The declaration of Chinese telecommunications giants Huawei and ZTE as high-risk vendors (HRV) is revealing a split between EU member states. Thierry Breton, European Commissioner for Internal Markets made the announcement at a recent news conference on 15 June. Several telecom executives and government ministers in Germany and Austria are questioning the EU’s conclusions regarding cybersecurity risks and have publicly voiced their opposition to the restrictions. This could have far reaching implications for the future of 5G development and international relations.
Huawei, in its official statement, “strongly opposes and disagrees” with the European Commission’s decision, asserting the move lacks a “verified, transparent, objective and technical assessment of 5G networks.” The tech giant warns that such restrictions could “pose serious economic and social risks,” possibly stifling innovation and distorting the EU market. Huawei also argued that the ‘High-Risk Vendor’ designation goes against free trade principles. They cite an Oxford Economics report that suggests excluding Huawei could inflate 5G investment costs by billions of euros, an expense that they say will end up being borne by European consumers.
Huawei says cybersecurity is a top priority and to assuage concerns about its products, once again invited customers and independent third-party testing organizations to its Cyber Security Transparency Centre in Brussels. Here customers and government standards bodies can perform security tests on all its equipment and code for verification against industry-recognized cyber security standards and best practices.
While the European Commission’s decision resonates with some, others have publicly rejected the security concerns raised about Huawei. Stephan Broszio, a spokesperson for Deutsche Telekom, asserts that China can’t shut down the 5G network, refuting the claim that manufacturers have remote access. Broszio states that “no update will be installed in live systems that have not previously been extensively tested for functionality and security.” He clarified that “The systems for network management are completely separated from the Internet and Deutsche Telekom’s office communication networks in their own high-security network. Access to this network is only available to a few specially checked employees, remote access for manufacturers is not possible.”
Research by Denmark’s Strand Consult showed that as much as 50% of 4G and 5G equipment in Germany is supplied by Huawei. This could run to as many as 46,000 sites across the country. According to a research note prepared by Barclays and seen by Lightreading, Deutsche Telekom could face a bill of around $1.2 billion, with Telefonica and Vodafone having to spend at least $750,000 each to remove their network equipment supplied by Huawei.
Similar support came from Austria, where Klaus M. Steinmaurer, the Managing Director of the Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR), expressed no security concerns regarding Chinese telecom firms. He sees “no reason for this (naming them as high-risk vendors).”
Austrian Digitization State Secretary Florian Tursky also confirmed that EU network security guidelines had already been implemented in the country, but since there is still no formal ban network operators are still free to use components from Huawei or ZTE for 5G network expansion.
It’s not just industry insiders; Chinese officials too have thrown their weight behind Huawei. The Chinese Ministry of Foreign Affairs refuted the European Commission’s claims of security risks, urging the EU to abide by “international economic and trade rules.” Ambassador Fu Cong, Head of the Chinese Mission to the EU, echoed these sentiments, stating that the ban violates WTO rules and could seriously impact the business communities in both regions.
While the European Commission is trying to shut Chinese vendors out of European markets, China appears to be moving in the opposite direction. European network operators Nokia and Ericsson were recently awarded around 16 percent of a large China Mobile contract. This is double the previous market share held by European telecoms operators in China.
The future of 5G development in Europe hangs in the balance, as does the EU’s trade and political relations with China. It’s a scenario that stakeholders around the world will be monitoring closely.