Rivada CEO Says Huawei Winning War on 5G

The concept of a wholesale network makes sense and would reduce the price of capacity, said Ganley. “Average price drops, consumption skyrockets.” The market would decide which carrier used capacity in a given market at any time, he said. “If the price that you’re prepared to pay us in downtown Washington, D.C., at 4 a.m. is $2 for the whole city and you’re the only guy bidding for it, it’s yours.”

Wholesale power networks have been in place in the U.S. for more than a decade and work well, Ganley said. “You would not have balanced power grids in America today were it not for wholesale markets” and 70 percent of the electricity used comes through these markets, he said. Lobbyists against the plan say it would nationalize the network, he said. “That’s not evenly remotely true,” he said: “The best lies to tell are the really big ones … because they’re the hardest to disprove.”

Most of the discussion focused on a threat from China. Carriers around the world find themselves having to say they’re using 5G equipment from Huawei because it’s the best, but that’s not true, Ganley said. “Country after country” is adopting technology from the Chinese company, he said. It’s not a government decision, he said.

Huawei goes to “strapped” carriers and says “would you like the soft vendor financing and heavily discounted technology and, by the way, if you take this, you’re going to be able to bid more in your 5G license auction,” Ganley said: “Try to get another bank to lend you the money to do this. They won’t do it because your business model sucks, because you are running a retail-focused consumer business model that doesn’t make any sense in 5G.”

Ganley hates the Chinese system but admires leadership skills of Huawei CEO Ren Zhengfei. Huawei “saw a flaw in the Western model, which is that we have all of these massively indebted retail mobile carriers with a broken business model,” all needing to pay for more spectrum for 5G and build out their networks, he said. “If you’re deploying 5G, think about it as about 10 times the number of sites, at least, that you need compared to 4G.” Huawei and the Chinese Embassy didn’t comment.

The U.S. is focused on high-band for 5G, while the rest of the world uses mid-band, Ganley said. The theory is others will follow, he said: “It’s not what’s going to happen. This is Betamax versus VHS. You can argue maybe Betamax was better. Who cares?” The VHS for 5G is the mid-band, he said.

China poses a threat not just in fifth-generation, but across technology, said Arthur Herman, director of the Hudson Institute's Quantum Alliance Initiative. “China is able to push ahead with a comprehensive strategy, even as the U.S. was slow to awake to the threat and to the challenge and to do something about it.”

The Trump administration sees the threat from China, but struggled with how to address it, Herman said. One big question is how 5G fits into the “predatory trade practices” of China in relation to the West, he said. Meanwhile, Huawei is adding carriers worldwide, with deployment contracts growing from 18 last year to 40 today. “There doesn’t seem to be, in many parts of the world, much that’s going to stop that,” he said.

The transition from fourth to fifth-gen is “like moving from ... typewriting to the computer,” Ganley said: “It’s not just another generation of wireless technology, it is a massive shift in the way that the economics of wireless and of technology are going to work.” With 5G, people will be able to look at video in a crowded football stadium, he said. “Vastly greater numbers of people will be able to access service on the same sites at the same time,” he said. There will be “vastly increased speeds, but also vastly increased capacity,” he said.