a business thwarted by sovereignty issues

This July 23, 2019, French telecom operators do not hide their annoyance. That day, the Senate, in a final vote, adopted a bill concerning the deployment of 5G. On paper, this aims to ” to secure “ next-generation mobile networks. But in reality, this text, carried by the government, has only one objective: to limit the footprint of Huawei, the Chinese giant of telecom equipment, in France, whose products arouse the mistrust of the executive and intelligence services.

Two operators paid the price for this “Huawei law”. These are SFR and Bouygues Telecom. Unlike Orange and Free, they would already use the services of the Shenzhen group for 3G and 4G on half of their networks. Both have received numerous bans to switch mobile sites to 5G. As a result, they are now forced to dismantle several thousand antennas in order to replace them with those of other equipment manufacturers, deemed less risky. In the summer of 2020, Bouygues Telecom notably announced that it would gradually withdraw its 3,000 Huawei antennas located in cities and very dense areas by 2028. Furious at this treatment, the latter and its rival SFR have been struggling since , for the State to compensate them.

Suspicions of espionage

Months before its adoption, and even today, this Huawei law was the subject of heated battles between the telecoms sector and the executive. Concretely, this text obliges Orange, SFR, Bouygues Telecom to Free to seek the approval of the National Agency for the Security of Information Systems (Anssi), which depends on Matignon, for the deployment of any new antenna in the ‘Hexagon. This new law allows, in clear, the Prime Minister to sweep these requests “if he considers that there is a serious risk of harm to the interests of defense and national security”. If officially, this procedure does not target any equipment manufacturer in particular, it is unofficially Huawei, and it alone, which is in the sights of the executive.

The Chinese telecom giant may be the technological leader on the 5G front, but it arouses the greatest mistrust of the intelligence services of many Western countries. They fear that its equipment is used for espionage purposes on behalf of Beijing. They also fear that China could, in the event of a conflict, disrupt or even turn off mobile networks. Which would be a disaster for France and its economy, which today is largely dependent on digital infrastructure. It is for these reasons that several countries – such as the United States, Australia, the United Kingdom or even Sweden – have decided to ban it.

Network security, a national priority

This “Huawei affair” illustrates this: in the field of telecoms, the choice of a mobile network equipment supplier is not simply linked to the quality of its products, its prices, or its customer service. His nationality and the geopolitical context matter. This is all the more true since the coronavirus epidemic and the war in Ukraine have apparently marked the end of the golden age of globalization. Evidenced by the concern of many countries, including France, to ensure at all costs their “sovereignty” and their independence in the most vital and strategic sectors of the economy.

Telecoms, of course, is one of them. The “digital economy” has invaded all areas, public and private, and this trend will increase further with 5G. Out of the question, in this context, that the networks “fall”, or that they are too dependent on a foreign power, especially if it is not considered a friend. Their security has more than ever become a national priority. This is true for France as for most Western powers. This is one of the reasons why the telecom equipment sector is now under high tension.

When Washington eyes Nokia or Ericsson

Today, the situation is simple: Europe is lucky to have two telecom equipment manufacturers. These are Finnish Nokia and Swedish Ericsson. China also has two via Huawei and its rival ZTE. But the United States does not have any more. After driving out Huawei and ZTE for security issues, they are now dependent on Europeans for their mobile networks. A situation that does not suit them at all. Washington’s priority is clear: the country of Uncle Sam must imperatively regain its sovereignty here.

This is why the United States would welcome a “made in the USA” manufacturer to grab hold of a European equipment manufacturer. For several years, rumors concerning a takeover of Nokia by Cisco, the American champion of network infrastructures, have come back regularly. In February 2020, Bill Barr, then American Minister of Justice, was extremely transparent: he publicly proposed, during a conference, that the United States “take control” de Nokia ou d’Ericsson, “either directly or through a consortium of private American and allied companies”.

Having failed to see this dream come true, Washington supports another initiative. In telecom jargon, it is called “Open RAN (Radio Access Networks)”. Behind this barbaric name hides an innovation: in the years to come, part of the mobile infrastructure will be replaced by software, which will run in the cloud. Its objective is also – and above all – to allow a multitude of specialized players to provide one or more of these software or infrastructure bricks, thanks to the harmonization of norms and standards. This will open up the market, while current equipment manufacturers each operate today with closed proprietary systems.

The United States wants to regain its sovereignty

Presented as a solution for the future, Open RAN should above all allow the United States to regain control, even leadership, in the field of telecom equipment. And for good reason: they already have many key assets at different levels. This is particularly the case in cloud and software, where they have world leaders. “We see it, moreover, with the American operator AT&T, which has entrusted Microsoft with the management of its core network”remarks Michaël Trabbia, Orange’s director of innovation.

The danger, for Europe and its operators, is to see its sector of mobile network equipment being beaten by the United States, and thus losing its sovereignty in this area. If certain European intelligence services railed against the Chinese origin of certain equipment, it is highly likely that they would also cringe if the “made in USA” were imposed… To avoid giving birth to a such a scenario, several major European operators are mobilizing. This is particularly the case for Orange.

If tomorrow Open RAN becomes the norm, then the operator wants to have the possibility of obtaining supplies, for each piece of software or infrastructure, from several players, including Europeans. “For the different bricks of the ecosystem, we must not be dependent on one or two players. This is where there is a riskwarned Michaël Trabbia. You need at least three or four players on each of the essential technological bricks. » In this perspective, Orange would like the European Union to support an in-house ecosystem. “We are working with the telecoms industry and the European Commission to find funding for this sector”pursuit of Michaël Trabbia.

Europe wants to depend less on China

At the same time, telecom operators are now concerned about their dependence on China and Asia for the supply of products high tech, including network equipment. The health crisis has, in particular, undermined the supply circuits. As a result of severe confinement, the port of Shanghai, the first in the world for the transport of goods, suffered very strong disruptions in the spring. Hundreds of ships were stranded. Telecom operators have suffered greatly from this mess, insofar as a lot of telecom materials and equipment are produced in the Middle Kingdom or its neighbors, such as Taiwan. “This is a problem for us, because there are no other places to collect our equipment”says Michaël Trabbia. “I believe that we must move towards a more balanced globalization, with a rapprochement of production sites”he adds, welcoming the initiatives of Nokia and Ericsson to strengthen their capabilities in Europe.

Asked by The Tribunean executive from another French operator also deplores the difficulties in obtaining supplies after this “blockade in China”. “The situation has deteriorated on the supply of telecom equipment and components that we need for our boxes and our antennas.he adds. There are tensions everywhere. » Same story for a leader of a competing operator. He says he is particularly worried about the supply of semiconductors, “essential to the functioning of networks”and of which 80% of world production comes from Asia. “The war in Ukraine has increased uncertainty in logistics circuits”he adds.

These difficulties are taken very seriously by Brussels. This is why the European Union launched, last February, a plan of nearly 50 billion euros to reduce its dependence on semiconductors. The objective is to double the share that the Old Continent represents in the world production of chips, to 20%. An initiative welcomed, unsurprisingly, by the telecom industry.