UK Defies Trump on Huawei 5G Technology Ban, EU Will Follow

Mish

UK Prime Minister Boris Johnson gave the go ahead today for the UK to use some Huawei 5G technology.

Despite intense pressure form the Trump administration, the WSJ reports U.K. Allows Huawei to Build Parts of 5G Network.

The U.K. government has given the green light for Huawei Technologies Co. to build part of its next-generation 5G cellular network, dismissing calls from the Trump administration to boycott the Chinese telecom-equipment vendor over security fears.

The decision is a major setback for American-led efforts to clamp down on the use of Huawei products, and could embolden other countries to follow the U.K.’s lead. Germany is expected to make a decision on whether to allow Huawei to build sections of its own 5G network this year. Canada is also still to decide whether to block the equipment maker.

U.S. officials visited London recently to reiterate their fears that the use of Huawei would strengthen China’s attempt to gain a stranglehold on the global telecom-equipment market. In recent days, President Trump, Treasury Secretary Steven Mnuchin and Secretary of State Mike Pompeo have warned U.K. officials of what they describe as the dangers of allowing telecom companies to use Huawei equipment.

The U.K.’s decision doesn’t give Huawei a full pass: The country will ban the company’s equipment from centralized parts of the 5G infrastructure that route data across the network, as well as sensitive locations such as near military and nuclear installations.

Politico reports Boris Johnson Allows Huawei to Build Parts of UK 5G Network.

The U.K. has come under intense lobbying from the U.S. against the Chinese firm, which they say poses security risks. The decision on Huawei was repeatedly postponed amid disagreement at the highest level of government.

The White House, which was informed of the decision just after noon U.K. time, blasted the move. "The United States is disappointed by the UK’s decision," a senior administration official, who declined to be named, said in a statement. "There is no safe option for untrusted vendors to control any part of a 5G network."

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

Germany, EU will Follow

With the UK on board, Germany is a strong bet to do the same, and may have anyway.

Germany would have huge problems scrapping Huawei because most of its 4G network is built on Huawei components. There is backward compatibility, but only if one uses the same vendor.

Scrapping Huawei would likely set Germany back by close to two years. And China also threatened retaliation.

In Huawei Battle, China Threatens Germany ‘Where It Hurts’

The New York Times commented In Huawei Battle, China Threatens Germany ‘Where It Hurts’: Automakers

Analysts say Nokia and Ericsson, which have won 5G contracts in Denmark and elsewhere, have the competence to build the 5G network, but it would take longer and cost more — not least because Huawei is already a huge part of the existing networks in Germany. Switching will be messy and costly.

“If we ban Huawei, the German car industry will be pushed out of the Chinese market — and this in a situation where the American president is also threatening to punish German carmakers,” said Sigmar Gabriel, a former German foreign minister and vice chancellor.

“Just because we have an American president who doesn’t like alliances, we give all that up?" he said. “Why would we? Especially since he does exactly what the Chinese do and threatens the German car industry.”

See, last year, 28 million cars were sold in China, 7 million of those were German,” Mr. Wu, China’s ambassador to Germany, added in his remarks in December, making what many in Germany interpreted as a veiled threat.

Markus Söder, Bavaria’s conservative leader, has publicly defended Huawei’s right to bid, while also lashing out at the United States.

Competitors

Huawei has emerged as the world’s biggest maker of telecom gear, including base stations, switches and routers. It competes chiefly with Sweden’s Ericsson AB and Finland’s Nokia Corp. and benefits from Chinese state subsidies.

It is currently the telecom-equipment market leader in the U.K., according to a government report published in 2019. The British government in 2018 estimated that Huawei’s market share for 4G networks in the U.K. was around 35%. That figure rises to 45% for ultrafast fiber networks.

Trump Won't Get His Way

It appears the UK has similar problems to Germany, just not to the same degree.

The Financial Times reports US Attacks UK’s Decision on Huawei.

The UK’s four mobile operators — EE, O2, Three and Vodafone — have all launched 5G services during the past six months, all using Huawei kit.

Europe is stuck with Huawei.

This is what happens when you let China get a huge lead in technology.

Mike "Mish" Shedlock

Comments (18)
No. 1-9
Stuki
Stuki

"There is no safe option for untrusted vendors to control any part of a 5G network."

And neither does such a thing as "trusted vendors" exist. Which render the whole cryfest moot from the getgo.

As far as the UK military goes, which the UK did make at least a tacit effort to shield from possible Chinese spying, I can understand the argument that a vendor from another NATO, or at least Western, country; is preferable to a country which in many ways is NATO's opposition. And there may be military strategic benefits from cultivating homegrown industry in militarily critical areas as well.

But for the average UK individual or business, it's not as if Huawei is, a priori, any less trustworthy than, say, Erickson; just because one is headquartered in China and the other in Sweden.

If your handling of sensitive data is sufficiently reckless that you're stuck depending on your backbone provider to safeguard them, you've got much bigger problems on your hands than the backbone provider's nominal address anyway.

BaronAsh
BaronAsh

10 years or so ago someone showed me how to backtrace everything, which I did for fun. I was in Canada at the time. Every single trace went first to the SS in Ontario, then to Langley Virginia and then to TELECOM CHINA. Why, I don't know, but have always assumed they need to keep things outside of national jurisdiction just like they use private contractors (like Amazon, EDS, Black Rock) etc. to do govt work but outside govt jurisdiction.

5G represents the end of any sort of privacy at all.
It therefore also means the end of Common Law sovereignty principle for both individuals and nations.

Personally, am glad I probably won't live long enough to enjoy what will doubtless be a brave new post-socialist soft totalitarian world, probably using the quite successful Chinese One-Party model.

It might all work out quite well. But culturally we will increasingly resemble insects rather than humans.

And so it goes...

Stuki
Stuki

“This is what happens when you let China get a huge lead in technology.”

There is no way to avoid “letting” “China get a huge lead in technology”, while simultaneously handing darned near every penny which could have been invested in homegrown technological progress, to idle nothings sitting on their rear while getting rich from their “homes,” “portfolios,” “commission checks,” “pensions,” “rents” and arbitrary lawsuit settlements “go up.”

There’s only so much resources to throw around. Every penny handed to idle leeches in exchange for zero useful contribution at all, is a penny not available to be spent on anything, by anyone, useful.

abend237-04
abend237-04

The Chinese Army, (Chinese Government Strategic Support Force), has routinely backdoored motherboards being shipped worldwide for many years now. They are probably second only to our own NSA in that regard. It's part of the price you pay in moving manufacturing to China.

I suspect the reason we haven't seen and heard more governmental griping about episodes like the ZTE and Supermicro hacks recently is just that...it's common knowledge that anything and everything on the web has been or will be hacked.

Smart stategists, on both sides, would say nothing and develop defences to mislead and defeat them when required.

wootendw
wootendw

I talked with my cousin in Wembley yesterday. He's happy with Brexit (which he voted for) but, for the first time I've heard from him, he's worried the UK is becoming too dependent on US.

Hopefully, the Huawei decision should mollify is concerns, a little at least.

JonSellers
JonSellers

"This is what happens when you let China get a huge lead in technology."

Who is the "you" in this statement Mish? When you figure out why their can't be a "you" in a Free Market, you'll get a bit of insight into what's wrong with your thinking on economics.

Casual_Observer
Casual_Observer

China has no huge lead in technology. Most 5G technology is from non Chinese vendors as are patents. Huawei is cheaper but traditionally that doesnt mean better. If the Chinese government would divest its 51% holding stake in Huawei, then it would not be an issue. No country should trust Huawei for their infrastructure.

Casual_Observer
Casual_Observer

By the way, Huawei should be allowed to bid. But part of the bid package should be to show vendors all backdoors, source code and access to embedded operating systems. Typically this has been done with other vendors. Huawei has refused when asked for this in other bids I know of. This and security should be another requirement as part of any vendors bid package.

Borat123
Borat123

There is already talk about the City of London wanting the non Hauwei network to extent to them also. So you're going to end up in this unusual position where only the UK government, security, City of London, are on their own secure network, while other companies, perhaps even research groups, and the average Joe, are all on the Hauwei network. It will be interesting to see what happens on the University / research front actually, whether that becomes part of the non-Hauwei network (obviously it would make sense, but do they have the money). The fact that most corporations won't be on it either will be interesting. I guess China already has the ability to steals most of these corporations information anyhow.