5G and Hauwei – will it change cell rents in Canada?

5G Antennas will replace much of 4G

Great article recently in the Economist on the challenges Telus and Bell face in Canada with all their Huawei equipment. An alternate software system for hardware named “OpenRAN” is described. Perhaps a savior for the Canadian cell industry and property owners with Telus, Bell, Freedom and Videotron sites. How will this affect rents? Give us a call .

“In recent years America has conducted a campaign against Huawei, which it worries poses a threat to Western interests and which has built a commanding position in 5g systems globally. Australia, Canada and Japan have already in effect banned Huawei from their 5g networks. In July Britain said it would phase out its gear, and on October 20th Sweden said it would impose a ban, too. More countries may follow.

The trouble is that the costs of ditching Huawei are high: you risk becoming reliant on two big Nordic firms, Nokia and Ericsson, the other main suppliers of 5g gear. In the long run a duopoly is bad for competition and innovation. And in the short run neither firm is infallible. Nokia, in particular, is in trouble. On October 29th it announced a drop in sales of 7% year on year, and its shares plunged by almost 20%. Its new boss said that it had been “clearly behind” on 5g.

Openran is an alternative to relying on either Huawei or the Nordic duo. Along with a related technology called network virtualisation, it changes the rules of the game. To understand why, compare an old tethered telephone with a modern smartphone. One is a dedicated piece of hardware made of customised parts, whereas the other is a general-purpose computer controlled by software that can accommodate any type of app, provided it complies with certain technical rules.

Similarly, conventional mobile networks are made out of specialised equipment, whereas the new Openran kind use mostly off-the-shelf hardware, with lots of code defining what it can do. Because all the gear connects up using standard interfaces, carriers can mix and match products from different suppliers—something that they cannot do today. Operators have more insight into what is going on in their networks and can avoid components they do not trust, such as Chinese chips. They could also save a lot of money and become quicker on their feet.

Openran is gaining momentum. Last month Rakuten Mobile launched the world’s first 5g network based on Openran—which helped the Japanese carrier cut investment by 40%.   It can also put together new services within minutes instead of months, as is the case with conventional networks. In September Telefónica, which has 260m mobile subscribers in Europe and Latin America, teamed up with Rakuten to deploy Openran more widely in its networks by 2025. In America Dish has started to build a 5g network based on the technology. With the notable exception of Huawei, even equipment-makers are coming on board. Ericsson has just announced its first related product.

Yet Openran still has problems. The supply chain is untested and may face bottlenecks if demand suddenly surges as more mobile operators sign up. Notwithstanding its roll-out in urban parts of Japan, experts fear that the technology may not yet function well in densely populated cities; most carriers, including Vodafone, want to test it in rural areas first. Integrating the many different products that make up an Openran network is hard. And although the technology lowers the potential security threat from China, it creates new openings for hackers.

All this means that governments still have a role to play. They should help tackle bottlenecks by, for example, encouraging investment in the development of specialist chips that power antennae, as well as laboratories that test integration of a network’s components, as lawmakers in America have proposed. They should also follow Japan by promoting a common set of standards among equipment-makers and network-operators that deals with security and mandates at least some compliance with Openran. The choice between relying on a monolithic Chinese firm that is not fully trusted or on a doddery Western duopoly is a rotten one. It would be a lot better to give a new type of technology a chance to thrive.”

As Bell, Telus and Rogers deploys 5G antennas at 10 meters height on the sides of buildings, owners can generate more rent. Contact us to find out how your buildings can profit from 5G.