Huawei CFO arrested in Canada ‘at US request’, while Ericsson is blamed for O2 UK and Japan network fails
WEEK IN TELCO IT – Mainstream media outlets have been dominated in the last 24 hours by two telecoms-related news stories. As Jeremy Cowan reports, the China-based network systems giant, Huawei is demanding the release from detention in Canada of its CFO. Meanwhile, UK network operator O2, owned by Telefonica, is pointing the finger of blame at Ericsson for a network outage affecting many of its 25 million customers.
SoftBank’s mobile phone service was also disrupted in parts of Japan. The timing was unfortunate for the network operator, coming as it did ahead of an initial public offering (IPO) later this month for SoftBank’s domestic telecoms business. A market valuation of US$21 billion for the business had been mooted, however shares fell initially by more than 5%, reportedly influenced by the arrest of Huawei’s CFO.
The news broke on Thursday morning, and was confirmed by Huawei, that Canadian immigration authorities and police had arrested Meng Wanzhou, 46, the chief financial officer (CFO) of Huawei, the world’s largest telecoms equipment and software vendor.
Shenzhen-based Huawei called for the immediate release of the telco giant’s CFO, who had been arrested (reportedly at the request of US authorities) for investigation of alleged violation of U.S. sanctions on exports to Iran. Her position as CFO would likely have guaranteed a robust response from the Beijing government anyway, but the fact that Meng Wanzhou is also the daughter of Huawei’s founder, 74 year-old Ren Zhengfei only compounded the diplomatic and commercial upheaval.
Although academic observers of Sino-US relations were reported to be deeply shocked at the news, a more emollient tone was set by China’s commerce ministry. It issued a statement on Thursday saying Beijing is “confident in reaching an agreement (with the U.S.) within the next 90 days.” Negotiations have been continuing between the two economic superpowers since President Donald Trump met Chinese Premier Xi Jinping in Argentina in an attempt to roll back the effects of the trade war that has deepened in recent months. China’s trade spokesman, Gao Feng told a media briefing, “We will start with agricultural products, energy, automobiles to immediately implement the issues that the two sides have reached consensus.”
Shares initially tumbled in US markets,not only in Huawei but across the wider tech market, before returning to a position close to their previous levels. The NASDAQ resuming a positive position, erasing earlier losses.
Ms. Meng was reported by Canadian officials to have been arrested on December 1st but news only broke today, Thursday. A hearing in Canada in Ms. Meng’s case is set for Friday.
Tensions have been running high for several years between the US and Chinese governments over allegations that Huawei and compatriot telecom solution vendor ZTE pose a national and commercial security risk to western countries. (Also see: ZTE Corporation reaches a US$892m settlement with US authorities.)
O2 and Ericsson apologise
“Faulty software” has been blamed by Ericsson UK for the network outage that continued throughout Thursday. In a joint statement, O2 and its mobile network equipment supplier Ericsson apologised to the millions of customers hit by a total failure of its data services. The companies sought to reassure users that its 3G service would be fully restored by Thursday evening. It would, however, continue work on restoring 4G operations.
O2 has 25 million customers in the UK and also provides services for the Giffgaff, Lycamobile, Sky, and Tesco networks, which between them have another seven million users.
Commenting on the O2 UK network failure, Mike Walton, CEO of Opsview says: “Today’s headlines reported that millions of smartphone users in the UK had lost their data services after the O2 network suffered technical problems. This large-scale data outage is just one of many to hit the news recently, with a number of tech giants such as Microsoft and Facebook also falling victim this month to the dreaded IT outage. Whilst the latest reports put today’s disruptions down to a global software outage, it is important that IT departments across all industries have full visibility across the entire IT estate.
“By implementing a robust monitoring system mobile networks such as O2 will be able to identify potential outages not only across the infrastructure, but also across all applications,” Walton adds. “By doing so, companies can ensure that their time to detect problems is vastly reduced and any potential issues can be rectified before they cause disruption to consumers, and reputational harm to their brand.”
Such advice may have come too late for O2 and their network software supplier, Ericsson. If previous experiences involving TalkTalk and Facebook are anything to go by, the reputational damage is likely to be lasting and deep.
Report by Jeremy Cowan, editorial director of VanillaPlus.