level 3 creates a global network services company capable of providing customers a wide range of technology solutions over a secure fibre-rich network.
The US Federal Communications Commission (FCC) approved the merger on November 30. CenturyLink's network now connects more than 350 metropolitan areas with more than 100,000 fibre-enabled, on-net buildings, including 10,000 buildings in EMEA and Latin America. The combined company will compete against US telecom heavyweights AT&T and Verizon.
The combined company, with estimated pro forma revenue of $24 billion for the twelve months ended June 30, 2017 (excluding revenue related to CenturyLink's May 1, 2017, colocation business sale and including estimated intercompany eliminations and purchase accounting adjustments), anticipates that approximately 75 percent of its core revenue will come from business customers and nearly two-thirds of its core revenue will come from strategic services.
"CenturyLink is now poised to offer an expanded, robust portfolio of communications solutions focused on our customers' networking and IT services needs," said Glen F. Post III, CenturyLink's chief executive officer. "Our customers, from individual consumers to global enterprises, will benefit from our expanded, innovative network solutions, our complementary managed services and our highly talented workforce."
The acquisition is more like a merger, with CenturyLink shareholders getting 51 percent ownership and Level 3 stockholders 49 percent. CenturyLink remains headquartered in Monroe, La., with a key operational presence in Colorado and the Denver metropolitan area.
Following the acquisition, CenturyLink is now better positioned to offer a broader, innovative product portfolio of network solutions and advanced IT services designed to meet complex technology and threat protection needs.
The acquisition allows CenturyLink to deliver these solutions and services to enterprise, government, wholesale and consumer customers over a large-scale, fiber-rich global network. CenturyLink will also continue to invest in the reach and speeds of its broadband infrastructure for small businesses and consumers.
"Our goal is to be the world's best networking provider and we have the ability to achieve this as one company," said former Level 3 CEO Jeff Storey, now CenturyLink's president and chief operating officer. "CenturyLink is focused on providing a differentiated experience for our customers, while driving profitable growth and increasing free cash flow per share. Our scale and experience will enable us to deliver on behalf of our customers, employees and our shareholders."