Sortie sign


Deutsche Telekomwatch
This release
: #80
February 2019: 44pp
Releases/year: 10+
Click for more details of this release

Executive brief

Group

Deals: DT pulls plug on Albania [p.6]

  • A taster for wider portfolio rejig?
  • Table: DT “principal subsidiaries” and their affiliates

People [p.11]

  • Table: people movements

Supply Chain: DT pushes back against anti-Huawei forces in Europe [p.15]

  • Keep calm and carry on
  • Mixed messages from Germany
  • Hurricane Huawei continues to gather force
  • America first (Huawei last)

Germany

Legal and Regulatory: TDE treads warily into 5G auction [p.21]

  • 5G investment under threat
  • Table: Not playing by the BNetzA rulebook: Kopf rounds on the regulator
  • Dommermuth makes his move
  • DIY 5G

TDE gets a boost in in-building broadband battle [p.26]

  • TDE responds

Europe

Greece: EETT reviews spectrum bands for 5G [p.30]

  • Table: Deutsche Telekom's Europe spectrum agenda FY19-20

Hungary: MT progresses automotive-flavoured 5G testing [p.32]

  • Ericsson vs Huawei: MT yet to commit

Slovakia: ST ties with Ericsson on massive MIMO trial [p.34]

USA

Network: TMUS looks high and low for 5G spectrum [p.37]

  • 600MHz on the move
  • Sprint is the key to TMUS' 5G high jump

Further reading

Index

A

Africa 13

Albtelecom 7

Alphabet

 - Google 13

  -- Android 41

Americas

 - Brazil 12

 - Canada 18

 - North America 11, 12

 - United States of America (USA) 8, 13, 17, 18, 19, 22, 35, 36, 38, 42

  --  Commerce Department 18

  --  Department of Justice (DoJ) 15, 18, 19

  --  Federal Communications Commission (FCC) 19, 37, 42

  --  States

   ---   Washington 18

Asia-Pacific 11

 - Australia 17, 18, 35

 - China 15, 16, 17, 18, 19, 23, 40

 - India

  --  Licence Circles

   ---   Himachal Pradesh 31

 - Japan 18, 19

 - Malaysia 35

 - New Zealand 18

 - Singapore 35

AT&T 10, 12, 38

B

Beta Film GmbH 28

Bigtincan Holdings 39

Brand Finance 10

BREKO 27, 41

British Standards Institute (BSI) 17

BT Group 8, 17, 18, 40

 - EE 8, 18

Bundesliga 28

C

CeBIT 14

Comcast Corp. 13

Committee on Foreign Investment in the United States 19

Cosmote Romanian Mobile Teleco. SA (see OTE/DT) 8

D

Daimler AG 9, 25

 - Mercedes-Benz 10

Dennis Publishing 12

Deutsche Telekom 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 21, 22, 24, 25, 27, 30, 31, 32, 33, 34, 35, 37, 39, 40, 41

 - Corporate

  --  Headquarters 14, 15, 17, 19

 - Deutsche Telekom Capital Partners

  --  Next Generation Enterprise Network Alliance (ngena) 10

 - Europe 6

  --  Austria 7, 8, 11, 17

  --  Bulgaria (see OTE) 7

  --  Croatia (Hrvatski Telekom) 8, 31

  --  Czech Republic 7, 8, 11, 17, 35

  --  Greece (see OTE) 30

  --  Hungary (see Magyar Telekom) 7, 8, 11, 32, 35, 41

    ---   International Carrier Sales & Services (ICSS) 11

  --  Montenegro (see Magyar Telekom) 8, 11

  --  Netherlands 7, 8, 13, 17

  --  Poland (Polska Telefonia Cyfrowa/PTC) 7, 8, 17

  --  Romania (see Cosmote Romania/OTE) 8

  --  Slovakia (Slovak Telekom/T-Mobile) 7, 8, 34, 35, 41

  --  UK (EE) 8, 18

 - Executives

  --  Ewaldsson, Ulf 13

  --  Hartmann, Jens 12

  --  Höttges, Timotheus 17, 22

  --  Kopf, Wolfgang 21

  --  Legere, John 19, 38

  --  Ray, Neville 13, 38

  --  Rekasi, Tibor 32

  --  Tsamaz, Michael 7

  --  Tsybulskaya, Dina 11

 - Germany 8, 9, 15, 16, 17, 21, 22, 23, 25, 26, 27, 28

 - Goingsoft 9

 - Investments

  --  Magyar Telekom (see separate) 7, 8, 11, 32, 33, 35, 41

  --  OTE (see separate) 6, 7, 8, 11, 30, 41

 - Products and services

  --  T-Mobile TV 39

 - Systems Solutions

  --  T-Systems 8, 9, 11, 12, 32, 35

 - South Africa 11

 - Telekom Security 12

 - Toll4Europe 9

  --  Toll Collect 9

 - USA 7, 8, 11, 13, 15, 18, 19, 37, 38, 39, 42

Drillisch AG 24, 41

E

Ericsson 11, 13, 17, 19, 33, 34, 35, 38, 42

Eurobank 6

Europe

 - Albania 6, 31, 40

 - Austria 9, 11, 31

 - Bulgaria 7

 - Croatia 31, 41

  --  Hrvatska Agencija za Postu i Elektronicke Komunikacije (HAKOM) 31

 - Czech Republic 7, 31

 - Finland 10

 - Germany 8, 9, 10, 12, 14, 15, 16, 17, 19, 20, 21, 22, 23, 24, 25, 26, 27, 31, 38, 40, 41

  --  Bundesnetzagentur (BNetzA, or German Federal Network Agency) 22, 24, 25, 26, 27

  --  Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen (BNetzA, RegTP, FNA, or German Federal Network Agency) 22, 26, 41

  --  Government 9

 - Greece 7, 11, 30, 40, 41

 - Hellenic Telecoms and Post Commission (EETT) 30

 - Hungary 7, 31, 32, 33, 35, 41

 - Macedonia 11, 31

 - Montenegro 7, 11

 - Netherlands 12, 31

 - Poland 9, 11, 15, 31, 40

 - Portugal 11

 - Romania 7, 8, 31, 40

 - Scandinavia 10

 - Serbia 7

 - Slovakia 7, 31, 34, 35, 41

 - Sweden 10, 13, 17, 34

 - Switzerland 12

 - Turkey 10

 - Ukraine 8

 - United Kingdom (UK) 8, 10, 12, 13, 18, 35

  --  British Standards Institute (BSI) 17

European Union 15, 18, 30, 35, 40

F

Forthnet 11

France Télécom

 - Orange 10

 - UK (see EE, DT) 8, 18

FreeMove Alliance (DT-FT-Telia Company-TI) 10

G

Global M2M Assocation (GMA) 10

Goldman Sachs 8

Green Party 9

H

Hewlett-Packard 31

Hitachi 13

Hrvatski Telekom (see DT, Croatia) 8, 31

Huawei Technologies 15, 16, 17, 18, 19, 23, 33, 35, 40

I

Intel 37, 38, 42

L

Liberty Global

 - UPC Austria 7

Liberty Global Inc.

 - UPC Broadband 7

M

Magyar Telekom (see DT) 7, 8, 11, 32, 35, 41

 - Macedonia (Makedonski Telekom/T-Mobile) 7, 8, 11

 - Montenegro (Crnogorski Telekom) 8, 11

 - Romania

 - Combridge 8

 - T-Systems Hungary 11, 32, 35

Major League Baseball 42

Market segments

 - Machine-to-machine (M2M) 14

 - Mobile virtual network operator (MVNO) 24

 - Multinational corporations (MNCs) 10

Middle East 13

 - Iran 18

N

Nokia 17, 19

North Atlantic Treaty Organisation (NATO) 15, 18

Novatel Wireless 8

NTT 12

O

Open Handset Alliance (OHA)

 - Android 41

OTE (Hellenic Telecom. Org. SA, see DT) 6, 7, 8, 11, 40

 - Bulgaria (Globul) 7

 - Cosmote 8, 30

  --  Albania (Telekom Albania) 6, 8, 40

 - Greece 30

 - Romania 8

Tsamaz, Michael 7

P

PPF Group 7

Premiere AG 40

Q

Qualcomm 35, 37

S

SAP 12

Siemens AG 25

Sky

 - Sky Deutschland 28

Slovak Telekom (see DT, Slovakia) 7, 8, 34, 35, 41

SOFTBANK CORP. 19

Sprint Corporation 15, 19, 38, 40

Swisscom 12

T

Technology

 - 2.5G 38

 - 2G 14, 38

 - 3G 14, 31, 35

  --  Evolved HSPA (HSPA+/I-HSPA)

  --  MIMO 34, 35, 41

 - 4G 14, 16, 18

  --  Long Term Evolution (LTE) 35

 - 5G 11, 13, 15, 16, 17, 18, 21, 22, 23, 24, 25, 30, 31, 32, 33, 34, 35, 37, 38, 40, 41, 42

 - Fibre 23, 26, 27

 - FTTH 26, 27

 - LTE Advanced 35

 - M2M 14

 - mobile TV 42

 - Narrowband Internet of Things (NB-IoT) 14

 - OpenStack 12

 - OTA 35

 - RAN 17, 23

 - R&D 11, 34

 - SIM 14

 - Smartphone 18

 - Spectrum 21, 30, 31, 37, 38, 41

  --  700 MHz 30, 31, 35, 38

  --  800 MHz 31

  --  2100 MHz 30, 31

  --  2300 MHz 30

  --  2600 MHz 31

  --  3500 MHz 31, 35

  --  Advanced Wireless Spectrum 37

 - VDSL 26

 - Vectoring 41

 - WAN 10

 - W-LAN 9

Tele2 7, 31

 - Netherlands 7

Telefonica Group 22

Telekom Austria

 - Austria

 - A1 31

Telekom Srbija a.d. 7

Telia Company 10

Twitter Inc. 39

U

UEFA 28

United Internet 21, 24, 41

V

Value-added services 10, 24

Verizon Communications 10, 38

 - Verizon Wireless 38

VINCI Group

 - Cofiroute, S.A. 9

Vivacom (BTC) 6

Vodafone 7, 10, 18, 22

 - Europe Region

  --  Albania 7

  --  Germany 22

Volkswagen AG 25

X

Xumo 39

Z

ZTE Corp. 16, 18

  • Reported internal assessment warns of European 5G delays.
  • TDE proposes various checks on network kit to allay concerns.
  • Polish government calls on EU and NATO to work out common position on Chinese suppliers.
  • Department of Justice resurrects old TMUS charges against Huawei.
  • ‘America First’ noises continue to rail against Sprint merger.

An internal assessment conducted by Deutsche Telekom (DT) was reported to have concluded that Europe will face a two-year 5G “delay” if Huawei Technologies is barred from supplying next-generation infrastructure in the region.

Unidentified DT sources, cited by Bloomberg, were the messengers of what was surely a warning to politicians bent on excluding Chinese suppliers on the grounds of national security risk. Although DT did not confirm the accuracy of what looked like a ‘leak‘ – and one that may or may not have been condoned by Group top brass – it lends force to a more pragmatic narrative that Bonn is keen on promoting.

In Germany, Telekom Deutschland (TDE) proposed a series of measures aimed at tightening up future 5G networks. Although initially aimed at domestic authorities, the proposals look broad enough to apply elsewhere in Europe.

One suggestion is that all critical infrastructure should be independently certified before deployment. An independent laboratory would be tasked with inspecting equipment, under state oversight.

Another TDE suggestion was for kit suppliers to submit equipment source code to a “trusted third party”. Under this arrangement, in certain circumstances, operators would gain source code access to address any security vulnerabilities. An idea to broaden legal liability for network security breaches to include vendors is also on the table. Current legal obligations are restricted to operators.

Huawei seemed to welcome the proposals. “It is up to policymakers, regulators, and the industry to work out the details, but such an initiative makes a vital contribution to making the debate about 5G more fact-based”, the Chinese vendor said in a statement, quoted by Reuters.

Keep calm and carry on

DT’s calming measures came at a time when anti-Huawei sentiment appears still to be growing, both in Germany and the rest of Europe. Speaking on public television, former German spy Gerhard Schindler went so far as invoking a war-time scenario in which a Chinese vendor could activate a so-called ‘kill switch‘ capable of shutting down critical network infrastructure. “If this module is shut down in a crisis, we would be absolutely unprepared and could not react”, he said.

US officials have reportedly briefed allies that Huawei and smaller rival ZTE cannot be trusted, since they are ultimately at the beck and call of the Chinese state. The main allegation, which Huawei strenuously denies, is that network equipment might contain ‘back doors‘ for the purposes of cyber espionage. The allegations are clearly being taken seriously in some quarters, if Schindler’s alarming remarks are anything to go by.

DT’s approach appears to be to try and take heat out of the debate. There are no obvious signs that the Group would be willing to take the drastic (and expensive) steps of extracting Huawei’s kit from its network, or blocking the vendor from supplying new equipment. Its first response to renewed security concerns surrounding Huawei was to pledge a review of vendor choices in Germany and other parts of Europe (Deutsche Telekomwatch, #79). DT’s senior executives may well have hoped that a procurement strategy review bought it more time – deflecting political pressure long enough until anti-Huawei sentiment becomes less febrile.

This strategy does not seem to have worked – at least so far. The leaked report, warning of a 5G delay, therefore seems useful. Rather than drawing attention to huge operational disruption and expense if DT has to rip out existing 4G infrastructure supplied by Huawei, the Group is pressing more sensitive political buttons that might work in its favour. If politicians in Germany play hardball with the Chinese supplier, the implication is that they run the risk of putting the country behind international competitors when it comes to developing smart-factory and other 5G-enabled solutions that might realise Industrie 4.0, a strategic initiative to establish Germany as a lead market and provider of advanced manufacturing solutions.

Timotheus Höttges, Chief Executive of DT, nonetheless suggested that the operator has a fall-back position if its supplier review reveals that Huawei equipment poses unacceptable risks to national security, or that political pressure to jettison the Chinese supplier proved too great to withstand. The Group’s dual-supplier strategy, he argued, gives it some protection (Deutsche Telekomwatch, #78). In Germany, TDE counts both Ericsson and Huawei as key radio access network (RAN) suppliers. Nokia used to be in TDE’s RAN mix, but was replaced by Ericsson after the Swedish manufacturer won a five-year “network modernisation” agreement with the German NatCo in late-December 2017 (Deutsche Telekomwatch, #69).

Getting rid of Huawei kit looks very much a last resort for DT, not least because there is an industry sense that the Chinese supplier provides the best 5G kit, and at extremely competitive prices. Speaking in November 2018 at the Global Mobile Broadband Forum, a Huawei-hosted event in London, BT Group Chief Architect Neil McRae asserted that “there is only one true 5G supplier right now, and that is Huawei – the others need to catch up”. Declared Group users of Huawei equipment, aside from TDE, include T-Mobile Austria, T-Mobile Czech Republic, T-Mobile Netherlands, and T-Mobile Poland.

Like DT, Huawei remains keen to douse geopolitical flames inside and outside the Group’s footprint. In November 2018, Huawei opened a Security Innovation Lab on its existing site in Bonn, the same city where DT is headquartered (Deutsche Telekomwatch, #77 and #78). The supplier said the lab will “work closely” with German customers, partners, and research institutions, as well as government and supervisory authorities, on security issues related to 5G and artificial intelligence. Further, Huawei said it intends in the quarter to March 2019 to open a “security transparency centre” in Brussels, in another attempt to assuage concerns about infrastructure trustworthiness. “We will build and put in place similar open and transparent security management mechanisms in other parts of the world as needed”, said Ken Hu, Rotating Chief Executive at Huawei.

Mixed messages from Germany

DT’s attempts to dampen the furore comes against a mixed backdrop of Huawei-friendly and -unfriendly noises in Germany.

In December 2018, Arne Schönbohm, President of the German Federal Office for Information Security (BSI), declared there was “currently no reliable evidence” of a risk from Huawei. “For such serious decisions such as a ban, you need evidence”, he stressed.

Schönbohm’s pragmatism is not universally shared, though. According to some media reports, surfacing in mid-January 2019, the German federal government was “actively” exploring ways of curtailing Huawei’s involvement in 5G rollout on the grounds of natural security.

An earlier report from Reuters indicated that some “senior Germany officials” – unnamed, but apparently from the country’s interior and foreign ministries – were lobbying the government to prevent Chinese suppliers from building 5G infrastructure. An auction of 5G-friendly frequencies is slated for early-2019 (see separate report).

Reuters said German officials have exchanged their security qualms with counterparts in Australia and the USA.

Hurricane Huawei continues to gather force

The current security storm surrounding Huawei was kicked up in the USA – inspired in part by those with an ‘America First‘ agenda. It has since spread to Australia, Europe, Japan, and New Zealand. UK incumbent (and DT investment) BT recently confirmed plans to strip Huawei equipment out of its “core” 4G network within the next two years, although presented the move as tied in with a broader network architecture strategy implemented when it bought mobile operator EE in 2015. Vodafone has also indicated it will suspend purchases of Huawei core network equipment in some European markets. DT, so far, has not buckled in this way.

There are no signs that Hurricane Huawei will blow over any time soon. On the contrary, political tensions between the USA and China continue to ratchet up. On 28 January 2019 – the same day Chinese Vice-Premier Liu Hu landed in Washington for trade talks – the Department of Justice slapped the Chinese firm with more than 20 charges, ranging from sanctions-busting to stealing corporate secrets. Much to Huawei’s annoyance, the DoJ reopened the Tappy case, related to a smartphone-testing robot developed by T-Mobile US (TMUS) – Deutsche Telekomwatch, #64. A federal jury awarded TMUS $4.8m (EUR4.2m) in damages in May 2017, after ruling that Huawei had wrongly acquired intellectual property related to Tappy, but the court also noted that it had found “neither damage, unjust enrichment nor wilful and malicious conduct by Huawei”.

The latest DoJ moves follow the dramatic, early-December 2018 arrest in Canada of Meng Wanzhou, Chief Financial Officer at Huawei – and the daughter of Ren Zhengfei, the company’s founder – over allegations that the vendor had broken US sanctions on Iran. The arrest of Meng, who now faces the possibility of extradition to the USA, is not directly related to the security-related allegations against Huawei and ZTE. The arrest nonetheless adds ammunition for Huawei’s opponents.

In December 2018, Reuters reported that US President Donald Trump was considering an executive order directing the Commerce Department to block US businesses from buying equipment from foreign suppliers that pose significant national security risks. Huawei and ZTE are unlikely to be named explicitly, but, should it be passed, the order clearly has the Chinese duo in its sight. At the time Deutsche Telekomwatch went to press, Trump had still to pull the lever.

Sino-European relations are also suffering. In late-January 2018, Zhang Ming, Beijing’s envoy to the European Union, lamented the “slander” and “discrimination” faced by Huawei and other Chinese companies in Europe. He warned that any attempts to curb involvement of Chinese technology in 5G would risk “serious consequences” for economic and scientific co-operation.

Huawei’s cause in Europe was further damaged in January 2019, when an employee in Poland was arrested on spying charges. Although Huawei was quick to sack him, some damage was evidently done. Joachim Brudziński, Poland’s Minister of the Interior, subsequently called for the European Union and North Atlantic Treaty Organisation to work on a joint position over whether or not to exclude Huawei from certain markets.

America first (Huawei last)

Continuing to add a further layer of complication for DT, in the Huawei furore, is its impact on the proposed Sprint-TMUS merger – key to maintaining the Group’s growth platform and increasingly “Trans-Atlantic” identity.

In a conference call organised by Protect America’s Wireless – a fairly new lobby group which, according to its website, comprises “foreign policy and national security professionals” – former US officials urged closer scrutiny on the proposed merger between TMUS and Sprint.

Despite Huawei being effectively barred from the US telecoms market, there is evidently a body of opinion that still thinks DT and Japan’s Softbank – respective owners of TMUS and Sprint – can pose a security risk by using and buying Huawei equipment elsewhere. “These global multinationals… shouldn’t have more resources to go out and buy Huawei”, said Andrew Holland, Chief Operating Officer of American Security Project, a policy group, and a former aide to Senator Chuck Hagel.

From media reports of the conference call, it was not made clear how DT and Softbank links with Huawei outside the USA posed a direct threat to homeland security. In an attempt to push the TMUS-Sprint merger through, Softbank previously stated it will wash its hands of Huawei equipment in Japan. This, it seems, is not enough for those talking a hard-line stance against the Chinese supplier.

An America First agenda is at play here, with hardliners noting that, if the TMUS-Sprint merger gets the green light, management control of the new entity will lie in Bonn and ownership divvied up between German and Japanese players (Deutsche Telekomwatch. #73). How widespread and influential this type of thinking is in the USA, and the chances that it will derail the TMUS-Sprint merger, is hard to assess. Call participants declined to disclose donors for Protect America’s Wireless, although one participant – David Wade, a former State Department official – said “all of our funding sources are domestic”.

The mood music in the USA is by no means anti-merger. Perhaps helped by TMUS and Sprint’s lack of direct links with Chinese infrastructure suppliers, the proposed merger transaction won approval from the Committee on Foreign Investment in the United States in December 2018, one of the authorities reviewing the deal. Additionally, the DoJ, Department of Homeland Security, and Department of Defence – collectively referred to as “Team Telecom” – recently submitted a filing with the Federal Communications Commission stating that they had reviewed the transaction pertaining to potential national security, law enforcement, and public safety issues. Team Telecom confirmed it had no objections to the merger and withdrew its request to defer action on the transaction. “We look forward to continuing our discussions with the remaining regulatory agencies reviewing our transaction to share our story and subsequently achieve similar positive results”, said John Legere, Chief Executive of TMUS. The NatCo still reckons it can secure full regulatory approval for the proposed merger during the first half of 2019. Nokia and Ericsson are longstanding infrastructure partners of TMUS, and the NatCo has no reliance on Huawei for wireless equipment.

Image: Lucas Gallone / Unsplash

Sign up to receive more from Deutsche Telekomwatch

Deutsche Telekomwatch

Information and Insight into Deutsche Telekom, its people, deals and strategy that you won’t find anywhere else

Telco insight for Telco leaders - making information work for you to help you get ahead

Teams that use Deutsche Telekomwatch accelerate and grow their business faster....

WHAT'S INSIDE the FULL REPORTS?

Insider information and analysis that you will not find anywhere else, including:

  • Strategy and objectives.
  • Vendor partnerships.
  • People movements.
  • Deals and trends.
  • Industry and analyst events/activity.

"I regularly find current activities I was not aware of” - VP, Deutsche Telekom

CRITICAL AREAS of focus include:

  • Challenges/Opportunities.
  • Disruption and change.
  • Strategy and objectives.
  • Contracts and deals.
  • Innovation.
  • OPEX/capex.
  • Technology developments.

“Deutsche Telekomwatch gives me a global vision of what is coming and what is happening now... and if this could affect me” - Business Manager, Ingram Micro

EXCLUSIVE INSIGHTS uncovered to help you:

  • Get ahead of rivals and colleagues.
  • Open doors, find more deals, faster.
  • Go native as the expert on DTAG.

"Deutsche Telekomwatch provides me with a comprehensive overview of important DT activities within a single source, saving me time having to search for it” - Account Director, Juniper

Click here to download a sample to evaluate.