Point of View

Telco leaders must comply with new UK 5G rules and ensure their partner eco-system isn’t over-reliant on Huawei

March 5, 2020

5G is well on the way to global deployment—but the Huawei question remains. Previous HFS work has outlined the advantages and disadvantages of 5G and the possible issues of collaborating with Huawei. Despite the potential security threats that come from faster speeds and cooperating with an organization that has been deemed unreliable by some, the United Kingdom released a statement detailing plans to cooperate with Huawei on 5G but, crucially, deny it access to core infrastructure.


The UK has confirmed it will cooperate with Huawei on 5G—the strict limitations of the agreement will mean significant disruption to the telco market


The United Kingdom has finally decided that it will cooperate with Huawei on the construction of its 5G network. The UK has outlined what the foreign secretary has called “one of the strongest regimes for telecoms security in the world.”


The government decision was made after a meeting by the national security council that involved senior ministers as well as senior intelligence figures and chiefs. The British intelligence service has consistently stuck to its guns, insisting that any risk from cooperating with Huawei can be limited and controlled. The meeting resulted in Huawei being allowed to supply up to 35% of the network’s peripheral equipment to the UK.


Huawei has been supplying equipment to the UK since 2003, and the UK’s intelligence agency GCHQ has kept a steady eye on the organization, subjecting it to regular review. The decision to only allow it to supply outlying infrastructure on the periphery (i.e., the pipes that relay or transport data with no access to the data itself) is a sensible security stance by the UK. The UK government and security services are aware of the security concerns, but operators found the affordability of the Chinese firm’s technology outweighed these concerns. As covered previously, there is still a frequently voiced fear that the Chinese government may look to leverage Huawei to spy on the UK.


In response to American opposition to dealing with the Chinese firm, the foreign secretary went on to give greater reassurance by clarifying that “we [the UK] know more about Huawei and the risks it poses than any other country in the world.” Of course, it’s important to bear in mind that the United States is in the middle of a significant trade war with the People’s Republic of China and has yet to provide significant evidence to support the suggestion that the Chinese firm is building back doors into its technology.


Huawei’s competitors can seize crucial territory in the 5G domain—they should be dominating the space that Huawei is restricted from


The key takeaway from Huawei’s limited future remit within the UK is its limit of only 35% involvement in outlying infrastructure and, importantly, the volume of traffic.


Huawei has been involved in British Telecom’s (BT) infrastructure since 2003, and organizations such as BT and Vodafone have established working relationships with the firm. The dilemma that organizations such as BT face is whether or not to continue a capped relationship while also being unclear of the future demand for 5G. Ultimately, BT could find itself wanting to grow while being unable to. In addition, it is going to find itself needing to unpick a complex web of technologies already in place to reduce its reliance on Huawei kit. Vodafone has already managed to form a relationship with Ericsson and uses it in London, which is likely to be at risk of high levels of 5G traffic, it is in a far better position to survive this ruling. BT currently depends on Huawei for 60% of its base stations at present.


It is time for Huawei’s opposition in the market to strike: the iron is hot, and Huawei is likely to be burnt. Ericsson and Nokia, which have faced a serious competitive threat from Huawei in the last decade, could make significant gains. Ericsson has already been chomping at the heels of rumors that Huawei technology is superior to its own and has stated that it has delivered the first commercial 5G network in Europe in Switzerland, and it is playing its part in three of the UK networks.


The Bottom Line: Huawei’s rivals, Ericsson and Nokia, have a huge opportunity here and will be scrambling to scavenge what they can from the UK market. It’s up to them to capitalize on this chance to push the Chinese supplier from the UK and provide an overall more trusted 5G network.


The bottom line is that the majority of the West still views Huawei as an untrustworthy organization. This plays into the hands of telecom providers such as Ericsson and Nokia, which have the opportunity to gain back some ground lost to Huawei in recent years—it is thought that the UK government would support an outright push of Huawei from the UK telecoms market. And beyond the UK, The European Union has issued similar guidance on risk-mitigating measures regarding cybersecurity of 5G networks. 

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