No equipment to build 5G network
Dear Sir, — In response to Mr Whalley inquiring about 5G technology, the editor in a factcheck responded with a tirade against Thatcherism.
The editor went on to bemoan the demise of GEC-Marconi and its cash pile as a product of 80s greed.
I indeed worked for GEC after graduating at university and have also since worked in the telecoms sector.
Firstly the GEC “cash mountain” as it was referred to at the time was a product of the cost-plus days.
My bosses at GEC spent many hours lamenting the end of guaranteed profits written into government contracts; such blank cheques would be unthinkable now.
The side effects of these types of contract was the huge sums that the company was able to divert into research and development.
Research and development is the costly end of the IT industry and results in a portfolio of Intellectual Property and royalties on inventions.
When companies such as GEC-Marconi fail, the assets get sold off, the inventions and patents are usually fought over by other companies in the same line of business, hence the inclusion of Ericsson in the editor’s tirade; just look at Arm Holdings buyout by Softbank. Why pay for R&D when you can simply buy the patent?
5G is no exception to the costly R&D cycle and is based on many patents from rival companies being fairly and reasonably used.
So when Huawei come to market with systems costing roughly half the price of either Ericsson or Nokia it’s only natural for big network operators to choose less expensive products for building out their new 5G networks.
The real question is can Huawei be trusted based on the fact the company is perceived as being state controlled, plus the tendency of Chinese companies to play fast and loose with IP (Jaguar Land Rover vs Landwind).
A Huawei funded investigation set up by GCHQ found no evidence to suggest that Huawei products were less secure than any other manufacturer.
The reason we can’t build our own 5G network is that fact that we don’t have the equipment.
Globally all telcos are building 5G networks and the global supply chain always leads back to Eriicsson, Nokia, Huawei or ZTE.
We will have to deal with these companies to get the hardware required to build the 5G network, and join the queue of all the other nations also building out 5G networks.
These manufacturers are themselves subject to global supply chains, natural disasters in the far east have knock on effects to this supply chain because there are only a limited number of factories in the world that can produce the chips required, or have the expertise to design them.
There have been severe shortages of components within the IT manufacturing industry over the years due to such things as the earthquake in Kobe, the SARS virus, the Tsunami, the Fukishima meltdown etc.
The American branded mobile phone in your pocket will have chips designed using Arm Holdings patents, with parts produced in China and Korea and with raw materials from the Africa and South America, Indeed many components of the Huawei systems will probably be used in the Nokia and Ericsson products as well.
It’s simply a case of supply and demand in a global industry.
Not sure if all this can be blamed on our late prime minister but the politics of the 80s had lots of unintended consequences, how much you attribute and to whom is a matter of debate. — Yours faithfully,
The editor comments: thanks for that. While it seems true that the business practices of the 80s were to blame for GEC-Marconi’s demise, some factchecks are written in the hope that someone who knows more will write in and offer a more in-depth explanation.