The ban on Huawei equipment in the UK is also likely to cost operators there billions of pounds, and delay the introduction of 5G services...
The UK Government has performed a massive U-turn by forcing mobile network operators to strip out any 5G equipment supplied by Huawei that they had already installed. The operators’ deadline to conform is 2027.
The announcement today also mandates that no new Huawei kit for 5G deployment can be purchased by the end of this year, and confirmed that the existing ban on Huawei gear in the sensitive core part of network remains in place.
In February, the Government said it would allow a 35% limit on infrastructure from ‘high risk vendors’, of which Huawei is a significant one, notably for radio access networks (RAN), and a complete ban in operators’’ core networks. This, it suggested, would be sufficient to ensure security and resilience, whilst preserving competitiveness.
That move was immediately denounced by the Trump Administration in the US, which wanted a complete ban, as it has imposed there.
And it was strict rules imposed in the US that forced a rethink in the UK. The National Cyber Security Centre (NCSC) was tasked with assessing the consequences of the edict, announced in May, which meant the Chinese behemoth could no longer use semiconductors and other devices made with American equipment or design expertise.
It was this ‘game changer’ that led the NCSC to alter its advice. According to the Centre’s technical director, Ian Levy, the subtle and detailed export rule changes meant “no-one, anywhere in the world, can send Huawei-designed chips to Huawei if US technology was used in the design tools or manufacturing process.
A significant shift in the supply chain
Huawei claims to have stockpiles of parts that it can use for 5G gear. “But we think that Huawei products that are adapted to cope with the FDPR (Foreign Produced Direct Product Rule) change are likely to suffer more security and reliability problems because of the massive engineering challenge ahead of them, and it will be harder for us to be confident in their use within our mitigation strategy,” said Levy.
He added it would be much more difficult to get the same level of information and confidence for new Huawei products in the future. Also, it will take more work to understand new toolchains that will be replacing the well-understood, global one in used today.
He also maintains the FDPR amendment “will cause a significant shift in the global telecoms supply chain” that will be felt for years. He also believes the long-term health and diversity of supply in the telecoms sector is a critical issue for the whole sector, and that it will take concerted, sustained and international effort to fix it.
“The decision today is necessary for the long-term security and resilience of the UK networks, but comes with significant risks and costs,” said Levy.
The US action also impacts Huawei products used in the UK’s broadband networks, both existing ones and the full fibre broadband being rolled out now, notably by BT.
Of course, as the Government recognizes, broadband operators, have ‘managed’ Huawei’s equipment in the UK’s fixed-access networks for some 15 years now. But new restrictions will be applied for the full broadband roll-out, and this transition away from using Huawei gear will take at least 2 years.
The extension is clearly being provided to avoid operators being dependent on Nokia as the sole supplier of some key parts of the network.
The ‘costs’ noted above by Levy were already starkly laid out by both BT and Vodafone, and analysts, ahead of today’s pronouncements.
The cost to UK operators will be steep
BT had already stressed complying with the 35% cap on Huawei RAN and fibre broadband gear would cost it about £500 million ($630 million), booked over a two-year span. It, and Vodafone, warned a total ban would all “tens to hundreds of millions” more in incremental costs.
Both operators last week were calling for a reasonable time-scale to remove any necessary equipment, and warned that too short a period for transition — which was being demanded by many parliamentarians, notably from the ruling Boris Johnson government — would inevitably lead to service outages and potentially serious disruptions to mobile phone users.
Andrea Dona, head of networks at Vodafone, suggested a minimum transition period of 5 years would be needed to avoid sporadic blackouts. Meanwhile Howard Watson, CTO at BT, indicated a seven-year time-frame was the most realistic option.
“At least the government seems to have taken such arguments and concerns on board, and the time-scales envisaged seem less draconian than I feared might be proposed”, James Barford, senior telecoms analyst at London-based Enders Analysis told EE Times. “Under this proposed timetable, operators have sufficient time to take out 5G gear without the prospect of any serious disruption.”
Barford suggests the direct ‘tear-out’ and replacement costs for mobile operators could turn out to be very high, perhaps £2 billion ($2.5 billion). This would include stripping out Huawei 4G equipment so that any new equipment supplier’s equipment could be overlaid so as to avoid compatibility issues.
However Barford warns of potentially serious delays to 5G roll-outs as operators focus on replacing what they have already installed as opposed to pushing into new coverage areas.
“I would say it will add 2-3 years for the full roll-out of 5G in the UK. This is unfortunate but not disastrous as the UK seems to be ahead of many European countries.”
The effects on competition
He also raised concerns that side-lining a supplier of the size and technological capability of Huawei would inevitably stifle competition. Telling operators they can’t buy from the biggest infrastructure supplier in the world, and one that seems to be ahead of the competition from a technical viewpoint, will clearly impact the prices they will have to pay and the quality of the equipment, he suggest.
Both the other suppliers, Nokia and Ericsson, which are already present in UK operators’ 5G network to some and in in cases significant extent, have indicated they would be able to meet demand from the operators involved over the next two to three years.
Ironically, parts of the gear from the Scandinavian suppliers would be manufactured in China , where both have large plants making a variety of infrastructure gear.
In a statement commenting on the announcement, Ed Brewster, a spokesman at Huawei UK, noted: “This disappointing decision is bad news for anyone in the UK with a mobile phone. It threatens to move Britain into the digital slow lane, push up bills and deepen the digital divide. Instead of ‘leveling up’ the government is leveling down and we urge them to reconsider. We remain confident that the new US restrictions would not have affected the resilience or security of the products we supply to the UK.
“Regrettably, our future in the UK has become politicised; this is about US trade policy and not security. We will conduct a detailed review of what today’s announcement means for our business here and will work with the UK government to explain how we can continue to contribute to a better connected Britain,” Brewster said.
Such a ‘review’ would likely impact the numerous R&D activities Huawei operates in the country, as well as the many University projects it supports.
As to the bigger picture regarding UK-Sino relations, late last week, the country’s Ambassador in London, Liu Xiaoming, said the UK “will have to bear the consequences of making an enemy of China” if it does ban the company from the UK’s networks.
“When you get rid of Huawei, it sends a very wrong message. You punish your image as a country that can conduct an independent policy.”
The upside, of course, is that taking such a tough line might just persuade President Trump to offer the UK a reasonable trade deal following the country’s self-exile from Europe.