UK approves Huawei's restricted use in 5G networks, handing lifeline to Chinese telecoms giant

South China Morning Post Dipublikasikan 16.01, 28/01/2020
UK approves Huawei's restricted use in 5G networks, handing lifeline to Chinese telecoms giant

The UK government on Tuesday approved the limited use of Huawei Technologies equipment in the country's roll-out of 5G mobile infrastructure, opening the door to rival European telecommunications gear suppliers Ericsson and Nokia.

While that action imposes a cap on Huawei's market share in the UK, it throws a lifeline to the embattled Chinese telecoms giant amid the Trump administration's accusations that the company's equipment poses a national security threat.

It could also serve as a model for other European governments, including Germany, as they prepare to make similar decisions over their deployment of 5G " the next-generation mobile technology that will help power advances such as the industrial internet, autonomous driving and smart cities.

The UK government said in a statement that "high-risk vendors" would be excluded from the sensitive "core" parts of the country's 5G networks. It said there would a 35 per cent cap on these vendors' access to the non-sensitive parts of networks.

"We want world-class connectivity as soon as possible but this must not be at the expense of our national security," Nicky Morgan, the UK's Digital Secretary, said in the statement. "High-risk vendors never have been and never will be in our most sensitive networks."

That decision marks a reprieve for Huawei, which faced the prospect of a complete shutout in Europe had Washington got its way in blocking the company in the UK's 5G network market. The dispute over Huawei's next-generation mobile equipment is part of a broader trade and tech war between the US and China, which threatens to delay 5G network deployment around the world, disrupt global supply chains and split technology standards.

The logo and signage of Huawei Technologies, the world's largest telecommunications equipment supplier, are seen at the Chinese company's main UK offices in Reading, west of London, on April 29, 2019. Photo: Agence France-Presse

That decision marks a reprieve for Huawei, which faced the prospect of a complete shutout in Europe had Washington got its way in blocking the company in the UK's 5G network market. The dispute over Huawei's next-generation mobile equipment is part of a broader trade and tech war between the US and China, which threatens to delay 5G network deployment around the world, disrupt global supply chains and split technology standards.

"Huawei is reassured by the UK government's confirmation that we can continue working with our customers to keep the 5G roll-out on track," said Huawei vice-president Victor Zhang in a statement released after the UK government's decision. He said the evidence-based process will result in a "more advanced, more secure and more cost-effective telecoms infrastructure that is fit for the future".

The so-called noncore area in which Huawei can take part in the UK's 5G infrastructure buildout covers radio access network (RAN) gear, which consists mainly of mobile base stations that wirelessly connect mobile devices to the broader telecoms networks. RAN represents the volume business and largest segment of a mobile infrastructure roll-out, as multiple base stations must be installed to ensure full network coverage in every location.

"The use of only Huawei base stations, when the rest of the network equipment is provided by other vendors is not an uncommon model in the roll-out of a new communications network, and it would be quite normal for other jurisdictions to use multiple vendors," said Paul Haswell, a partner who advises technology companies at international law firm Pinsent Masons. "But the use of Huawei at any point in the construction and operation of a network flies in the face of US warnings regarding the use of Huawei technology, and is likely to lead to repercussions from the US."

Technicians of mobile network operator China Telecom install a 5G base station at a site near the Yellow River in Lanzhou, capital of Gansu province in Northwest China, on May 16, 2019. Photo: Reuters

US government officials have scoured Europe over the past year, urging the EU and its members to exclude Huawei from their mobile networks on national security grounds. Shenzhen-based Huawei, which repeatedly said it is a private company and not subject to Chinese state interference, has argued for consistent global network security standards that all companies should abide by.

"In spite of US allegations, there is still no compelling evidence that Huawei technology constitutes a malicious security threat," Haswell said. "Security risks so far have focused on poor coding issues with the underlying tech, rather than attempts to spy on customers."

He indicated that the UK's move to combine Chinese and European vendors for its 5G infrastructure "may be seen as an attempt to mitigate any concerns that Huawei tech could compromise the country's security".

German Chancellor Angela Merkel has asked her conservative lawmakers to wait until after a March European Union summit before taking a position on whether Huawei can take part in the roll-out of the country's 5G network, according to a Reuters report last week that cited sources involved in the talks.

Germany's telecoms network operators, which are all customers of Huawei, have warned that banning the Chinese supplier would add years of delays and billions of dollars in costs to launching 5G infrastructure.

Restricting a major 5G equipment supplier from taking part in a country's network buildout will increase total 5G investment costs by 16 per cent to 19 per cent, according to a Huawei-commissioned study published by Oxford Economics last month.

China, which has Huawei and ZTE Corp as its main telecoms equipment suppliers, has an aggressive roll-out plan for 5G infrastructure. Beijing knows that being first to reach massive scale with next-generation networks " which deliver up to 100 times faster data speeds than 4G networks, as well reduced latency and increased network capacity " could allow China to dominate in fields such as factory automation, robotics and autonomous driving.

Huawei has projected an 18 per cent jump in 2019 revenue to 850 billion yuan (US$122.5 billion), despite a bumpy year that saw the company added to the US trade blacklist.

"Despite concerted efforts by the US government to keep us down, we've made it out the other side and continue to create value for our customers," said Huawei rotating chairman Eric Xu in a New Year's message to employees.

Huawei's key business segments " consumer, carrier and enterprise " produced revenue of 220.8 billion yuan, 146.5 billion yuan and 31.6 billion yuan respectively in the first half of last year. Europe is Huawei's second-biggest geographical market after China.

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