As The UK Govt. Bans Huawei From Its 5G Network, They Will Pay A Price Too

The United Kingdom has finally placed a ban on Huawei with respect to its 5G network and this marked a major U-turn from January when the UK had said the Chinese telecom giant could indeed go ahead and be a part of the 5G rollout. This came as a shock to many including some UK operators. The United States has been at logger heads with the Chinese government for over two years now and Huawei has been on the receiving end of that feud with American tech giant ordered not to supply Huawei again until there was a resolution. That said, The United States has indicated that it would encourage allies to follow suit and shortly after that, A Huawei executive was arrested in Canada and now the UK is banning them even though they have officially denied that this is this the case.

Operators like BT and Vodafone who have already purchased soe Huawei equipment have now been told that they have until 2027 to remove and replace them. UK Digital and Culture Minister Oliver Dowden made the government’s position known even though he admitted that the U.S decision to sanction the brand had a role to play in their decision-making process. He said “Given the uncertainty this creates around Huawei’s supply chain; the UK can no longer be confident it will be able to guarantee the security of future Huawei 5G equipment.”

The likely fallout from this is that many other western nations may follow suit and while this is a major blow for the China and its tech giant, it is a win for the Unites States politically speaking. This will eventually mount pressure on other allies to ban Huawei from their 5G networks as well. The US has labelled Huawei and other Chinese tech companies’ threats to national security. Chinese law actually compels tech companies to share data with the government upon request as part of its giant police state ideas powered by artificial intelligence and of course 5G. This means that Huawei and other tech companies like ZTE who sell services and goods abroad may be required to pass on information about foreign networks back to the government. China is a communist state which means that many operations are state owned even though they have publicly denied that they own any shares in Huawei which they call a purely private company.

US Secretary of State Mike Pompeo said last month that “the tide is turning against Huawei as citizens around the world are waking up to the danger of the Chinese Communist Party’s surveillance state.”

By being banned from using any American technology in its manufacturing process, it means that Huawei may find it more difficult to make chips that are vital to its hardware functionality. The disruption and eventual delay that may arise from this was also one of the reasons the United Kingdom concluded that it was best to cut ties with Huawei too.

Huawei has operated in the United Kingdom for about 20 years and the Europe area accounts for about 24 percent of their sales. In light of that, the company called the UK decision to exclude it from its 5G network disappointing. Ed Brewster, a Huawei UK spokesperson said “It threatens to move Britain into the digital slow lane, push up bills and deepen the digital divide. Regrettably our future in the UK has become politicized, this is about US trade policy and not security.”

But the US sanctions influence goes beyond the United States as big chip makers like the Taiwan based TSMC have been prohibited from selling chips to Huawei, something very much needed to make 5G hardware. This means Huawei outside of China is really facing a potential major international boycott of its equipment. But it looks like their standing in Asia and Africa seems to be safe for now as China continues to pour billions of dollars into African and Asian economies. In Nigeria, many of the telecom operators have opted for Huawei investment both on the public and private sides of things.

The UK and United States call themselves closes allies and this arises largely from intelligence sharing over the years. So, the US has always argued that a failure to rein in the Huawei situation may impact such intelligence sharing in future and this could in turn affect the individual national security of its partners. So, you can see why France which is America’s oldest ally may begin to take a second look at this too.

Well business goes on no matter what happens and one’s loss may be another’s gain. Nokia and other Huawei competitors are ready to fill the void left by Huawei which was heavily invested in UK’s 4G too. Sweden’s Nokia in a statement said that it will gladly stand in for Huawei saying we have the “capacity and expertise to replace all of the Huawei equipment in the UK’s networks at scale and speed.”

What is likely to happen now that the United Kingdom government has made a decision?

While Huawei has invested time and money on making sure it stayed in the UK government’s good graces, it looks like it will begin cutting its losses. But the UK as a whole will feel the heat as well.

So, for the UK, it means they will trail their counterparts in 5G roll out as they now say it may take up to three years to completely phase out Huawei equipment at a cost of £2.5b or $3.1b. The delay we talk about may not come at a huge economic cost at this time but think about new technologies that UK consumers may have to wait longer to get. Advanced AI powered services like real-time medical surgeries and self-driving cars are all technologies that 5G makes possible to every consumer.

UK telecom operators like Vodafone have echoed the same concerns but they don’t see the decision by the government affecting their roll out plan significantly at least in the short term. It’s going to cost them money though to begin the phase out process.

There is the diplomatic row that may ensue between the government of UK and China as a result of the decision. China has invested billions into UK petroleum and power sectors and now they are warning that the UK will pay a diplomatic price for this. Remember the UK is in the middle of a Brexit battle and would need all the friends it can gather as it chooses to stand independent of the European Union.  

We can only watch as events unfold over the coming years.