Huawei ban is beating a path to protectionism

By the lofty standards of the NSA scandal, the revelation that it hacked not just Huawei’s servers but also its products may rank as a mere footnote.

But it sends a few more awkward questions to the agency’s inbox. Such as over the legality of planting backdoors in Huawei’s equipment. Does that enhance national security or is it unlawful over-reach?

There’s also the obvious point, made by Huawei executive William Plummer and many commentators:

“The irony is that exactly what they are doing to us is what they have always charged that the Chinese are doing through us.”

It reinforces the view of this blog that US suspicion of Huawei is a massive case of projection; the Pentagon, the CIA and the NSA fear that Huawei will do to the US what they are doing to everybody else.

In fairness, probing communications vendors, and especially those from China, the world’s most shameless cyber attacker, is a reasonable part of the NSA mission. Building backdoors is probably not.

But the NSA occupation of Huawei’s networks failed to yield any sign of an intelligence relationship with Beijing – something else this blog has previously inferred. In which case the US should allow the company to go about its business in the United States and elsewhere. 

The logic of the security state lays down a path to protectionism. This harassment of Huawei gives China the excuse to do the same to foreign companies in China. In a state-driven economy in a country held together by nationalist ideology, it doesn’t take much encouragement.

MIT’s Technology Review makes exactly that point:

But the bigger fallout may be a rise in protectionism. “It’s been mostly open competition since the beginning of the Internet, and the companies that did well are the ones that won the competitions,” says [analysts James] Lewis. Now, with escalating security worries, countries may take the chance to stack the deck against foreign competitors or build up their own industries.

Hong Kong TV drama

The Hong Kong government has put yet another obstacle in front of Ricky Wong's HKTV service. Since his application for a free-to-air licence was rejected, Wong has been refashioning his business and programming around mobile TV.

But now he's been told by the telecom and broadcasting regulator, Ofca, that because he's offering the service to more than 5000 households he needs a pay TV or free-to-air licence.

That sounds crazy. But, as legislator Charles Mok, who represents the IT sector, has explained on Twitter, it's about how the service “enters the home”. Wong has a mobile TV licence that he bought from China Mobile, but is accessing the home viewer via the set-top box.

Which according to Ofca makes it a fixed and not mobile service, and is why he apparently needs the licence. But this is a case of the regulator applying broadcasting rules to a telecom service.

Ofca, which is known to favour competition in telecoms and TV, is not the villain here, but Hong Kong's economic policy-makers who have done nothing about merging the city's telecom and broadcasting rules.

In light of the previous decisions to impede HKTV, it’s impossible not to conclude that the discovery of this loophole is just a lucky break for the Leung administration. No matter what Ricky Wong does, they seem determined to block him.

If this is a technicality, however, and the government genuinely wants to encourage a diverse media sector, then it will move quickly to change the law to allow HKTV to deliver its service into the home, thereby preserving 300 jobs and some HK$1 billion ($776m) in investment.

But don’t hold your breath.

The action meanwhile moves to the courtroom as Wong seeks a judicial review of the decision.

In a post on the Chinese language website, The House News, Mok accused the government of being hypocrites, having just re-established the Innovation and Technology Commission to advance hi-tech in the city. He wrote:

“I wonder, in the way the authorities have explained and administered the law, is it for the broad interests of the people, or to adhere to some other vested interest?”

UPDATE: Some reporting by the SCMP Thursday clarifies this a little. 

The paper says the issue is about HKTV's use of the DTMB standard instead of another Chinese technology, CMMB, which was being used by China Mobile, from whom HKTV bought the spectrum. Legal and tech experts say the Ofca decision violates the technology-neutral principle. 

Information Technology Federation honorary president Francis Fong Po-kiu said yesterday it was unclear who would win because the issue - whether DTMB could be applied to mobile television without further restrictions - had no precedent.

Separately, SCMP.com reports that the government is reviewing its telecom and broadcasting ordinances - a step that seems grossly overdue given the formation of Ofca two years by merging the old telecom and broadcast regulators.

Finally, China Mobile chooses MVNO partners

China Mobile, the latecomer to the MVNO party says it has chosen 17 MVNO partners and is awaiting approval from the MIIT.  After that it hopes to sign agreements with the MVNOs, China’s National Business Daily reports.

China Mobile is months behind rivals China Telecom and China Unicom, whose MVNO partners were issued licences in December. Both Telecom and Unicom say they expect trials to start in Q2, according to the NBD.

China Mobile won’t reveal the names of its MVNO partners, but one small Shanghai-listed telco, Dr Peng Group, said it had applied and was waiting for a response.

A China Mobile spokesperson told the NBD in an email: “We are very willing to cooperate with MVNOs, to launch richer business and services and to satisfy customer demand for personalised and differentiated apps.”

TD camp targets WiMAX and FDD operators

Wimax has lost the race against LTE, but it’s still part of the 4G wars.

Global TD-LTE Initiative (GTI), the TD-LTE advocacy group, has reportedly made the mass conversion of WiMAX operators one of its top priorities for the year.

The group, whose members include Softbank, China Mobile and Sprint, sees the several hundred WiMAX operators and their spectrum as potentially valuable assets in their emerging competition with the dominant FDD standard.

According to China’s Sina Tech news, a GTI pre-Mobile World Congress meeting in Barcelona last Friday specified the need to win over Wimax operators to help build scale for the standard. They also agreed to target large FDD-LTE operators and emerging market carriers. 

Of the more than 250 commercial LTE networks in operation, only 28 are using TD-LTE. Another 40 networks are under construction. 

More than 450 Wimax networks are in operation, according to the WiMAX Forum, but the technology, which was the earliest 4G standard, suffers from a continual stream of defections. The forum agreed in November on a technology path that would allow WiMAX operators to harmonize their networks with TD-LTE in the 2.3GHz, 2.5GHz and 3.5GHz bands.

According to Sina, the WiMAX operators are seeking to evolve to TDD via WiMAX 2.1 rather than junking their existing deployments. It adds:

WiMAX and TDD are close in technology terms, and moreover TD-LTE is rich in spectrum resources.

It also points out that while TD-LTE is the “the only exit for WiMAX operators,” the massive amount of available TD frequencies are attractive to FDD operators, who have limited spectrum left.

The Japanese government announced last month that it planned to allocate 3.5GHz spectrum for TDD to the country’s three 4G operators by year-end.

The GTI meeting agreed a 2014 development plan, committing the group to “fully guid[ing] WiMAX operators to TD-LTE” and to “induce major FDD” and emerging market operators to adopt the standard.

China handset firms accuse Qualcomm

Chinese handset-makers have told a government inquiry that Qualcomm is charging them up to ten times more for its technologies than other foreign firms.

In a submission to the anti-monopoly probe into the US chip firm, an industry group, Mobile China Alliance,  says Qualcomm's high licence fees have had a “serious impact” on the domestic industry, Shanghai newspaper China Business News reports.

However, the group admits that even if Qualcomm cut its technology licence charges as a result of the investigation, the members are unlikely to benefit because of the intense competition between them.

MCA was set up under the government-backed China Communications Industry Association 15 months ago. Its members include handset-makers such as Lenovo, ZTE and Coolpad and chip firms like Spreadtrum. It said it had interviewed more than 20 companies for the report, which it filed with the National Development and Reform Commission (NDRC) on Sunday.

The NDRC began an inquiry into Qualcomm under China’s anti-monopoly law in November. An adverse finding could mean a penalty of as much as $1.2 billion.

The China Business News report says the NDRC investigation has three purposes:

...first, [the NDRC] probably hopes Qualcomm will reduce its licence fees for LTE chipsets; second, most likely to protect domestic businesses; and third it proceeds from national security considerations.

It says Qualcomm is planning to charge Chinese firms 4% of the retail price for use of its LTE technologies.

Yet although MCA chief Wang Yanhui says the Qualcomm inquiry is a "good thing", his members are not greatly enthusiastic about it.

"China handset vendor competition is very fierce. Even if Qualcomm reduce its prices, they still won't be able to easily grow their profit space."

Update: An earlier version of this post quoted a Beijing Daily News story which wrongly reported that Qualcomm had made a formal offer to the NDRC to drop the inquiry.  In fact, it was InterDigital which had made the submission to the NDRC. Beijing Daily News had inaccurately interpreted its name.