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Europe struggles with Huawei conundrum

by Jonathan Adams
Huawei

Though no EU member state has imposed an outright ban on Huawei yet, this has not eliminate the risk for Huawei in terms of individual markets in the future

As Britain decides on whether to allow Huawei to supply equipment for 5G mobile networks, concerns are echoed across other European capitals, debating the security implications of reliance on Chinese technology.

Even as Britain prepares to leave the EU on January 31, risks in 5G networks are still being addressed.

In Germany, Chancellor Angela Merkel’s preference for applying the same rules to all equipment vendors faces growing resistance from lawmakers in her own party, who are demanding an outright ban on Huawei.

The demand for an outright ban on Huawei is being opposed by Europe’s leading telecom operators, all of whom buy their 5G equipment from Huawei. However, they are removing Huawei technology from their “core” network. The core is more sensitive than the peripheral radio network as it routes traffic and manages data.

Reasons behind the Huawei conundrum

Germany

Lawmakers across party lines are opposing Merkel as they agree with Donald Trump that Huawei can’t be trusted because it is beholden to the Chinese government. Though, Huawei denies this.

Merkel has called for a time-out on the domestic debate ahead of a March EU summit, reinforcing a feedback loop that Brussels sources say has already slowed efforts to reach a bloc-wide consensus and delayed the 5G framework, dubbed the toolbox.

The stand taken by Merkel and senior aides may have been influenced by fears of a trade backlash from China as the country’s powerful car industry has expressed concerns that such a step will provoke trade retaliation from China. China is the biggest market for the German car industry.

Leading telecom operators such as Deutsche Telekom, Vodafone and Telefonica are all Huawei clients and they warn that replacing its kit could cost billions of euros, on top of heavy outlays for German 5G spectrum at auction last year.

A ban on Huawei will mean an opportunity for its European competitors such as Ericsson and Nokia. At present, Huawei leads the global telecoms equipment market with a 28% share, according to U.S. consultancy Dell’Oro. Nokia is second on 16% and Ericsson third with 13%. Its share is higher in Europe and it is banned in the United States.

The Toolbox

Meanwhile, the toolbox will create a framework to analyze and address network security but its scope is restricted to making recommendations as the EU considers security policy to be a matter for national governments to decide.

Though there will not be an outright ban, European Commissioner Thierry Breton has clearly stated that that the EU will assert its status as a sovereign space when it comes to telecoms networks.

EU countries should assess the risk profile of suppliers on a national or EU level and apply restrictions to high-risk suppliers including necessary exclusions to effectively mitigate risks for key assets, the draft document says.

France

France’s partly state owned and leading telecom operator, Orange, does not use Huawei for its domestic network, but it relies on Huawei in Spain and Poland.

Rivals Bouygues Telecom and Altice Europe’s SFR are both Huawei customers, which raises potential uncertainty as France prepares to sell 5G spectrum early this year.

Overall, across the EU, the approach towards Huawei varies, with some member states welcoming the use of the multinational’s technology in their 5G network, while some others are sceptical.

However, no EU member state has imposed an outright ban on Huawei yet.

While there has been little debate in Spain over the potential risks that Huawei may pose, others such as Hungary have welcomed Huawei.

The Czech Republic is sceptic as the country’s cyber-security watchdog has warned all critical network companies, identifying risks of equipment from Chinese vendors Huawei and the smaller ZTE.

Elsewhere, the Netherlands and Italy have talked about retroactive mechanisms for removing Chinese equipment should it be found wanting. Poland might impose stricter security requirements on elements of the network core that route traffic and handle sensitive information.

Though, there may not be a consensus on an outright ban on Huawei across the EU, risks for Huawei remain in terms of individual markets in the future.

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