BUSINESS Bloomberg Businessweek April 20, 2020
○ Theregion’spremierdiscountcarriermayhavetoloweritsambitions
The Virus Clips
In 2001, when Malaysian entrepreneur Tony
FernandesintroducedAsia’sfirstlow-costairline,
AirAsia,bypurchasinga failingtwo-planecarrier
forlessthan$1,it wastheperfecttimeandplace.
Theregion’seconomicascentwasraisingmillions
offamilieseachyearintoa newmiddleclassthat
waseagertotravel.GovernmentsfromMalaysiato
Chinawerebuildingmoderninternationalterminals
andmorerunwaysandoftenwelcomedupstartsto
helpdrawbusinesstravelersandtourists.Andin
mostofSoutheastAsia—agroupof11 countrieswith
25,000islandsspreadoveranarealargerthanNorth
THEBOTTOMLINE Operatorsofprivatenetworkslikegearmade
by China’s Huawei. But uncertainty over some government efforts
to discourage its use could slow the rollout of 5G in Europe.and snowplows, as well as for its communications.
Huawei equipment is equally ubiquitous on the
Continent. The company won a big contract to pro-
vide communications for offshore drilling plat-
forms and tankers in Norway’s oilfields. Its client is
Tampnet AS, which leases broadband services to oil
giants such as the U.K.-Dutch energy company Royal
Dutch Shell Plc. Huawei’s “Smart City” IT infrastruc-
ture underpins municipal and emergency services
systems in the Madrid suburb of Rivas-Vaciamadrid,
such as building entry.
That established footprint has positioned Huawei
to be a major player in 5G as companies worldwide
are set to unlock as much as $4.3 trillion in value
from 5G enterprise networks in coming years,
according to KPMG. And it’s jostling aggressively
with Nokia and Ericsson to supply gear in systems
to do everything from inspecting jet engines in vir-
tual reality to monitoring the vital signs of thousands
of medical patients in real time.
“For the companies making these huge capital
investments, the obvious choice is Huawei, given
their flexibility and their highly competitive pricing,”
says Ben Wood, an analyst at CCS Insight. “Should
it emerge that they can’t use Huawei infrastructure,
that may well set back some of these initiatives
in places like ports and airports.” That’s because
America—air travel was the easiest and often the only
way to get around.
Other entrepreneurs followed, and by 2018 low-
cost airlines had half of the region’s rapidly expand-
ing market. Before the coronavirus pandemic,
AirAsia was serving 159 cities, and the International
Air Transport Association estimated the number of
passengers in the Asia-Pacific region for all carriers
would more than double by 2037, to 3.9 billion.
But Fernandes and other low-fare high flyers
were slammed in January when air travel was
recognized as a prime conduit for spreading the Huawei’sshareofthe
U.K.telecommarket,
bysector
Full-fiberfixedaccessMobileaccessMobilecoreFixedcoreTransport& transmission1435131744%Huawei has spent a decade seeking an edge in indus-
trial networks that can ping data among vehicles,
robots, sensors, and cameras at lightning speed,
driving new applications such as smart factories and
driverless cars. For one potential customer, German
engineering giant Robert Bosch, a blanket ban on
one supplier could push up the cost of private net-
works and slow progress toward industrial 5G, says
spokeswoman Rianne Ojeh.
Meanwhile, Britain’s hazy guidance about “high-
risk” suppliers has prolonged confusion among
operators of private communication systems.
Three UK, the CK Hutchison Holdings Co. unit that
runs the Felixstowe and Heathrow networks, doesn’t
know what role Huawei will be allowed to play in
its future system infrastructure, says Dave Dyson,
until recently the division’s chief executive officer.
Huawei’s use in private networks is “one of the out-
standing questions that we’ve still got,” he says. A
company spokeswoman adds: “Further conversa-
tions with Britain’s National Cyber Security Centre
have provided more clarity, and conversations are
ongoing.” —Thomas Seal, with Helene Fouquet, Kitty
Donaldson, and Patrick Donahue