Table of Contents
Huwaei and ZTE
- Huawei is the world’s largest maker of telecom equipment and the second largest maker of mobile phone parts.
- The company has allowed many companies in developing economies to build large telecom infrastructure at very low costs.
- ZTE manufactures patented telecom equipment for telecom operators at very low costs.
Background: USA Bans Huwaei and ZTE
- The Federal Communications Commission on 30th June ,formally designated Chinese’s Huawei Technologies Co and ZTE Corp as posing threats to U.S. national security.
- Huawei and ZTE have been accused of being close to the Chinese government and spying for them by sharing data of US citizens.
Ban on Huwaei: USA and India
- The US is likely to put pressure on India to cut ties with Huawei as it has done with other trade allies.
- In November 2019, USA made same demand from India to ban Huwaei, but going against it, India permitted Huwaei for 5G trials. Amid current India-China standoff, India can reconsider its decision.
Impact of Ban on India
- In case India follows the path of USA and bans Huwaei and ZTE in India it will impact the Indian telecom sector in following manner
- Expansion of 5G
- Cost of telecom operations for Indian telecoms
- Monopoly of Reliance JIO in 5G
- Duopoly of Samsung and Ericsson
EXPANSION OF 5G
- In June 2019, Huwaei said the company was ready to sign a “no backdoor” agreement with the government. Under the agreement, Huwaei would vouch that it will not gain access to any Indian customer’s equipment under any circumstance.
- In December 2019, Huwaei was permitted by telecom minister Ravi Shankar Prasad to participate in 5G trials in the country.
EXPANSION OF 5G
- Absence of a major telecom equipment supplier like Huwaei can delay the commercial rollout of 5G in India by 2-3 years.
Cost of Telecom Operations
- The prices of Huwaei and ZTE telecom equipments are up to 30 per cent lower compared to their European competitors like Ericsson.
- The reserve price for 8,300 MHz spectrum for the 5G band in India is as high as 5.22 lakh crore.
Cost of Telecom Operations
- Huawei has occupied nearly 25 per cent of the total telecom equipment market in India. While Bharti Airtel uses up to 30 per cent Chinese telecom equipment, including Huawei’s for its networks, Vodafone Idea uses as much as 40 per cent.
- In absence of low cost equipments, financial viability of 5G rollout by Airtel and Vodafone will be jeopardize.
Monopoly of Reliance JIO in 5G
- At present Reliance is the only telecom operator, who does not depend on Chinese firms for supply of telecom equipment. Reliance is developing its 5G network in collaboration with Samsung.
- In a bid to increase pressure on telecom operators to use non Chinese telecom equipments USA designated Reliance as ‘Clean Teleco’
Monopoly of Reliance JIO in 5G
- Ban on Huwaei and ZTE will put other telecom operators out of the 5G rollout plan.
- It will establish monopoly of Reliance in 5G telecom sector.
Duopoly of Nokia and Ericsson
- Huwaei, ZTE, Ericsson and Nokia are the four major telecom equipment manufacturers worldwide. Ban on Huwaei and ZTE will establish duopoly of Nokia and Ericsson in India. It will increase India’s dependence on one region (European) for supply of telecom equipment.
Comment Section
- Do you think India should ban Chinese telecom equipment manufacturers amid India-China standoff ?
- Do you think India should try to develop a self sufficient semiconductor manufacturing sector to support telecom equipment manufacturing, Which will help India to become Atmanirbhar
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