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Summary

One of the major strengths of the mobile ecosystem has been common standards. These standards have helped create a global market for vendors' devices and network kits. Thanks to this global market, vendors can build in scale, helping to bring down prices for everyone. This could come undone if the banning of Chinese mobile technology in the Western world leads to the creation of two sets of standards.

Two worlds could mean two incompatible standards

It wasn't that long ago that we had different islands of mobile technology. Most of the world was based on GSM, which eventually gave us WCDMA and then LTE. In the US, however, some operators took a different path. That path was the one laid out by 3GPP2 that gave us the CDMA family of technologies. China had its own approach to 3G called TD-SCDMA. These different islands were incompatible. Networks had to be built differently for each group. Devices that could roam on all three networks were limited and more expensive. Verizon was late to the iPhone due to CDMA. Only when Verizon deployed the global LTE standard did Apple start making a phone for the operator. The growing call to ban Chinese vendors Huawei and ZTE could take us back to those days of competing standards.

It isn't too difficult to see the current situation with Chinese vendors leading to a split mobile ecosystem. There would be one group of operators that follow a technology path dominated by US and Western vendors and another group of operators that follow a path dominated by Chinese vendors, with no guarantee of full compatibility between the two camps. Now 5G in its current state is safe. Release 15 and 16 are far enough along to ensure harmony. But, as we move into whatever we eventually call 5G Advanced or Plus or 6G, there could be a split.

Operators in the two different spheres might have different needs, leading to different solutions. Already in 5G we have seen how some operators want to start with non-standalone solutions and others standalone. The breach could be greater in the future if some vendors are isolated out of certain markets. We could return to the days when a true global mobile phone comes with a market-limiting premium price and vendors are forced to support multiple network platforms. With networks this divides a vendor's already strained R&D resources, and could slow innovation and raise prices as well. An all-out ban on Huawei and ZTE by Western countries, whether legitimate or not, could undo some of the gains we all currently enjoy from a unified and global ecosystem.

Appendix

Further reading

"Huawei focuses on network simplification and service enablement for its 5G strategy," GLB007-000194 (January 2019)

"Huawei's recent difficulties change the importance of Latin America for the Chinese group," GLB007-000185 (December 2018)

"ZTE looks to make a strong return to the market after its US ban," SPT002-000110 (August 2018)

Author

Daryl Schoolar, Practice Leader, Service Provider Technology

daryl.schoolar@ovum.com

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