Finland is trying to compete with China and the US in the race for 5G

Share

Tech

Finland is trying to compete with China and the US in the race for 5G

Shares of Finnish telecommunications company Nokia have rallied nearly 30 percent in 2018, and that's largely thanks to two letters: 5G.

The stock still trades well below its sky-high levels during the dotcom boom, when Nokia was the world's top mobile phone seller.

But Nokia is gaining momentum in the mobile communications market as a key player making 5G equipment and software. The company's efforts have helped put Finland on the map in the worldwide race to develop and implement so-called fifth generation wireless technology.

"They (Nokia) are trying to regain some technological leadership here in 5G that was largely lost in the last 15 years through the smartphone era," said Tim Hatt, head of research at GSMA Intelligence, in a phone interview with CNBC.

'It's connecting everything'

5G promises faster connections and lower latency, bringing down the time delay for devices to communicate with one another and provide quicker download speeds.

Nokia says 5G's potential reaches far beyond quicker downloads, though. Inside the company's global headquarters in Espoo, Finland, hands-on demonstrations showcase 5G's applications in industries from advanced manufacturing to health care.

The network's low latency could, for example, allow autonomous vehicles to communicate almost instantly on the road or seamlessly connect smart devices inside a home.

"I think that 5G is something that will touch everybody's lives in a few years from now," Lauri Oksanen, Nokia's vice president of research and technology, told CNBC in an interview in December in Espoo.

Putting 5G to the test

In January, Finland will become one of the first countries to enable the launch of commercial 5G networks. Telia, a Swedish telecom, is one of three operators that has won a license to offer commercial 5G. The licenses were granted in a spectrum auction through the Finnish government in October.

"To us, 5G is a whole platform for utilizing, analyzing and using data more effectively compared to what we've done in the past," Janne Koistinen, director of Telia's 5G program in Finland, told CNBC.

Telia recently built Finland's largest open data center in Helsinki to accommodate an influx of data that will accompany the rollout of 5G. For example, when data is sent between one mobile phone to another, it passes through the cloud, which is comprised of servers in data centers around the world. By building data centers closer to mobile users, users will be able to take advantage of the low latency of 5G, receiving data faster than ever.

Telia has already worked with Nokia to test 5G in limited environments across Finland. Koistinen said Finland's legacy in wireless technologies, combined with support from the Finnish government, puts it in the running to compete with bigger countries on 5G initiatives.

Asked whether Finland can keep up with the U.S. and China, the two countries duking it out for dominance in the 5G market, Koistinen replied, "in the agility, in the speed, in the finding new ways of how to utilize this technology, for sure we will."

Security in question

The loud hype around 5G has been met with equally loud concerns about the network's security. Australia and New Zealand, for example, have banned Chinese operator Huawei from building 5G networks out of fear it could facilitate spying from China. Huawei has been barred from selling equipment in the U.S. since 2012 because of security concerns by the U.S. government. Huawei has repeatedly denied these claims.

Some analysts say the negative perception of China's 5G operators is a boon for Finnish firm Nokia.

"With Huawei banned from certain markets, we view Nokia as the only global supplier with an end-to-end solution, as evidenced by leading global carriers choosing Nokia as a partner for 5G deployments," analysts from Canaccord Genuity said in a recent note.

Nokia's Oksanen said he understands why governments and citizens are concerned about 5G, adding the company is taking every step possible to secure its equipment, from radios to routers to software.

"We are now connecting not just the people but the whole world and we don't want the infrastructure to fail because of some security issues," he said.