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Kenya now a battleground in China-American 5G war

John Mwasi (Right), The Wireless Engineer and Trainer explains the workings of the 5G network to the firm’s Training Coordinator Linet Milo (left) and Chief PR Officer Dalmar Abdi.  [Stafford Ondego, Standard]

Last month, the Communications Authority of Kenya (CA) and Chinese telecommunications giant Huawei signed a memorandum of understanding on, among other things, growing Kenya’s 5G infrastructure, artificial intelligence and cybersecurity.

Coming less than 20 days to Kenya’s General Election that will usher in a new administration, the deal is the latest move in a grand battle for supremacy between China and the United States (US) over control of East Africa’s 5G infrastructure.

Kenya is emerging as a battleground for Beijing’s and Washington’s race to dominate not just the 5G deployment but also the next industrial leap that will see the victor wield more influence in the region for decades to come.

Last week, the Biden administration unveiled the US-Kenya Strategic Trade and Investment Partnership (STIP) meant to “pursue enhanced engagement leading to high standards commitments in a wide range of areas with a view to increasing investment.”

Among the areas of focus in the surprise announcement was digital trade where Kenya and the US claim a mutual interest in fostering consumer, business and worker trust in the digital economy as well as promoting the development and use of resilient and secure digital infrastructure.

“The two countries will discuss measures to support digital inclusion, including accessibility and online consumer protection,” said the Office of the US Trade Representative in a statement.

“The two countries will also monitor global discussions on emerging issues in digital trade, which are of mutual interest.” In recent years, the US and China have been racing to carve out market share for their domestic industry in 5G network deployments across the world. Huawei is currently ahead of the US and leads global telecoms infrastructure firms in the number of commercial deployments.

In 2020, the company’s president of the carrier business group Ding Yun told State media China Daily that Huawei has 91 commercial 5G contracts. Yun said this was an increase of nearly 30 per cent from 2019 and ahead of 81 announced by Swedish telecom company Ericsson and 67 announced by Nokia, adding that the US is politicising the 5G competition.

Key markets

In 2019, the US Department of Defence wrote to Congress warning lawmakers that China was poised to lead the race for 5G and could lock out the US in key markets worldwide. “Transitions between wireless technology generations before 5G also had substantial commercial, competitive, and security implications for first-movers,” said the US Defence Innovation Board report.

“Europe, led by Germany, gained first competitive advantage in 2G, and as a result, companies like Nokia and Ericsson were able to roll out more advanced devices earlier and were already transitioning to 3G in the 2000s when the US was still trying to implement 2G.”

The report claims that Japan’s subsequent lead in 3G cost the US thousands of jobs and considerable revenue as the latter tried to transition, with multiple wireless technology firms collapsing or absorbed by foreign firms.

“First-mover advantage will likely drive significant increases in their handset and telecom equipment vendors market along with their domestic semiconductor and system suppliers,” notes the report.

“As 5G is deployed across the globe in similar bands of spectrum, China’s handset and internet applications and services are likely to become dominant, even if they are excluded from the US. China is on a track to repeat in 5G what happened with the United States in 4G.”

In recent years, the US has been pressuring allies in Europe to drop Huawei from its list of suppliers for 5G technology, urging that the telecoms giant’s affiliation with the Chinese Communist Party presents a security threat.

In 2020, Belgian telcos Orange and Proximus announced deals with Nokia for building 5G networks, dropping talks with Huawei after pressure from the US.

Economic diplomacy

The decision from the two firms coming from the heart of Europe, the North Atlantic Treaty Organisation (NATO) and the European Union was seen by analysts as an indication of the US’s dogged determination to unplug Huawei from its allies’ networks. Financial Standard last month met with a top executive from one of the leading US hardware tech firms.

The executive was on an economic diplomacy trip to East Africa where they would meet the country’s ICT Ministry officials and then proceed to Rwanda on the same mission.

“The world is now at a reflection point in terms of migrating from 4G to 5G and the implications will cut across every sector and industry, so the stakes are quite high,” the official explained.

“Kenya is best positioned because the labour market is relatively advanced in terms of language skills, education and literacy and the country’s geographical positioning and hub status provide a strategic advantage.” Huawei had not responded to our questions about the number of 5G contracts it has signed in the region and the progress of its deployment by the time of going to press.

The firm, however, already has an advantage on this front over its American and European rivals. The firm has deployed more than 4,000 kilometres (km) of the National Fibre Optic Cable Infrastructure (NOFBI) and another over 5,000kms of Safaricom’s fibre network.

Huawei is also behind the core infrastructure of M-Pesa and commands a sizable share of the government’s cloud services besides signing numerous pacts with universities and colleges on skills development across the country.

In Ethiopia, viewed as the next growth frontier for East Africa’s telecommunications industry, Huawei is already a key supplier for Ethio Telecom.

It is also leading Safaricom Ethiopia’s network rollout that is expected to go live in a few weeks.  

At the moment, 5G deployment plans in Kenya and the rest of Africa are being slowed down by the lack of critical mass in most places to motivate mobile network operators to sink billions of shillings in infrastructure rollout.

CA data shows smartphones account for 54.6 per cent of the population. The price for 5G enabled devices, retailing from Sh100,000, is, however prohibitive for the majority of subscribers. This has seen CA scale back its 5G deployment policy that had set August this year.

This was the date the government would hold spectrum auctions to mobile network operators.

Experts, however, see other opportunities that could form a nascent market for 5G network deployment.

For instance, the number of machine-to-machine SIM-card subscriptions in the country is increasing at an average of 10 per cent on a quarterly basis and stood at 1.2 million as of the end of March this year.

The first adopters of 5G in Kenya will be businesses, particularly in the manufacturing or logistics sector looking to improve efficiency in their production and supply chains.