08 Jun Huawei’s UK marketing campaign is doomed | Light Reading
If only they hadn’t talked up 5G quite so much, parts of the telecom industry could be forgiven for thinking.
Worldwide, many governments have been persuaded that 5G is the greatest technological innovation since the discovery of electricity. US Senator Tom Cotton reflected a widespread view last week when he told the UK Parliament’s Defence Select Committee that: “5G technology is such a technological leap beyond 3G and 4G technology and it is so central to the way economies will function in the future and the way our countries will secure themselves.”
Accept that argument and it becomes very difficult to justify the use of a Chinese 5G equipment maker, he went on to say. “Using Huawei technology, ZTE technology, any technology from a company that is beholden to the Chinese Communist Party would be as if we had relied on adversarial nations in the Cold War to build our submarines or to build our tanks,” said Cotton.
In other words, if 5G were less revolutionary more like 3G and 4G, say Huawei, ZTE and others “beholden to the Chinese Communist Party” would be more acceptable.
The 5G standard has plenty of detractors who think it has been oversold and say it will never live up to this vision outlined by Cotton. Even some operators now deploying the technology have suggested it is a solution in search of a problem. Clearly not among them, Huawei has led a round of 5G cheerleading that has recently backfired. Cotton and his ilk have joined in enthusiastically before asking why Chinese players are on such an important team.
In the UK, a new Huawei marketing campaign is doomed to failure, largely because it overlooks the problem. “For nearly 20 years, we’ve supplied the UK’s mobile and broadband companies with 3G and 4G,” says the company in a public letter. “But some now question our role in helping Britain lead the way in 5G.”
Huawei’s flawed rationale, then, is that its 20-year-old dependability makes it a trustworthy partner. Critics such as Cotton will simply argue that its two decades in the UK’s mobile and fixed broadband markets are irrelevant because pre-5G technologies were far less critical.
That’s a hard point to challenge as Huawei fights politicians and critics who want to see it banned from the UK’s 5G market, and not merely restricted to 35% of any network, as the government proposed in January. Suddenly claiming 5G is not so different from 4G would undermine the entire case for investing in the new technology.
Huawei is certainly downplaying 5G’s impact in its letter, though. Absent are any references to the “Internet of Things,” a technological utopia/dystopia (delete according to preference) in which everything from an insulin pump to a ballistic missile has a 5G connection.
Instead, 5G is presented as nothing more exciting than an answer to crap, pandemic-era broadband. “We know a poor connection makes working from home, or running a small business, harder than it should be,” says the vendor. “New 5G and full-fiber broadband networks will fix these problems and we’re working to bring high-speed connections to every part of the country.”
On a call with reporters earlier today, Huawei was also typically desperate to distance itself from the Chinese government. “We also need to clarify incorrect statements about Huawei,” said Victor Zhang, Huawei’s global vice president. “Huawei is 100%-owned by employees and independent from any government, which includes China.”
Unfortunately, for Huawei, this simply doesn’t wash in the new age of trade conflict. Whether or not it is a private-sector player or government-owned, Huawei is a Chinese company and technology champion as much as Google heavily restricted in China is a US one. As such, Huawei is subject to laws that make it “beholden to the Chinese Communist Party,” say critics. Ren Zhengfei, its founder, has reportedly insisted he would rather go out of business than share data with his government. That will hardly reassure customers heavily reliant on Huawei technology.
Huawei, moreover, has a habit of undermining its proclamations about independence whenever executives are feeling especially riled by Trump’s antics. “The Chinese government will not stand by and watch Huawei get slaughtered on the chopping board and they may also take some counter measures,” said Eric Xu, one of Huawei’s rotating chairmen, about the distanced-from-Huawei Chinese authorities, during an investor update in March.
Nor has the firm abandoned its scaremongering about the costs of a Huawei ban. A one-year delay to 5G rollout would equate to 9 billion ($11.4 billion) in lost productivity benefits and a two-year hold-up would cost 29 billion ($36.8 billion), said Zhang today, citing independent research by Assembly, an analyst firm. Restricting Huawei would set back the UK by up to two years in 5G, he said, referring to a separate Assembly report.
What he failed to point out was that Assembly’s report on productivity benefits, published in April, was not so much independent as commissioned by Huawei. Meanwhile, its research into 5G hold-ups was commissioned by Mobile UK, a lobby group whose telco members BT, O2 (owned by Spain’s Telefnica), Three and Vodafone all use Huawei equipment. While that does not necessarily invalidate the conclusions, they would have carried more weight if they were not sponsored by the Chinese vendor or its customers.
It’s unclear who the latest marketing campaign is aimed at, and Zhang failed to answer a question on that during today’s call. Notwithstanding the current popularity of the street protest, the general public seems unlikely to add Huawei to its list of worthy causes. Informed stakeholders already know about Huawei’s UK history. Badly informed ones have probably made up their minds. Huawei might yet escape a complete UK ban, but that will have nothing to do with its latest efforts.
Iain Morris, International Editor, Light Reading
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