5G technology advances in Latin America: Huawei seeks to land in Argentina amidst suspicions of espionage
Huawei has an obsession that keeps its executives awake: the laying of its own 5G network in Latin America and the rest of the world. Huawei shares this fixation with the person who facilitates the lobbying of the subcontinent by force of hundreds of millions of dollars: the Beijing regime.
In the last three months, the rapprochement has been greater in the region. More specifically in one place, Argentina. Contacts with China began some time ago and promises have already been made in exchange for support in other areas, such as nuclear energy.
The Xi Jinping strategy is simple and has been applied in this part of the world for years. The Chinese president knows that the economic crisis that the country -and the region- is going through is serious and that the accounts do not close. He is also aware that few administrations make long-term plans. To this end, he exercises his power of conquest through the promise of billions in U.S. currency in exchange for a portion of sovereignty, which successive governments claim to defend in order to avoid "imperialist interference.
In this way, Huawei would seem to be an oiled bishop, the key to the communist regime. There are accusations against the joint venture that trace different crimes: from the theft of technology and patents to the alleged smuggling of goods to Iran for which the financial director of the firm has been requested to extradite and is being held in her home in Vancouver, Canada. Meng Wanzhou -this is the daughter of Huawei's founder, Ren Zhengfei, someone very close to Jinping. Neither Beijing nor the owner of the company could be unaware of these crimes.
Such is the influence of the Chinese authorities on the company that it will not be difficult to bring the technology into compliance with the country's fundamental laws. It will not be necessary to force it. These rules are not only enforced by Huawei, but by all the organizations based in that vast territory. The National Security Law of the People's Republic of China, the National Intelligence Law and the Counter-Terrorism Law - any of them - can be used at any time by the central committee to obtain what it is obsessed with: data and information from governments, companies... and even individuals.
If China succeeds in imposing its 5G network in Latin America, it will be able to control all the documents, communications, archives, geolocation and other sensitive elements of the 620 million inhabitants of this vast Latin American neighborhood, including their administrations and the main business people. In Argentina, for example, the plan is already underway. Whether it begins to become visible depends on the difficult agreement that Alberto Fernandez's administration reaches with the International Monetary Fund (IMF). "It is expected that a framework agreement will be reached by March or April, after which China will be free to sit down and make promises," says an official source who prefers to remain in reserve.
The sector was placed under the direct control of Santiago Cafiero, Chief of Staff, who is responsible for the Secretariat of Public Innovation, headed by Micaela Sánchez Malcolm, and the Undersecretary of Information and Communications Technology (ICT), under the control of Martín Olmos. The regulatory framework is in charge of the National Communications Entity (Enacom), presided over by Claudio Ambrosini. According to official sources, 5G will finally be on the map this year, "at least to start talking" and they clarify: "In the local market, for now, Huawei works without problems".
The technology "5G is going to be very much linked to the infrastructure. It's not just a matter of spying, if someone has illegal access to the networks, they can shut down a city or leave it without water. It's not a minor issue. Here we are spectators and we will have to see if we want to align ourselves with one or the other, but we are not in the center of the scene," said analyst Enrique Carrier of Carrier and Associates. That scenario, which seems like science fiction, has already happened: suspicions about the digital attack landed on Russia, whose hackers were accused of cutting off electricity to Ukraine on Dec. 23, 2015. With total control of the technological network, the mission would be much easier and more accurate.
"Once 4G is over, from the point of view of state regulation, the state will have to assign the spectrum, put it out to tender and regulate equipment deployments. It will also have to take into account the sovereignty of the network and national security issues," said Gabriel Balbo, an analyst in international economic relations and director of Espade. Sovereignty would be one of the first things to be lost with Huawei's presence with the Chinese Communist Party behind him and as a member of its board of directors, according to the law. The same rule is that the Chinese company must share the requested information without any objection in case the central government requires it.
When the Casa Rosada sits down before the negotiators of the Xinping regime, it must be prepared to commit itself to accept the conditions that will be imposed on it. "China, in any bilateral negotiation, includes the offer of its firms (Huawei and ZTE) within broader business agreements, and usually negotiates 'as a package' of all or nothing," described Balbo, who knows the market.
Local mobile operators - Movistar, Claro, and Personal - are just beginning to address the issue although they have already had their contacts and trials with Huawei. In this context, one of the keys is to find out how much they will have to invest to deploy their networks and provide fifth-generation services. A private study - "The value of the mobile digital transformation in Latin America", which Raúl Katz and Sebastián Cabello did for Telecom Advisory Services in November 2019 - indicates that for a first stage it would be more than US$ 5 billion without counting the cost of spectrum bids. Will Huawei tempt them easily? It is likely that these talks have already begun in earnest.
"The most optimistic estimates point to the beginning of the commercial deployment of 5G networks in Latin America only in 2021," says Miguel Fernández, CTO of Telecom Argentina, from where they assure that they have already "virtualized" the heart that controls their network in 2017 and last year they finished the functionalities for 5G in the company's site network. "Our solutions are totally ready for implementation in Argentina when the operators require it," says Juan Bonora, public relations director of Huawei Argentina who did not respond when asked about the accusations against the brand.
Those accusations are based on the multiple articles of the laws already mentioned that refer to the contribution to the state that Chinese citizens and companies have to make in terms of intelligence. Article 7 of the National Intelligence Law obliges individuals, organizations and institutions to assist Public Security and State Security officials in carrying out "intelligence" work. It stipulates that "any organization or citizen shall support, assist and cooperate with State intelligence work in accordance with the law". Article 14 of the same regulation gives intelligence agencies the authority to put pressure on those entities involved: "The State's intelligence services, when legally carrying out intelligence work, may require the bodies, organizations or citizens concerned to provide the necessary support, assistance, and cooperation".
"We must persist in the leadership of the Chinese Communist Party on national security work, establish centralized, unified, effective and authoritative national security leadership structures," Article 4 of the National Security Law says. "The citizens of the People's Republic of China, all State agencies and the armed forces, all political parties and people's organizations, enterprises, entities, and all other social organizations have the responsibility and duty to safeguard national security", according to Article 11 of the said law.
Article 25 makes further reference to how Beijing controls all data sources: "The State builds a network and information security protection system, updates network and information security protection capabilities, strengthens innovation, research, development, and application of networks and information technologies, realizes security and control capability of central networks and information technologies, crucial infrastructure, and information, and data systems in important areas; strengthen network management, prevents, deters and legally sanctions online attacks, online hacking, online theft of secrets, dissemination of illegal or harmful information and other illegal and criminal acts online, safeguards the security of national sovereignty and development interests in cyberspace". How can Huawei or ZTE escape this paragraph? No one is concerned about Zhengfei.
Should any rebelliousness emerge in an unruly employee, the same law ensures that this will not be an obstacle. Article 42 states: "National security agencies and public security agencies collect national security intelligence and information in accordance with the law, and exercise the powers of investigation, arrest, investigation, and detention, as well as other powers provided for by law in national security work in accordance with the law.
Further, Article 51: "The State completes the structures for collection, deliberation, and use of information and intelligence with uniform authority, flexible response, high accuracy and efficiency, and smooth operations, and establishes mechanisms for coordination of intelligence and information work to carry out timely collection, accurate deliberation and effective use and exchange of intelligence and information. Controlling 5G networks will be key to achieving this.
But it is Chapter VI of the National Security Law that dictates the obligations of both Chinese citizens and companies, leaving them explicit beyond any doubt.
"Article 77: Citizens and organizations shall have the duty to carry out the following matters to safeguard national security: (1) abide by the provisions of the Constitution, laws, and regulations relating to national security; (2) report in a timely manner leads on acts detrimental to national security; (3) truthfully provide evidence involving acts detrimental to national security of which they are aware; (4) to provide appropriate conditions or other assistance to national security work; (5) to provide necessary support and assistance to relevant national security agencies, public safety agencies, and military agencies; (6) to maintain State secrets of which they have knowledge; (7) other obligations as provided in laws and administrative regulations.
Article 78: Agencies, organizations of persons, enterprises, companies and other social organizations shall educate the personnel of these work units on the protection of national security, mobilize and organize the personnel of these work units to prevent and curb acts that are detrimental to national security.
All of this will be done without a judicial body to guarantee the transparency of the process, as is the case in other latitudes. Much less a social or democratic protest.
In this context of control and absolute dependence, Huawei will seek to disembark in Argentina and the rest of Latin America. Despite the fact that its executives swear in all forums that this will not happen, other first world countries are already aware of the "back doors" in Chinese technology and are evaluating alternatives such as Finland or South Korea. Australia, the United Kingdom, Germany, Japan, Canada, and New Zealand have already been warned and their security agencies have raised the alarm about the threat to their sensitive data.
There are 5 commercial networks and 30 tests were carried out last year
5G commercial networks are making progress in Latin America. There are now five such networks in the region, and they are in Uruguay, where it was launched in April last year, and in Puerto Rico, Trinidad and Tobago, Suriname and Aruba (the last four were launched last December).
According to a survey conducted by 5G Americas, at least 30 tests were carried out in 12 countries during 2019.
Regarding commercial launches, Uruguay used the 28 GHz band and Puerto Rico the 600 MHz band. Most of the tests were conducted in the 3.5 GHz band, and to a lesser extent in the 28 GHz band.
The main use in the trials that took place last year was the enhanced mobile broadband (eMBB) in smartphones. Although Augmented Reality sessions, Internet of Things (IoT) applications for industry and smart cities, telehealth and fixed-wireless broadband were also tested.
About the countries where these tests were carried out the most, in Brazil 10 were carried out, using the spectrum of the 3.5 GHz band, as well as in Peru, where 4 tests were made. The other country is Chile, which had 4 trials in the same band but also in the 28 GHz band.
5G costs, the biggest obstacle to its deployment in Latin America
The implementation of 5G technology in major cities in Latin America will take between five or six years, mainly due to high installation and operation costs, said Fernando Garcia, vice president, and general manager of Vertiv for Latin America.
Although the first implementations of 5G have already been made in Uruguay, in the rest of the region it will be some years before "we begin to have relevant coverage," García said during the 34th Andicom International Congress taking place in Cartagena de Indias.
According to the representative of the world's largest company dedicated to ensuring operational continuity of applications, one of the obstacles to the rapid implementation of 5G in Latin America is the high capital investment required by its infrastructure.
"In Latin America, it is estimated that in an aggregate manner in the next five years the investment will amount to some 50 or 60 billion dollars", he explained.
Garcia added that for this reason telecommunications operators "are being very cautious," because that investment "requires an economic model that allows them to make that investment profitable later and the current economic model with all prepaid cards and only billing for data does not cover it and does not justify it.
The executive explained that operators of cellular telephony services are looking for application services "that will be able to mount on top of these networks to provide additional services" such as content distribution by 5G or intelligent cities.
Although he did not give exact figures, he said that an investment of "between 30 % and 50 %" higher than what was used for 4G technology is needed.
"5G cells are smaller than 4G cells, so more needs to be installed to achieve the same coverage. In addition, 5G technology consumes between two and three times more energy than 3G and 4G, so the cost of operating the network will be higher," he said.
The great challenge that exists today among operators is how to monetize 5G networks since the user is not willing to pay more for a higher speed.
For this reason, operators are looking for ways to provide additional services beyond cellular telephony and data: "Provide services mainly directed to companies and not so much to consumers to look for ways to make these networks profitable," he added.
Garcia said 5G technologies are going to be "a radical change" in the way humans communicate and the way they consume information.
This is due to the fact that this technology has two characteristics that make it "revolutionary": speed and bandwidth, which are "equivalent to a hundred times what we have today with 4G in cell phones," and ultra-low latency.
"We will be able to enable a number of services and applications that today we can not even imagine ranging from virtual reality to cars driven," he said.
According to Garcia, at Vertiv, where they provide software solutions and services dedicated to ensuring the continuity of telecommunications networks and data centers, the utility of 5G has been classified into what they call four archetypes.
The first has to do with the massive distribution of entertainment content such as Netflix or Spotify and the second is related to virtual reality and augmented reality.
"In a few years we will no longer use two-dimensional devices but will use devices that allow us to see in three dimensions and allow us to communicate in another way," he said.
The third archetype refers to applications sensitive to machine-to-machine communication, as more than half of Internet traffic is generated by robots, sensors, and devices that create an enormous amount of information.
According to Garcia, this "will have a lot of application in stock market transactions, as well as in intelligent security, urban video surveillance and facial recognition.
Finally, there is what they call "critical for life" where autonomous cars and digital medicine are located.
5G TECHNOLOGY ACCELERATES ACCESS ACROSS LATIN AMERICA
The 5G technology expands its presence worldwide and Latin America is preparing to assimilate the service and Bolivia still has to work in its ecosystem to take advantage of the benefits of the proposal.
Ericsson executives pointed out that the 5G proposal goes for entertainment and industries, and explained that this new technology connects things, while 4G connects people.
At a global level, the incorporation of 5G technology is advancing. It is expected that networks will reach 43 percent worldwide, as well as 32 percent of connected mobile networks, of this 9 percent connectivity will be in Latin America.
Representatives of the Swedish company reported that they have 24 Ericsson commercial networks in the world, which already use the 5G benefit. As an example, they mentioned that the use is shown more in telemedicine, in intelligent cities, with connected traffic lights as well as with security cameras.
But education also enters this field, since children will be able to review their subjects through virtual reality and increase their knowledge. Ericsson Bolivia has been working with operators in the country since 2015, whose equipment already has incorporated technology.
Meanwhile, when the ecosystem becomes a reality in Bolivia, users will be able to navigate at high speeds and connect to objects.
The company carried out in La Paz the Ericsson Barcelona Unboxed, in which it showed the 5G technology, the fifth generation of mobile telephony that offers improved speed, less latency, greater capacity, and greater flexibility.
According to Ericsson, 5G broadband service is expected to provide 10 to 100 times more capacity and data throughput than 4G.
This new generation of mobile telephony, already present in some European and Asian markets, goes beyond connecting people. It focuses on facilitating the Internet of Things (IoT) and the Fourth Industrial Revolution, enabling the expansion of smart cities, virtual and augmented reality (AR/VR), autonomous vehicle transport and digital health.
It is expected that by the end of 2024, up to 35% of global data traffic will be operated by 5G and 65% of the population will be covered by this technology. This will keep pace with the current increase in mobile data traffic, which will grow 30% per year by 2024, according to the Ericsson Mobility Report.
"Based on our technological leadership, research and development investments and global scale, we are well positioned to partner with Latin American telephone operators as they plan their migration to 5G," said Arun Bansal, Ericsson's director of Latin America and Europe.
Meanwhile, Public Works Minister Óscar Coca said 5G technology will begin to be implemented in the country gradually, taking into account that its application "has several edges," beyond the technical.
CHILE ACCELERATES PLAN TO AUCTION 5G SPECTRUM AND BRAZIL DELAYS IT
The region must overcome some obstacles before thinking about the deployment of the new mobile technology. The first, and perhaps most important, is a spectrum. Recent tenders have shown that regulators are not willing to give up their vocation to collect, and operators are in a dilemma: on the one hand, they need the spectrum to be able to offer new services, but on the other, they must deal with the large volumes of investment that 5G technology will require.
If we add to this combo the fact that not many operators have the financial backing to be able to face up to these investments -let us remember, for example, that Spain has just let go of Telefonica's hand-, the situation seems complex to resolve in the short term, unless one of the protagonists gives in.
Brazil, which had announced the tender for this first half of 2020, now seems to be taking the plans towards the second half and there are already those who say that it will be delayed until 2021. In fact, the country's own communications minister said the technology would not be deployed until 2022, according to the Brazilian newspaper Folha.
This situation is part of a problem of spectrum availability in the mid-bands for 5G and negotiations on who should pay the cost of avoiding interference with existing services. In the past, when television services were migrated to deploy 4G, the cost was paid by the telecommunication operators.
Today, with a weaker financial situation, operators do not seem willing to bear that cost. In addition, satellites do not want to see their business damaged and claim that 5G will bring service interference. Until the country can resolve this conflict of interest, 5G's plans will be delayed.
Ecuador is the other country that plans to auction spectrum in 2020. The planned bidding contemplates bands commonly used for 4G - 700 MHz and 2.5 MHz - along with a band that has already been defined by the industry for 5G: 3.5 GHz. The country will seek to have technology active between 2021 and 2022.
In Mexico, meanwhile, news are also expected by the end of 2020 on a possible tender that has 600 MHz and 3.5 GHz bands as protagonists. In addition, it is considered the possibility of delivering also some remaining of the 4G AWS or 2.5 GHz tenders.
Colombia has just tendered spectrum for 4G and, for now, does not have 5G among its priorities. In this market, some changes are expected with the entrance of Novator, Avantel's recovery order and Telefonica's difficult situation. The short term does not seem to be a good moment to bid spectrum.
In Argentina, the change of administration has not yet defined the authorities of the National Telecommunications Entity (Enacom), although the person in charge of the sub-secretariat of Telecommunications is already official, and is holding the first meetings with the operators this week, according to iProfesional. The previous management just left a draft Spectrum Plan with recommendations for good practices and band analysis after four years of work and an announced tender for the remaining spectrum that never came to fruition.
In the rest of the countries, the situation with 5G is similar: either they are in a period of analysis of the portions of spectrum available - which, like the tests carried out by the operators, makes the figures rise in relation to "countries that are working on 5G" - or they have not even begun to review the issue.
The one that does seek to put its foot on the accelerator now is Chile, after a time of uncertainty that has held back investment in that country. With new spectrum caps and operators already determined to return frequencies, Chile is now on track to be the first to tender for the 5G spectrum in Latin America.
The Under-Secretariat of Telecommunications (Subtel) has posted a public consultation on its website, which already includes some details of what the 5G tender could look like. The agency plans to tender 20 MHz in 700 MHz - that block that was reserved for emergency communications but was not used later -, 30 MHz in AWS, 150 MHz in 3.5 GHz, divided into 15 blocks and a total of 800 MHz in the 28 GHz band, divided into two blocks of 400 MHz. The consultation is enabled until mid-February, with the aim of advancing in the bidding, after seven years of waiting.
Thus, Chile intends to be the first to deliver spectrum and to be able to lead 5G in Latin America, as it did in the past with 4G. Technically, Uruguay was the first to launch the technology, but it remains to be seen if, after the recent tenders, the country will be in a position to launch a new competition to deliver portions of the spectrum to enable wider deployment of 5G.
There are some operators in the region with spectrum concessions in 3.5 GHz that could be renewed -as it happened in Mexico- or go through a refarming process for its use in 5G mobile networks. However, the reality is that Latin America needs spectrum, and situations in different countries mean that decisions must take longer than they should. Thus, between studies and public consultations, Latin America seeks to prepare itself for 5G. Without pause, but without hurry.