Opinions

The Chinese chokehold on Ethio-Telecom

Ethio telecom is currently a prisoner of the two Chinese telecom equipment giants Huawei and ZTE.

by Lehager Yekochew Oct 16th 2020 · 4 min read
The Chinese chokehold on Ethio-Telecom

I am a telecom professional with more than 40 years of experience in the industry. I have helped transform telecom networks and worked on all of the mobile network systems including 2G, 3G, 4G and now 5G in the U.S.A, Europe, Asia and Africa. In-addition I have worked in big technology companies that have deployed cloud solutions and data centers globally. Although the current state of the Ethiopian telecommunication system is archaic, since Ethiopia is my country of birth, I have decided to dedicate my remaining working life to Ethiopia.

Since you now know my background, it makes it easier for me to explain why I think the Ethiopian telecom is currently a prisoner of the two Chinese telecom equipment giants Huawei and ZTE. This may seem like a ludicrous claim for the average person but if you look closer and study the level of helplessness and dependency the telecom has on these two companies, then you will clearly understand why the telecom may not even be able to operate without them.

What is very unfortunate here is that ethio telecom continues to procure products from Huawei and ZTE even today, while some of the solutions that ethio telecom already purchased from them have been found not to adhere to international technology standards. This means, a solution from Huawei for example does not interoperate with a solution from a company based in Silicon Valley or Europe. 

In recent years the lack of security and trust on telecom infrastructure obtained from Chinese companies such as Huawei and ZTE has dominated the news cycles. This is because a lot of countries including the U.S and the U.K have realized the dependency of their national security on telecommunication infrastructures and the threat posed by being dependent on Chinese government controlled technology companies. The level of obscurity and lack of transparency of the products by these companies has been exposed multiple times. One very clear and blatant issue for example is the lack of documentation in English for ZTE’s products. Since all the manuals and instructions are in Chinese, a country like Ethiopia has to rely on Chinese speaking experts to deploy and manage their network. This basically means one has to blindly trust ZTE with their entire infrastructure. 

One of the main reasons that these chinese companies keep getting new contracts from ethio telecom is because they are well entrenched in the ethio telecom procurement process. It is clear to see that the Request For Proposals (RFPs) issued as international competitive bids by ethio telecom for network, datacenter and related solutions a lot of times ask for specific requirements that can only be met by Huawei or ZTE. Most of the time there is no reason for those requirements apart from to help one of these Chinese companies win the RFP. In fact a lot of times these requirements prevent ethio telecom from acquiring the best solution in the marketplace. The bias towards these companies is very obvious in the evaluation process too, to the point where it sometimes gets confusing to identify whether some individuals that are part of the evaluation process have the interest of ethio telecom or Huawei/ZTE. 

The archaic procurement process ethio telecom follows; to this date is partly to blame for this crisis the company is facing. Overall the process is not geared towards enabling ethio telecom procure the best solutions at the best prices. Instead the focus is on going through a tedious and time consuming process of analyzing useless details. This process makes it easy to choose a vendor without merits of the quality of the solution or price. These kinds of underlying problems are at the foundation of the system that is allowing these companies to sell outdated  technology and products to ethio telecom that other companies in the developed world are not willing to buy.

How did the telecom get here?

Vendor Financing. 

Back in 2012 and 2013 Huawei and ZTE secured a 1.6 Billion deal with the telecom dangling to their credit a fully backed vendor financing and also a concession priced equipment to build an LTE network in the capital, Addis Ababa, and help deploy 3G service throughout the rest of the country. 

Vendor financing gained something of a bad name after excessive use of the measure by some vendors caused significant financial problems in the past. But the Ethiopia deal indicates that the policy of financing next-generation equipment for operators is still live and kicking.

Huawei and ZTE have relied on backing from state-linked banks to offer financing to their big customers in recent years, giving them an advantage on some contract negotiations.

Since then, the telecom has rapidly increased its relationship and purchase of equipment from these two giants where it has now become fully dependent on these two manufacturers for its equipment needs. One of the byproducts of vendor financing is that ethio telecom has been paying less and less attention to researching and understanding the latest technologies. A lot of times ethio telecom’s technical teams focus only on the two vendors’ products. The commercial evaluation teams also do not do the proper due diligence when it comes to pricing, interest rate, and return of investment comparisons. Too many times these have resulted in ethio telecom procuring outdated, expensive and insecure solutions. Ethio telecom also ends up paying high-interest rates, and sometimes even buying refurbished products labeled as new. 

Not only ethio telecom become an accumulator of outdated products but it is also creating engineers who are semi-skilled on Huawei and ZTE products which are not in use anywhere else in the world. These in turn made the country less attractive for remote support jobs which major international telecom hardware vendors outsource to countries with a cheap skilled labor resource such as India, Nigeria, Egypt, Kenya ….. 

My point is very straight forward. Ethiopian Airlines became what it is today due to a persistent and consistent effort by lots of people that toiled and worked hard to acquire and master the technologies and management knowhow throughout the years. The Airline did not get clumsy and give all of its core operations to the Americans or the Europeans. Ethiopians made sure that they learnt and made the airline Ethiopian.

What I see the telecom doing is the opposite. Unless we take a longer term look and fix this issue of blind dependency on opaque vendors; we might as well sell the telecom to these vendors and just have them operate it for us. Otherwise, I say to all, it is time to take a deep breath and chart a long-term strategy that establishes the telecom’s independence from any and all vendors as much as possible.

Article first appeared on Borkena

last updated: 2020-10-16@04:10