The Chinese government has warned France against discriminating against Huawei while selecting suppliers for its 5G network. In a statement, the Chinese embassy called for transparent criteria and fair treatment for all equipment makers. Washington has persisted pressure on European countries to avoid the Chinese manufacturer for possible security risks including possible Chinese spying. The French government has recently announced the auction of its 5G spectrum although at a price of €2.17 billion contrary to €1.5 billion proposed by the French communications regulator, ARCEP.
Implications of Huawei exclusion
The Chinese embassy in France indicated that the selection of the equipment based on the country of origin was blatant discrimination and industrial protectionism. The embassy said that it would not wish to see European companies in China suffer because of such actions, hinting of possible retaliation by Beijing. Nokia and Erickson from Finland and Sweden currently operate in China’s mobile infrastructure.
Apart from the possibility of retaliation by the government in Beijing, banning Huawei kits from European telecom operators comes at a financial cost. The GSM Association estimates that replacing the Chinese equipment from European operators would lead to additional costs of up to €55bn. In addition, the replacement of Huawei would lead to delays in rolling out of the 5G network by up to 18 months. For the British telecom company BT, the cost of banning Huawei would cost the company over $500 million within the next five years.
The European Union industrial policy chief and the former French economy minister, Thierry Breton, has dismissed these claims by saying Europe was on track on its 5G technology rollout plan. He added that the exclusion of Huawei would not upset Europe’s rollout plan.
French telecom companies hinted at the possibilities of demanding compensation should the government prevent them from using Huawei equipment.
Some European providers have defended Huawei against the possible lockout. Orange’s chief executive Stéphane Richard said he was against the exclusion of Huawei from France’s 5G network. Richard suggested having Europe-wide standards for the selection process.
Although European companies and governments may defend Huawei, it is unlikely that they would go against the wishes of the United States. Orange has already excluded Huawei from its 5G network and selected Nokia and Ericsson after what it called “months of testing” despite Huawei and 5G being synonymous. Unlike Orange CEO, Breton openly warned against using “risky” suppliers. He also indicated that it was necessary for Europe to maintain its technological sovereignty by protecting areas of strategic importance.
Huawei 5G network in European countries
The European Union member states have resisted pressure for an outright ban on Huawei from their 5G mobile networks. They have indicated that they are willing to ignore the US warning on using Huawei 5G equipment after conducting their own assessment. Germany has already indicated that it has no problems incorporating Huawei 5G equipment in its 5G infrastructure. Similarly, the British government cleared Huawei to participate in the development of 5G by supplying equipment for the non-core parts of the country’s 5G network. The British government said that it had considered all the possible risks of using Huawei equipment. However, the UK government is yet to make a binding official position on the matter. Recently, politicians in the UK and the National Cyber Security Center designated Huawei as a risky vendor. This new development could lead to a change in policy on the use of Huawei equipment on the UK 5G network.
Although European governments may not openly discriminate on Huawei, individual carriers are likely to stay away from using the leading Chinese manufacturer’s equipment in their 5G networks for fear of possible restrictions by the United States. Washington is likely to impose sanctions on the individual companies using Huawei equipment thus preventing them from conducting business in the US. In addition, the possibility of upsetting US relations with Europe might be too costly for them to bear, especially for countries such as the United Kingdom after Brexit.