The Chronicles: UK’s 5G Network and China’s Link

5G or 5th Generation mobile network is the latest technology in the mobile telecommunications that will enable its users to perform more functions than just high-speed browsing and surfing at present, such as interconnecting and controlling entities such as machines, devices as well as various objects. The ascent of this technology which already begun with the 4th Generation mobile networks, along with the technologies like smart home and other smart products. 5G is expected to reach a speed of up to 100 gigabits per second (GBPS), approximately 100 times faster than the current 4th Generation technology. In simple terms, a 5G network has two major constituents: 5G enabled mobiles, tablets, or PC’s and 5G network infrastructure. Huawei has been traditionally one-stop shop in the telecom industry for this technology.

In order to understand the prevalent conditions in the UK telecom sector, first, it is important to understand the US-Huawei conflict, which began around 2 years back, when in the month of February 2018, FBI (Federal Bureau of Investigation) Director first warned the citizens of USA not to buy Huawei smartphones. The backdrop of this conflict was the US-China trade war. This was followed by a report, which revealed that Facebook gave Huawei’s illegal access to user data, following which a lot of major countries such as Australia banned Huawei and asked telecommunication and technology companies to stop working with Huawei. Later that year, Huawei was also caught cheating on a benchmarking test. This was followed by the United States of America, in January 2019, putting Huawei under 23 indictments for theft of trade secrets as well as fraud. Not only this, the US officials also stated that any country using the technology from Huawei poses a threat to the United States. Google also withdrew its products as well as Android support from all Huawei devices, causing the Chinese Giant to develop its own operating system to support its devices.

In the war of words between US and China, the demand from the Trump administration primarily included that China should improve and make its trading practices fair, by changing economic policies, and it also accused Chinese companies such as Huawei of stealing data and other intellectual property from the United States of America. This all came into light, post a historically high trade deficit being highlighted with China by the current US government.

In addition to the problems surrounding Brexit and its implications for the United Kingdom as well as the other parts of the European Union, a major economic downturn was inflicted by the trade dispute between the US and China. Primarily, this was caused by the US asking its allies such as the United Kingdom and France to not indulge in any trading activities with China or to impose high tariffs on goods being exported to the country. Several statements also emerged from the officials of the US not to allow Chinese companies such as Huawei and Xiaomi bring any technology into their countries, as they allegedly stole Intellectual property and violated data rights of individuals.

5G technology and entry of Huawei in the UK

In the United Kingdom, 5G technology has already been rolled out in around 50 towns and cities by major telecom giants such as Vodafone, O2, Sky Communications, Three and EE. The technology had started rolling out in the UK by mid of 2019, over a small group of carrier phones from companies such as Samsung, OnePlus, LG, and Huawei. Users had consistently been able to clock speeds of 200 Megabits per second (MBPS) to 400 Megabits per second, while the highest clocked speed had been of approximately 550 MBPS over the mobile network. This clearly indicates that the technology is still not stable and will need a lot of further improvement in the United Kingdom. Huawei carriership of 5G services has been the talk of the town since its inception, primarily because of the United States of America raising security concerns around the carrier’s 5G services, amidst a full-blown trade war with China.

The UK intelligence authorities reported that they had already analysed the potential threats which might arise from Huawei that the US has indicated, and those threats and risks were already considered in terms of planning of the rolling out of the 5G technology by Huawei in the United Kingdom. As a result, the United Kingdom remained unfazed by the US opinions to change its decision post its remarks on Huawei, as the experts believe that any threats or risks arising from the telecom giant are manageable. The British prime minister, Boris Johnson had also stated that it was up to the US to provide an alternative to Huawei’s 5G technology, but UK does not want to spoil its intelligence-sharing relationship with the US.

Huawei’s reach and spread in the UK

Huawei, the Chinese telecom giant and the mobile manufacturer, is one of the pioneers of 5G technology. Huawei basically has two operating activities in the United Kingdom, one is the selling of its hardware such as 5G enabled smartphones as well as Tablets and Laptops, while the other operating segment deals in providing 5G network infrastructure to the telecom industry.

The National Security Council in the UK had two options to consider. Either it could have banned Huawei operations completely as demanded by the Trump administration, or the Chinese telecom major could be allowed to operate with non-core services with a restricted market share. The Non-core services refer to the base stations and antennas installed on rooftops and masts, which are a part of network infrastructure and comparatively less risky compared to data processing services. The Chinese telecom was restricted to the non-core parts of the network, with a cap of 35 per cent. The Chinese vendor was also strictly prohibited from sensitive locations such as military bases.

BT Group Plc (LON: BT.A) in its trading update, released in January 2020 estimated an impact of 500 million pounds due to cap imposed on the Chinese telecom major. However, BT Group said that it would migrate to Ericsson powered network infrastructure by 2023.

During the lockdown induced by the outbreak of Covid-19, internet usage has increased manifolds. The removal of Huawei from the British telecom ecosystem might be detrimental for the UK. There were reports that the UK government has drawn up plans to reduce Huawei’s involvement in nation’s 5G infrastructure to zero by the year 2023. Huawei though has requested the UK government to reconsider its decision of cutting its role in the UK telecom space. However, with the US-UK trade negotiations underway, the UK can bank upon some US telecom providers for filling the gap created by the exclusion of Huawei.