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Huawei did it come to this?

January 28, 2020

There has been a week-long drum roll here in the UK leading up to today’s announcement about vendor inclusion in 5G roll out. When the ‘ta da’ moment came it was, of course, a completely predictable political fudge: Huawei (whose name wasn’t mentioned in the statement) will be allowed in, just not in the really sensitive bits and only up to a limit of 35 per cent over all.

Good news for Huawei? Well, if you don’t mind being branded an HRV (High Risk Vendor) and being explicitly told you’re only here until we can do this stuff ourselves, yes. I suppose it is better than being banned completely.
For Nokia and Ericsson, two companies who have been so preoccupied with restructuring after almost existential failures in their core businesses that they neglected to keep up with Huawei on 5G, it’s brilliant news. Of course, they may not be allowed to build quite so many of their components in China going forward, but that hardly matters as they’ll be able to name their price to telcos.

If an American company, perhaps Cisco, wants to try and find a margin in the network integration business they’ve all abandoned, then doubtless it will be conferred the usual free market virtual monopoly the US keeps for its tech hardware companies, not least because they are always so enmeshed in their defence and spook industries. If not, all the more easy money for Nokia and Ericsson. That’s a Buy recommendation, by the way. There’s talk of state cooperation to ‘diversify the market’; does this mean states are going to pick winners and make them work together to produce hi-tech products? That’s always gone well in the past, hasn’t it? Still a Buy.

Is Huawei a Trojan Horse for a mendacious Chinese state? Probably not, at least not deliberately, and is the Chinese state more mendacious than anyone else when it comes to cyber spookery? Remember Snowden. But probably better to play safe and not make it too easy – although the idea that China, or anyone else, needs their own installed tap, or off switch, to wreak cyber havoc is naive.

Why did it take so long to figure out that Chinese equipment embedded in your networks might be a problem? Actually, it didn’t. BT gave Huawei a huge leg up in embedding itself in the world’s networks when it signed a massive infrastructure contract in the early noughties. BT’s motivation was simple, it wanted to make its rather pathetic stab at providing the UK with broadband at a bargain basement price (so it could spend all the savings on football?). Huawei undercut everyone by masses and when the spooks got wind they were horrified, as with the Chinese supplying virtually the whole network they could essentially switch the UK off if they had a mind to. This lead to the UK insisting on a (Huawei funded) independent monitoring of kit and code as it came in. I’m told what they found was that you get what you pay for – the equipment was sometimes poor, and the code was often sloppy. But there was never any evidence of spyware. It also means that the UK, more than anyone else (like Australia, for instance) knows what it is talking about when it comes to Huawei and its capabilities.

Matt Warman, culture minister (is this a cultural matter?), was asked what the government was doing to improve our own ‘sovereign capability’ in the telecoms industry. He wisely waffled rather than advise the truth: that ship sailed a long, long time ago. As for our new-found Sovereignty in Brexit, welcome to the world where every decision really annoys a now badly needed trading partner. Yes; America angry. No; China angry. No wonder we went for ‘on the one hand…’

Categories: Blogs, Broadband, Business, Equipment, Nick Snow, Policy, Regulation