Huawei warns ban would cause ‘huge damage’ to UK digital economy

Preparing itself for an onslaught from the UK national government that is widely expected to lead to its existing products and services removed from communications infrastructure across the country, Huawei is warning that ordering its technology to be removed from comms networks will come at a heavy cost, especially with regards to the country’s established timetable for 5G roll-out.

The appeal against a ban on Huawei technology came just over a month after the company began a campaign to emphasise the fundamental nature of its presence in the UK’s current communications infrastructure, which clocked up its 20^th anniversary at the end of June, and the role it can play in the expansion of 5G and full-fibre networks. And just as the birthday was being celebrated, Huawei revealed it had gained to build a research and development and manufacturing centre in the heart of the UK’s technology hub in Cambridge which would focus on the production of optoelectronics products.

The use of Huawei kit in the UK’s networks has been a political hot potato since July 2019, when in its Telecoms supply chain review report, the UK government asked the country’s National Cyber Security Council (NCSC) to consider issuing guidance to UK telecoms operators in relation to companies regarded as posing security and resilience risks to UK telecoms networks, with Chinese firms ZTE and Huawei commonly regarded as key examples.

After a long period of wrangling, rumours and high-stakes political lobbying, and much to the relief of the country’s telco community, the UK government decided in January 2020 not to follow the US and Australia in totally banning leading Chinese tech firms from supplying their equipment for the UK’s growing 5G infrastructure.

Instead, it decided that so-called high-risk suppliers such as Huawei should be excluded from all safety-related and safety-critical networks in critical national infrastructure; excluded from security-critical “core” functions, the sensitive part of the network; excluded from sensitive geographic locations, such as nuclear sites and military bases; and limited to a minority presence of no more than 35% in the access network, which connects devices and equipment to mobile phone masts.

Yet attacks have ramped up over the past few months, especially after the US renewed its ban on Huawei technology in American networks in addition to setting other limitations of the purchase of US technology, such as chipsets, regarding the nature of Huawei’s alleged connections with China’s security services.

In early June 2020, speaking to a House of Lords select committee, US senator Tom Cotton warned that the UK’s continued usage of Huawei in telecoms networks could not only threaten national defence but also potentially damage intelligence relations between the US and UK.

For the past few days, UK media outlets have been reporting that the UK government is set for a U-turn on its earlier decision and will ban Huawei totally from all parts of networks on security grounds. The cost to UK operators, in particular BT and Vodafone, of such an action would be huge.

Huawei’s 5G-enabling technology, along with non-4G kit, has long been present on the operators’ networks. If forced to remove Huawei from the network, such as in the many base stations, the operators calculated that the cost would run into hundreds of millions of pounds and would dramatically affect their 5G business case, effectively meaning a refresh of 4G networks to overlay new 5G technology. BT estimates a cost of around half a billion pounds over five years, while Vodafone calculates €200m over two years across Europe.

Reaffirming the company’s position and policy in a media conference, Huawei vice-president Victor Zhang noted that now was a “once in a lifetime” opportunity for the UK to be a leader in 5G, but the restrictions imposed by the US potentially threatens not just leadership in that area but also in national broadband roll-out as a whole.

“More importantly, these restrictions may deepen the digital divide,” he said. “By 2025, every UK business and household should have a superfast connection to new full-fibre broadband or 5G. The benefits of both are far-reaching, such as [driving] economic recovery and growth and productivity over the long term. The prime minister made a decision in January to start delivering these benefits. Our priority at Huawei remains to support our customers in delivering that decision, and how to build a better-connected UK.”

Zhang noted specifically the step taken by the UK government to ask the National Security Cybersecurity Centre (NCSC) to conduct a review into the impact these restrictions could have on the UK networks. He said that Huawei has cooperated fully with this process, but added: “This has never been about reviewing the decision the UK government made to approve Huawei in January, but about the negative impact the unjustified US restrictions would have on British business and consumers.

“It is important to stress that,” he said. “It is too early to assess the long-term impact [and] make considered judgments on our ability to deliver next generation connectivity across the UK. This decision will definitely impact the national broadband strategy and the future of the UK digital economy. Now is not the time to be making such a crucial decision about Huawei.”

Huawei 5G in particular was going to be essential to the UK’s economic recovery, and its priority was to work with UK operators and customers to continue to deliver benefits. But Zhang warned that there would be significant delays in 5G deployment in the region of 18 to 24 months without Huawei involved. Furthermore, he recalled research that Huawei published earlier in the year, warning of the huge financial costs of delays to the roll-out of the broadband infrastructure as a whole. A two-year delay could cost as much as almost £29bn in terms of lost potential productivity.