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Huawei TecHnologies co., lTd.

Upgrading Europe’s ICT sectorHuawei’s place in the eu’s research and innovation landscapeBrussels – February 2013

Upgrading Europe’s ICT sectorHuawei’s place in the eu’s research and innovation landscapeBrussels – February 2013

Table of content

Huawei – Serving European innovation 3

Huawei – Connecting the world 7

At the heart of European innovation 11

ICTs – Smart, green and inclusive innovation 19

Huawei – A valuable partner in Europe 23

Huawei’s vision 2020 and beyond 27

More information and sources 31

Contacts 32

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Upgrading Europe’s ICT sector – Huawei’s place in the EU’s research and innovation landscape

Huawei – Serving European innovation

Huawei is one of the world’s largest and most innovative firms in the information and communications technology (ICT) sector. Our technology is used by 45 of the globe’s top 50 telecoms operators and our smartphones are the third most popular worldwide.

This is not bad going for a company that is only a quarter of a century old and was founded not in Silicon Valley but in Shenzhen, China. We attribute our meteoric success to two main factors: our investment in people – reflected in the fact that the company is owned by its workers – and our investment in knowledge.

In fact, it is in the area of research and development (R&D) that Huawei truly holds its own. At a time when many corporations and governments are cutting back on their research expenditure, Huawei invested more than €3.6 billion on R&D in 2012 alone, and more than €14.5 billion over the past decade.

Although we were founded in China and are headquartered there, it would be a mistake to think of Huawei as simply a Chinese company. In fact, we are a valuable, and increas-ingly valued, fixture of the EU’s research landscape.

Huawei investments in its European R&D operations have increased annually by an impressive 24% since 2007, reaching €137 million a year. And given Huawei’s ex-pressed commitment to Europe, this investment is set to continue and grow.

Huawei’s ‘2020’ vision

The vision we outline here relates to Europe’s ICT strategies for the current decade as embodied in the Europe 2020 strategy and the European Union’s eighth framework programme, called Horizon 2020.

The key recommendations we make relate to a number of vital areas. One relates to the urgent need to find crea-tive ways to boost European public and private R&D in-vestment in order to boost EU competitiveness, create jobs and growth, and meet societal and environmental needs. Another key recommendation relates to the need to enhance the Union’s international co-operation in the ICT field with key emerging players, such as China, India and Brazil.

Huawei welcomes the emergence of a single European patent and EU efforts to promote e-procurement, both of which will be powerful tools for boosting innovation. However, as outlined later in this document, the EU’s pat-enting and procurement policies still need some further improvement if they are truly to bolster Europe’s innova-tive potential.

Europe also needs to ensure that its policies to promote superfast broadband are achieved in a way that bridg-es the “digital divide” (see box). In addition, the EU can catch up in the cloud computing stakes by developing a conducive regulatory environment and protect its huge

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FOREWORD

investment in e-commerce by effectively combating cybercrime.

In this paper, we introduce Huawei, our European re-search and innovation activities and successes, Huawei position in the EU research configuration, what the com-pany can bring to the European R&D stakeholders, how we can serve European ICT policy and our vision for how EU policy can be shaped for a better future.

At Huawei, we believe that the ICT industry will face its own flood – but instead of water, it will be a flood of data. This digital deluge will penetrate every corner of hu-man society, but unlike a tsunami, it will never recede. Instead, if managed properly, it will offer opportunities as wide and deep as the Pacific Ocean. And to prepare for this change, which will be on a par with the Industrial Revolution, Huawei has developed what we call the “Pacific-like pipe strategy”.

Mind the global gap

The digital divide, i.e. the gap between the haves and have-nots in terms of access to ICTs, is a problem dogging society, especially in the developing world. As a responsible global citizen, Huawei has been working hard to help bridge this gap. In addition to providing affordable and innovative solutions, the company has been supporting numerous initiatives around the globe which target vulnerable and digitally marginalised groups.

For example, Huawei supplies equipment to training centres and universities in developing countries, including India, Indonesia, Bangladesh, Nigeria and Kenya. In addition, Huawei is also a member of the Broadband Commission for Digital Development, a UNESCO-backed initiative to promote broadband deployment in developing nations.

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Eu rEsEarch landscapE

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Huawei – Connecting the world

Huawei is one of the world’s largest telecommunications equipment maker and a leading global ICT solutions provid-er. Although it may not yet be a household name in Europe, Huawei enjoys a household presence, with its products and solutions serving a third of the world’s population in 140 countries.

A private company owned by its employees, Huawei focuses on three core businesses: integrated telecommunications networks for telecoms operators, consumer products and services, as well as vertical solutions, including consulting services, for enterprise customers.

Set up in 1988, Huawei currently employs 150,000 peo-ple and registered revenues of over €25 billion in 2012. The company serves 45 of the world’s top 50 telecoms operators, including a number of leading European opera-tors, such as BT, Vodafone, France Telecom, T-Mobile and Portugal Telecom. At the end of 2012, the company also became the world’s third-largest manufacturer of smart-phones, according to leading industry analysts.

Huawei’s rapid growth and meteoric success can be traced to its far-sighted vision, customer-centred core values, and highly effective business model. At a time when people have grown to expect to connect seamlessly wherever they are and whenever they want to, Huawei has risen to this

challenge by embracing an overarching vision: “enriching life through communications”.

To achieve this vision, Huawei has placed the customer right at the heart of its business, seeking at every juncture to create maximum value for its clients. In addition to putting the customer first, Huawei’s core values revolve around dedication, striving for continuous improvement, innovation, integrity, teamwork and strategic thinking.

Non-stop innovation

As a reflection of Huawei’s constant quest for solutions, the company channels much of its resources into research and development. Propelled by the conviction that innovation is the only way to create growth and overcome sluggish economies, nearly half the company’s global workforce, about 70,000 workers, are employed in R&D. At a time when many corporations are cutting back on their research expenditure, Huawei invested nearly €3 billion in R&D in 2011, and nearly €12.5 billion over the past decade.

Huawei’s research activities are carried out globally in 16 R&D centres and 28 joint innovation centres with top car-riers which transform leading technologies into competitive advantages and business success for our customers.

For a quarter of a century, Huawei has been delivering on its commitment to enrich life through communications by developing cutting-edge technologies and tailored solutions.

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INTRODUCTION AND BACKGROUND

And this investment in the future has paid off handsomely for the company. As of 31 December, 2012, Huawei had filed a to-tal of 41,948 patent applications in China, 12,453 PCT patent applications and 14,494 patent applications outside of China. A total of 30,240 patent applications had been granted.

Setting the standard

However, creating new knowledge is not enough: setting up effective standards to provide market players with an even playing field and to facilitate innovation is also a vital component of Huawei’s work. In that regard, the company supports mainstream international standards and con-tributes to the formulation of such standards. As of 31 December, 2012, Huawei had joined around 150 standards

organisations and held more than 180 positions. In 2012, Huawei filed over 5,000 standards proposals in total.

Huawei’s performance over the years has garnered global recognition, in the form of numerous awards and prizes. In 2011 alone, the firm was awarded six top Long-Term Evolution (LTE) awards from around the globe. Huawei was also recently ranked the fifth most innovative company in the world.

Huawei has also been ranked by Forbes as one of the world’s most respected corporations, was recently included in BusinessWeek’s first-ever list of the world’s most influen-tial companies and The Economist bestowed it a Corporate Use of Innovation Award.

‘Innovated’ in China

In Europe and the West, “Made in China” is today associated with low-cost, labour-intensive industries, or as an outsourcing destination for products and technologies created elsewhere but produced in China.

However, it was not always this way, and China was once associated around the world with luxury products, such as silk, and cutting-edge technology. In fact, many of the inventions that revolutionised human civilisation were created in China, including the so-called “Four Great Inventions”: papermaking, printing (both block and movable type), the compass and gunpowder.

After a period of relative decline, China is regaining its status as a global innovator as its rapidly growing economy continues to climb up the value chain – and Huawei is among the companies leading the charge in the ICT sector.

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At the heart of European innovation

The EU has long been an innovation powerhouse in the ICT sector as reflected in the fact that the world’s first general-purpose computers, the “Turing machines”, were invented here as was the game-changing World Wide Web. And despite certain challenges and growing global competition, from both established and emerging rivals, Europe contin-ues to hold its own.

Outside China, Europe is Huawei’s home away from home. The company’s commitment to the EU is reflected in its large and rapidly expanding European research network. Headquartered in Munich, Huawei’s European Research Centre (ERC) runs 13 sites in Germany, Sweden, Italy, France, Belgium, the UK, Ireland and Finland, as well as five joint innovation centres.

Recognising Europe’s important leading position in the global ICT market, Huawei has invested heavily in R&D in the European Union and is striving to become an integral and valued player in the European ICT field.

Sweden: microwave, base station, mobile system design, algorithm/IRF design, chipset design, terminal chipset design

United Kingdom: optoelectronics

Germany: standard, energy, MBB solution, antenna, software platform, optical, future network research

Belgium: carrier software

Ireland: next generation customer experience management product SmartCare®

France: standard

Finland: mobile devices

Italy: microwave, optoelectronics

Huawei R&D sites in the European Union

FRANCE

IRELAND

GERMANY

ITALY

SWEDENFINLAND

BEL.

UNITED KINGDOM

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HUAWEI’S EUROPEAN OPERATIONS

From a starting base of around 50 experts in 2007, Huawei’s European research network now boasts a team of more than 750 researchers. Huawei invests €137 million in its European R&D operations, and the ERC has experienced an average annual increase in its budget of an impressive 24% since 2007. And given Huawei’s expressed commitment to Europe, this investment is set to continue and grow.

The ERC is a fundamental technologies research institute that performs a wide spectrum of basic and applied research. In the spirit of collaboration promoted by the EU in its various research programmes and policies, Huawei employs a number of co-operative mechanisms in its European R&D activities. These include strategic partnerships to embark on national or EU-backed research projects with our client and bilateral projects with a single key partner.

Jan 2013

Dec 2012 Establishment of Finland and Ireland branches

Establishment of UK Branch

Establishment of Nuremberg Branch

Establishment of Belgium Branch

Establishment of Gothenburg Branch

Establishment of Milan Branch

Establishment of Bonn Centre

Establishment in Stockholm

Total People in Sweden 50+

Major Movement from Bonn to Munich

Total People reaches 550

Total people reaches 350

Jan 2012

Sept 2011

Jun 2011

Apr 2010

Apr 2009Mar 2009

Dec 2008

Jun 2008

Mar 2008

Dec 2007

2000

Total people exceeds 750+

Total R&DInvestements

CAGR: 24%

CollaborationInvestements

CAGR: 40%

2008 2006 2007 2008 2009 2010 2011 20122009 2010 2011 2012

137M€

14M€

114M€

12M€

6M€71M€

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Collaboration, the key to success

Since 2010, Huawei’s ERC has collaborated with more than 120 top industry experts and has built more than 10 expert networks. We have also established contacts with more than 200 academic partners in Europe and financed over 100 research and innovation projects. In addition, the ERC has been involved in some ten EU-backed col-laborative projects in the context of the Union’s Seventh Framework Programme (FP7, 2007-2013).

Although many people tend to think of ICT as a computer-driven sector, it is ultimately only as good as the human tal-ent behind the machines. That is why the ERC invests heavily in seeking out, acquiring and developing the best European talent through post-graduate and post-doc internships, scholarships and awards, and special Huawei chairs.

The ERC focuses on a number of priority research areas, such as optical electronics, cloud computing, engineering, procedure optimisation, multimedia and future networks, as well as application software architecture, energy technology,

antenna technology, innovation design, media technology, software and microwave technology.

Excellence in action

Each of Huawei’s 13 research sites in Europe is a centre of excellence in its own right and conducts leading-edge R&D (see map above). To give you a flavour of the frontiers in R&D Huawei is exploring in Europe, we profile a few of our centres below.

Huawei’s Ipswich facility in the UK, which has a team of 60 research engineers and scientists, focuses its efforts on de-veloping integrated opto-electronic chips – based mainly on Indium Phosphide compound semiconductors and silica-on-silicon planar waveguides – which are expected to enable future terabit-scale communication systems.

Although many users do not realise it, modern telecommuni-cations is power hungry. Despite advances in energy efficien-cy, our insatiable hunger for data-rich content means that the ICT sector currently represents some 8% of the EU’s electricity

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consumption and almost 2% of its carbon footprint, accord-ing to a recent Europe-wide study.

If this trend continues, it has potentially serious envi-ronmental and economic consequences. At Huawei’s Energy Technology Research Centre in Nuremberg, Germany, some of Europe’s most resourceful minds are seeking more efficient energy solutions for telecoms networks. In the longer term, these solutions will in-clude solar energy.

Key components in the ability of a telecoms network to communicate are the base station antennas which, because they were long overlooked, have become a sort of Achilles’ heel for many networks.

Huawei’s Antenna Centre of Competence in Munich, Germany, has marshalled its resources to optimise this key el-ement in the performance of radio networks, including through the development of “smart antennas”, such as Multiple Input Multiple Output (MIMO) technologies. The team recently con-ceived the world’s slimmest 4xMIMO base station antenna cov-ering the frequency bands LTE700 to LTE2600 MHz.

In addition, Huawei’s optical research team in Munich, Germany, is working hard to boost the capacity of fibre-optics networks to handle the massive expected growth in traffic, while the Microwave Competence Centre in Milan, Italy, is creating innovative and advanced product solutions to en-able wireless transmission networks to meet the growing de-mands of high-end 3G and 4G mobile broadband networks.

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The future is now

One major challenge facing Europe which the EU has been working to address in recent years is the need to boost Europe’s capacity to translate great ideas created by European research-ers into useful products for society and industry.

Huawei is also tackling this challenge head on with its Application Software Architecture Research Department in Brussels, Belgium, whose job is to downstream innovative ideas, technologies or concepts into future software prod-ucts. The department acts as a bridge between academia and industry, providing a fertile multidisciplinary environ-ment for the rapid and successful commercialisation of research.

People are rapidly moving towards new ways of interact-ing and communicating with one another, anywhere, at any time, using a multitude of devices. In addition, virtual and augmented reality, not to mention ambient intelligence, will be an integral part of our daily lives, as will the Internet of Things (IoT), in which billions of real-world locations and objects – at home, at work and in public – will have their online equivalent.

These evolutions will have enormous ramifications for tel-ecommunications networks. Future carrier networks must be able to provide seamless, high-volume connectivity, and allow users to store data and perform complex analytics in an open cloud ecosystem.

In the years up to 2020 and beyond, the world will become a place where virtual and augmented reality will be an in-tegral part of our daily lives. Future network technologies will connect people, things, processes and any source of rel-evant information. Future carrier networks will provide users with seamless, full, broadband connectivity. It will become possible to perform large data analytics in an open cloud ecosystem with reliable and secure hardware and software, as well as applications built for the “prosumer” (i.e., the pro-fessional consumer). Energy consumption will also be opti-mised in any part of the physical and virtual infrastructures.

Huawei is preparing for this tomorrow, today. Its Future Network Technologies Group, based in Munich, Germany, targets the next generation of network and information sys-tems that will help guide European business, government and society towards this compelling vision.

The research group was established in 2008 and currently brings together competencies in future mobile communica-tions, cloud computing, and internet technologies. Its areas of research include network topologies, radio links, radio re-sources management, as well as multi-node and spectrum usage techniques. Furthermore, the centre looks into other fundamental networking, security and scalability aspects of future networks, in order to bring connectivity to billions of devices while providing support for the diverse requirements

of next-generation services. Topics of interest include: Information-Centric Networking (ICN), Software-Defined Networking (SDN), semantic networking, cloud networking, virtualisation, autonomic networking, security and privacy, enforcement of Service-Level Agreements (SLA), inter-opera-bility of heterogeneous cloud solutions and cloud federation, as well as networking and cross-domain middleware for the Internet of Things (IoT).

The Future Network Technologies group works closely with leading global players – operators, other telecom equipment manufacturers and public/private institutions – on bilateral and/or projects co-funded by national governments or the EU. In Europe, it is also an active member of the European Telecommunications Network Operators’ Association’s (ETNO) Research and Innovation Working Group (RESI), DigitalEurope and Net!Works.

The group has published many high quality papers and ar-ticles, contributed to the publication of several books, and it is the holder of a number of international patents. In ad-dition, the team has been a member of several Institute of Electrical and Electronics Engineers (IEEE) technical pro-gramme committees for key international conferences, jour-nals, magazines and workshops, especially in the area of wireless mobile systems.

The ERC Media Technology team was founded in the same year. The team has participated in all recent major stand-ard developments in audio and video (3GPP, ITU-T, MPEG, and IETF). Those contributions have, in particular, led to the extension of the most deployed speech codecs with low bit rate stereo support in ITU-T (G.711 Annex F and G.722 Annex D) and the adaptation of stereoscopic 3D video in 3GPP services since Release 11 (TS 26.140, TS 26.234, TS 26.244, TS 26.247, TS 26.346).

The team also contributes to the development of innovative solutions for Huawei products. The most recent achievement relates to the deployment of stereo recording techology as one of the key feature of the Ascend D2 Smartphone, which was demonstrated at the 2013 edition of the International Consumer Electronics Show (CES 2013). With more than 50 patents filed since 2008, the team has helped to position Huawei among the leaders in media technologies. Members of the team have also published numerous articles for the most important international conferences and journals.

The Media Technology team is now focusing on the develop-ment of advanced 3D audio and 3D video technologies, from capture to rendering, with the aim of offering a more natural and immersive experience to the end users. The group investi-gates microphone arrays, headphones and multi-loudspeakers rendering, camera arrays, stereoscopic and multi-view technol-ogies for mobile terminals, augmented reality and innovative 3D vision applications. The Media Technology team has built strong collaborations with universities, research institutes and SMEs in the 3D media domain.

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Educating future networks

The internet’s exponential growth has put massive strain on the world’s telecoms networks, with 97% of available bandwidth taken up by the World Wide Web. But with hundreds of millions of new web users readying themselves to come online, and a kaleidoscope of new and demanding applications related to the Future Internet, something needs to be done.

Huawei Technologies in Dusseldorf, Germany, was involved in an EU-backed project, CHRON, which sought to find a smart way out of this predicament through the development of self-learning, self-aware and self-managing networks.

Known as a “cognitive network”, this architecture is able to detect the current conditions of data traffic, adapt to them and then learn from these adaptations to enhance future performance. Early tests have shown that cognitive networks not only outperform their conventional counterparts but also do so more economically and with a smaller environmental footprint – which is good news for telecoms operators and for the environment.

Huawei has also been involved in a number of related projects which have worked to develop energy-efficient optical networks. An example of that is the EU-backed CONSERN project which developed a purpose-driven, energy-aware, self-growing wireless network.

CHRON: http://www.ict-chron.eu CONSERN: http://kandalf.di.uoa.gr/consern/

Fleshing out the bare bones of collaboration

Europe enjoys a world-leading position in the area of optical future networks. However, this position is being challenged both by growing global competition and the fragmentation of European research efforts.

In a bid to address these two challenges, Huawei’s ERC got involved in the EU-funded BONE project which promoted greater co-operation and collaboration between European research bodies involved in this field through the creation and developed of virtual centres of excellence.

These virtual centres co-ordinate the research activities of the nearly 50 BONE partners in such a way that coherent solutions can be developed. Each centre of excellence focuses on a particular issue or theme of interest to the network.

In addition, BONE facilitates the exchange of research talent and knowledge between its members.

BONE: http://ww.ict-bone.eu/

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http://ww.ict-bone.eu/

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Europe 2020 is the European Union’s blueprint for the cur-rent decade to promote recovery and growth in Europe that is smart, sustainable and inclusive. It balances the needs of the economy and society against those of the environ-ment, as well as the needs of employees against those of employers.

In the framework of Europe 2020, the EU has set itself am-bitious objectives in the areas of employment, innovation, education, social inclusion and climate/energy.

To achieve these goals, the EU has launched seven flagship initiatives: the Digital Agenda for Europe, the Innovation Union, Youth on the Move, a Resource-Efficient Europe, an Industrial Policy for the Globalisation Era, the Agenda for New Skills and Jobs, and the European Platform Against Poverty.

Given their ubiquitous nature, ICTs can serve just about every component of the Europe 2020 strategy. This is dem-onstrated in the EU’s commitment to providing a legal framework that inspires investment in an open and com-petitive high-speed internet infrastructure worthy of the title “Future Internet”, and to champion broadband internet access for all.

Dynamo for growth

The ICT sector is a significant component of the EU econo-my in its own right and accounts for a large percentage of the Union’s GDP (5.6%) and employment (5.3%) – that is not to mention the ICT employed by other sectors. In addi-tion, the European Commission estimates that investments in ICTs have been responsible for around half of the EU’s productivity growth in recent years.

This is because, as general purpose technologies, ICTs boost productivity and performance across all sectors. Moreover, as Huawei’s own activities clearly demonstrate, the ICT sector is R&D-intensive, accounting for around a quarter of EU invest-ment in research.

In brief, ICTs have a catalytic effect in three key areas: pro-ductivity and innovation, the modernisation of public servic-es, as well as facilitating advances in science and technology (both in the ICT sector and by enabling co-operation and access to information).

It should then come as no surprise that ICTs are an inte-gral component of numerous EU treaties, policies and pro-grammes, from the landmark Lisbon Treaty to the Union’s framework programmes (FPs) for research.

To understand how Huawei can best serve Europe’s research priorities, it is important first to outline briefly the EU’s research policies and how ICTs can contribute to the Union’s goals of promoting smart, sustainable and inclusive recovery and growth.

ICTs – Smart, green and inclusive innovation

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EU RESEARCH lANDSCAPE

Investing in ICT

In Europe, investment in ICT comes from both the private and public sectors. Private research is financed and carried out by industry, from large corporations to small start-ups. The EU plays a number of key roles in this regard, by encouraging the private sector to invest more and by helping private-sector players pool their resources and expertise to address common challenges. These mechanisms include European Technology Platforms and Joint Technology Initiatives.

The EU and its member states fund ICT research through a variety of national and European programmes. The main EU-level mechanisms for funding R&D in this field are the Union’s FPs. The current FP7, which is due to end in 2013,

earmarked €9.1 billion for ICTs over its seven-year lifespan, making it the largest single theme to receive funding.

The next FP, called Horizon 2020, will fund EU-backed re-search between 2014 and 2020. The ICT priorities high-lighted in the Horizon 2020 blueprint are, in Huawei’s view, ambitious and appropriate. Huawei advocates that the European Union should focus attention on a number of promising areas, including 5G radio-access technologies; cutting-edge technologies for orchestrating the virtual re-sources running network services, functions and apps; 3D audio, 3D video and augmented reality for a truly immer-sive experience; as well as cross-domain middleware for the Internet of Things which seamlessly bridges the digital and physical worlds.

Co-operation without borders

Despite its competitiveness and undoubted strength, Europe’s ICT sector has been facing a number of challenges in recent years: the financial and economic crises of 2008/9, sluggish recovery and growing competition from emerging powers, mainly in Latin America and Asia. For instance, the number of ICT patent priority applications by China-based inventors overtook the EU in 2004 and the United States in 2006. In 2005, China became the world’s second-largest investor in R&D.

Some Europeans are bound to regard this changing global reality as a threat, but others see myriad opportunities. This has been articulated in a coherent EU strategy set out for the Horizon 2020 programme to intensify international co-operation activities with key partners outside Europe “on equal terms and in programmes and activities of high mutual interest”.

Just as the United States and Europe have traditionally been both competitors and collaborators in the ICT sector, the same is beginning to occur between the EU and China, as reflected in the joint science and technology agreement and the fact that China is one of the main third-country partners in the EU’s research programmes. Under FP7, China ranked as the third-largest third-country participant, with Chinese research teams sharing more than €26 million in EU funding. European researchers and research bodies can also apply for financing from some Chinese public funding programmes.

Huawei, which has become a major R&D player in both China and Europe, is perfectly positioned to act as a co-operation bridge between the two.

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At Huawei, we have sought and will continue to seek to establish ourselves within the bedrock of the science and technology landscape in Europe and leverage our expertise as a legitimate contributor to the policy-making process, as well as to be an instrumental partner in supporting the priorities of the European Union. Furthermore, we will ac-tively participate in important dialogues with key institu-tions and decision-makers, thereby positioning ourselves as a key player and thought leader within the research and innovation environment in Europe.

Huawei can serve most of the ICT priorities of the Europe 2020 strategy and the Horizon 2020 programme.

Broadband for all

Europe 2020’s Digital Agenda for Europe advocates a switch to the next generation of connectivity because it will provide a shot in the arm to GDP growth and speed up much-needed job creation. Superfast broadband will also fundamentally alter how healthcare, education and other public services are delivered. In addition, superfast broad-band will shape the working environment of the future, in which a majority is expected to be mobile, home-based or working from a much smaller number of office hubs. Through its various research efforts and partnerships with top telecoms providers, Huawei is well-placed to help realise this vision.

However, a vital component of this switchover is ensuring that no citizen is left behind by helping people to acquire the necessary skills, knowledge and mentality to adapt to this changing environment. Besides a skills check, the Digital Agenda must continue to emphasise inclusiveness.

In this respect, The Connecting Europe Facility, which sets aside some €9.2 billion to support investment in fast and very fast broadband networks and pan-European digital services, is a timely and sensible initiative. Huawei’s own experiences in bridging the digital divide in developing countries can provide a good practice model for such endeavours.

The ‘cloud’

Cloud computing – using software and hardware over a net-work rather than on a local device or network – is growing in popularity worldwide. Whilst Asia and the United States are out in front of Europe in their adoption of cloud computing and level of services provided, Huawei recognises the EU’s latest Cloud Computing Strategy as a great leap forward for the European ICT sector, not to mention the end-user.

Huawei is primed to lend its considerable technical expertise in cloud computing to help the EU implement its strategy. We hold 685 cloud-computing patents in China, 226 in Europe, and 107 in the United States. Huawei has played a major role in standards development in cloud computing

Huawei – A valuable partner in Europe

Huawei has played and can continue to play an important role in helping bring the European Union closer to its ICT objectives.

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HUAWEI’S VAlUE-ADDED

and is a member of the Distributed Management Task Force (DMTF).

A major challenge hindering the take-up of cloud comput-ing in Europe is trust. A fundamental barrier experienced by users of cloud services has been the lack of a clear regula-tory framework. This has left a number of companies con-cerned about the safety of locating their information in data centres controlled by third parties.

In response, the European Commission has promised to identify and disseminate best practices relating to model contract terms. This initiative, Huwaei believes, will build trust throughout Europe and correct a weak spot in the cloud computing landscape.

Combating cybercrime

Today, millions of Europeans conduct their business online, from ordering the latest gadget to filing their tax returns. Over a third of the EU’s half a billion or so citizens bank online, and an estimated €6 trillion changes hands globally each year in e-commerce.

The fast evolving nature of the European ICT environment and the sheer volume of data transmitted electronically bring massive benefits as well as risks. Protecting citizens’ rights and strengthening business confidence by ensuring privacy and security are priorities for Huawei.

Cyber security is a common challenge that all societies in the world must confront together. The global supply chain that is shared by the ICT industry, the strong interdependencies within this chain, and the diversity of vendors from different regions, pose a significant challenge for managing cyber se-curity threats. Additionally, the lack of trust amongst stake-holders in the field of cyber security makes it difficult to find an effective global solution because their attention is often diverted from the real issues on the table.

The European Union recently launched its plans to in-crease safety and security in the networked society for its citizens. It also established a European Cybercrime Centre. While Huawei warmly welcomes these important milestones for cyber security in Europe, it feels the EU can do more to expand its work with global stakeholders in order to strengthen global risk management. The EU currently synchronises its activities with the United States, but Huawei would favour a truly global approach.

For its part, Huawei is ready to contribute to increasing Europe’s cyber security by working with the key stakehold-ers; ENISA, the telecoms operators and our industry peers. In addition, Huawei emphasises the vital need for an ef-fective communications campaign to raise public awareness of the various online threats and what citizens can do to protect themselves.

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Huawei’s vision 2020 and beyond

Europe urgently needs to address the question of R&D fi-nancing. Since 2002, the EU, member states and European industry have together been striving to marshal 3% of the Union’s combined GDP to finance research and innovation activities which would, in turn, help Europe to become a leading knowledge-based economy and society.

Despite some successes, this target has not yet been met, and combined R&D investment still hovers around the 2% mark, although the EU itself has increased its investment substantially (by 25% in real terms between 2000 and 2008) and some member states (Sweden, Denmark, Germany and Finland) invest 3% of their GDP or substantially more.

Despite the economic slowdown, the EU has admirably re-iterated its commitment to the 3% milestone, which has become one of Europe 2020’s key targets. Despite this com-mitment, member states were unable to agree to the ambi-tious proposed budget for the Horizon 2020 programme of €80 billion, which, pending debate in the European Parliament, has dropped nearly €10 billion to €70.96 billion, according to press reports.

Although we understand the reasons behind this decline, Huawei regrets this decision and reminds the EU that history has proven that in times of economic crisis, innovation is the best policy, as reflected in the fact that the 1930s saw more product innovations than any other decade since the mid-19th century.

The EU needs to recognise that the ICT field is a key enabler for many other businesses and, as such, it should benefit not only from considerable portions of EU research funds but also funding from other EU programmes – such as the Structural Funds and the Common Agricultural Policy.

But it is not just the responsibility of governments; the pri-vate sector has a major role to play. In fact, statistics reveal that the differences in R&D intensity between Europe and its main rivals are largely down to differences in investments by businesses. Research conducted by enterprises in Europe was equivalent to 1.23% of the EU’s GDP in 2010, com-pared with 2.7% in Japan and just over 2% in the United States, the EU’s statistical service, Eurostat, reports.

Huawei, which invests well over 10% of its earnings in R&D, fully appreciates the importance of private research investment, and is committed to continue investing more in European research.

From innovation to patents

Europe 2020’s Innovation Union aims to improve frame-work conditions for industry to generate new ideas and products. This includes an area that has long been viewed as an essential incentive for, and protector of, innovation: intellectual property (IP). The Innovation Union is commit-ted to implementing the single EU patent and creating a specialised patent court, modernising the framework of

Huawei believes that the EU can maintain its position as a science and technology powerhouse, not to mention boost its innovative potential. But urgent action is required in a number of vital areas.

27

HUAWEI’S “VISION 2020”

copyright and trademarks, improving access to IP protec-tion, and accelerating the establishment of interoperable standards.

Huawei welcomes the decision of 25 member states, in December 2012, to draw a line under decades of debate and create, pending ratification by national parliaments, a single EU patent. Expected to come into force in 2014, the new system promises to be both cheaper and simpler for patent applicants, because it removes the need for transla-tion (except to English, French and German) and national validation. According to European Commission estimates, the single patent will reduce the cost of a typical patent application and approval will be cut from around €36,000 to just €5,000.

The EU also plans to establish a Unified Patent Court (UPC) as a one-stop shop for patent-related litigation, thereby simplifying legal procedures and avoiding potential con-flicts between the rulings of national courts. Huawei also welcomes the upcoming creation of the UPC, but urges member states to clarify the exact jurisdiction of the European Court of Justice in patent-related matters.

Demand-driven innovation

Necessity is the mother of invention. In the business world, this adage could not be closer to the truth. What the cus-tomer wants, the customer shall get – and the company that can creatively satisfy its customers’ needs thrives. The image of inventors dreaming up ideas in a lab or workshop is potent but the reality is that much innovation is actually demand-driven.

Recognising this truth and the fact that Europe’s biggest “customer” is the public sector, the EU has, in recent years, promoted procurement as an instrument for promoting and

rewarding innovation. The overall public procurement mar-ket is estimated to be worth in excess of €2.4 trillion in the EU and, if marshalled correctly, this can buy an awful lot of innovation.

To level the playing field between larger and smaller enter-prises and to enhance the access of bidders across Europe to tenders in other member states, the EU has been striv-ing to roll out electronic procurement on a wide scale. Nevertheless, e-procurement is only used in 5-10% of tenders issued across the Union. By comparison, a full on-line procurement market place has already been achieved in South Korea, which generated savings of $4.5 billion annually by 2007.

To enhance take-up, the European Commission put forward an ambitious proposal to modernise the EU’s public pro-curement legal framework. One objective of this proposal is to achieve a full transition to e-procurement by mid-2016.

The responses to the 2010 Green Paper on e-procurement identified two main reasons for the slow take-up: inertia to change and market fragmentation along national, re-gional and linguistic lines. The Commission proposes to tackle this issue through the sharing of good practice and through supporting (technically and financially) the devel-opment of e-procurement infrastructures.

Huawei believes that such efforts and investments will be worthwhile and will pay handsome dividends for all con-cerned. Not only does e-procurement slash the costs of ten-dering, it also boosts participation and transparency. One important issue for policy-makers is implementation cost. The new Welsh e-procurement system, XchangeWales, pro-vides a positive example in this regard. It recouped its invest-ment costs in just one year, and went on to deliver tens of millions of euros in savings within three years.


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More information and sources

• Huawei – http://www.huawei.com/en/

• Europe 2020 – http://ec.europa.eu/europe2020/index_en.htm

• The Innovation Union – http://ec.europa.eu/research/innovation-union/index_en.cfm

• Horizon 2020 – http://ec.europa.eu/research/horizon2020

• The EU’s international strategy for research and innovation – http://ec.europa.eu/research/iscp/index.cfm?pg=strategy

• Fact sheet on China’s participation in FP7 – http://ec.europa.eu/research/iscp/pdf/china_comm.pdf#view=fit&pagemode=none

• More information on the EU’s 3% target – http://ec.europa.eu/research/era/areas/investing/investing_research_en.htm

• The Innovation Union Scoreboard – http://ec.europa.eu/enterprise/policies/innovation/files/ius-2011_en.pdf

• Eurostat statistics on R&D investment in Europe – http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/R_%26_D_expenditure

• EU’s Multiannual Financial Framework, including Horizon 2020 and Council conclusions on budget – http://europa.eu/newsroom/highlights/multiannual-financial-framework-2014-2020/index_en.htm and http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/135344.pdf#page=46

• The single EU patent – http://ec.europa.eu/internal_market/indprop/patent/index_en.htm

• European Cybercrime Centre – https://www.europol.europa.eu/ec3

31

http://www.huawei.com/en/

http://ec.europa.eu/europe2020/index_en.htm

http://ec.europa.eu/research/innovation-union/index_en.cfm

http://ec.europa.eu/research/horizon2020

http://ec.europa.eu/research/iscp/index.cfm%3Fpg%3Dstrategy

http://ec.europa.eu/research/iscp/index.cfm%3Fpg%3Dstrategy

http://ec.europa.eu/research/iscp/pdf/china_comm.pdf#view=fit&pagemode=none

http://ec.europa.eu/research/iscp/pdf/china_comm.pdf#view=fit&pagemode=none

http://ec.europa.eu/research/era/areas/investing/investing_research_en.htm

http://ec.europa.eu/research/era/areas/investing/investing_research_en.htm

http://ec.europa.eu/enterprise/policies/innovation/files/ius-2011_en.pdf

http://ec.europa.eu/enterprise/policies/innovation/files/ius-2011_en.pdf

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/R_%2526_D_expenditure

http://europa.eu/newsroom/highlights/multiannual-financial-framework-2014-2020/index_en.htm

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/135344.pdf%23page%3D46

http://ec.europa.eu/internal_market/indprop/patent/index_en.htm

https://www.europol.europa.eu/ec3

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