ZTE sets its sights on Asean to boost growth: Page 2 of 2

ZTE and 5G

According to Zhang, ZTE’s growing confidence in its potential in the region besides having a growing population is its belief that pre-5G and 5G is expected to hit the region in the next five years or so. Zhang said experienced gleaned from its work in larger markets such as China and Japan will help it roll out these advanced technologies to other markets in SEA.

Pre-5G is industry nomenclature used to describe the availability of 5G-like characteristics riding on current LTE/ 4G networks before 5G is commercially available. 5G is the next evolutionary step in wireless communications, which requires new spectra and new handset support in those bands.

5G promises 50 to 100 times faster transmission speeds compared with what’s available on 4G today. Also, it will boast of less than one millisecond latency – the ability of the signal to get from one point to another – compared with 20 to 30 milliseconds on 4G today.

ZTE is actively seeking to test its pre-5G massive multiple input multiple output (MIMO) network with Japan’s SoftBank and China Mobile, which the company claimed is a solid foundation for the commercial use of 5G and accelerates the development and commercial use of 5G networks.

Zhang said that such trials will be used as testing grounds so that they will be able to bring similar trials and real-life commercial networks to the SEA region eventually.

“There is great interest in pre-5G and 5G in all main operators,” he claimed. “However, these operators have also invested a lot into their respective 4G networks, so pre-5G will help them transition to 5G.”

Asked what plans ZTE has specifically for Malaysia, Zhang said that the company has already laid the groundwork since its entry into the country a decade ago.

Zhang revealed that several years ago, ZTE had already ramped up strong engineering skill sets and engineers when it won the contract to deploy some 5,000 4G/ LTE base stations for Digi.

“We plan to build from there as we already have service delivery people,” he explained. “In Q3 this year, we plan to strengthen our management team by at least 30 people,” Zhang said, adding that these are “very senior level people.”

 Analyst weighs in

According to Neil Shah (pic, above), research director at Counterpoint Research, over the last few years both Chinese vendors ZTE and Huawei have ramped up research and development (R&D) spending to work on pre-5G and 5G technology development and are contributing handsomely to the global standards alongside the likes of Ericsson, Nokia, Qualcomm.

Shah argued that in the early days, Chinese companies were late to 2G, 3G standards and lost out to competition such as Ericsson, Nokia and Alcatel Lucent (now Nokia).

But since then, China has become one of the leading countries in 4G deployment and adoption, and the experience gained from the growth and scale in its home market has given ZTE and Huawei confidence to ramp up contribution in the pre-5G (Gigabit LTE) and 5G era, he added.

“Furthermore, due to low-cost and now end-to-end offering from chips, network infrastructure middleware/software and cloud platforms, both ZTE and Huawei are winning decent share in 4G and post 4G rollouts across Europe, Latin America and South Asian operators,” he pointed out.

 Shah said ZTE in particular has made some good inroads, having partnered with Softbank and Deutsche Telekom in their 5G labs to test and develop 5G network tech, as with the pre-5G and 5G test beds in China in conjunction with Chinese operators.

“Chinese users are growing fast and are becoming quite advanced and matured in terms of Internet use-cases and data consumption,” he argued, leading to the need for rapid development in building advanced networks to support these users.

Besides this, this knowledge transfer along with strategic cooperation with some of the world’s leading operators will drive the inflection point for ZTE, as will its traction in network function virtualisation and software-defined networking (NFV/SDN) market.

 Asked what kind of challenges ZTE faces, Shah says the large one obviously is from its own homegrown rival Huawei which has also grown by leaps and bounds with R&D budget more than US$10 billion compared to ZTE, which has a mere budget of US$2 billion. Relatively speaking, Ericsson has an annual R&D budget of around US$3 billion.

“This shows that Huawei is in a better position to out-spend R&D, out-price and also to a greater extent out-market ZTE,” he argued.

Quizzed as to what ZTE can do going forward, Shah said ZTE will have to choose its battles focusing on key operator wins to use it as a case study and drive newer business with other operators which are behind the leading ones.

“The Asian market will be challenging but getting a share of the pre-5G deployments in the next two years will be key to ZTE’s growth in this geography,” he pointed out.

Edwin Yapp reports from the Mobile World Congress Asia in Shanghai at the invitation of ZTE Corp . All editorials are independent.

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