NEC gets a piece of the UK’s 5G bonanza

The door is officially open for Japanese tech company NEC to participate in the UK’s 5G rollout, as part of the post-Brexit free trade agreement between the two countries.

Early in the summer we reported that the UK was checking on NEC’s technology capabilities as the government was musing the idea of banning Huawei from the country’s 5G rollout. It probably was not too keen to be locked in the Ericsson-Nokia duopoly in the long run and was looking for alternatives.

NEC’s role was officially recognised when the free trade agreement between the two countries, formally known as “UK-Japan Comprehensive Economic Partnership Agreement (CEPA)” was signed recently in Tokyo. The Department of International Trade tweeted on the day of the signature:

Exactly how NEC will play its part in UK 5G is not yet defined, as, although the government has the power to prohibit the presence of certain vendors in the country’s communication networks, on national security grounds, it does not have the mandate to force any operators to use products from any specific vendors.

In whatever shape NEC’s role will materialise, this is a good win for the company, which was once a heavyweight in the telecoms kit market before the ascendency of LTE and subsequent market consolidation. 5G seems to have opened a new opportunity.

The company, an enthusiastic supporter of OpenRAN, was selected by Rakuten to build the greenfield operator’s 5G network, superseding Nokia, which supplies its LTE network. NEC is also in partnership with Vodafone, which recently succeeded in a voice call trial in The Netherlands using the OpenRAN technology.

This is also good news for NTT, which recently acquired close to 5% ownership of NEC, in keeping with an emerging trend of vertical integration in the OpenRAN world (for example Altiostar’s owners include Rakuten and Telefonica).

Commenting on the NEC announcement, Guillermo Pedraja, Head of Networks, 5G & IoT Consulting at NTT DATA UK said in a statement that “the UK government’s collaboration with NEC points to a thriving future for UK-Japanese cooperation, with the recent free trade agreement ensuring that businesses from both countries remain closely aligned as they lead the world in technology and innovation.”

He also saw in 5G an opportunity for the resurgence of Japanese technology companies in general. “Japanese firms are also positioning themselves as global centres of innovation in telecommunications technology. NTT’s decision early this year to take a 5% stake in NEC was an important moment that showcased Japanese telco giants’ willingness to combine forces to accelerate their capabilities in the 5G space,” Pedraja added.