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Summary
- Huawei to be stripped out of the United Kingdom's 5G networks by 2027
- In January 2020, the United Kingdom had given a green signal to Huawei for its involvement in the 5G network
- The decision to oust Huawei from the nation’s 5G network is likely to delay the roll-out of 5G in the nation by another 2-3 years
The British Government has finally decided to strip Huawei from the much-hyped nation’s 5G network by 2027. Prime Minister, Boris Johnson had long been contemplating to ban Huawei, and thereby, this decision will put an end to the two-decades-long partnership. National Security Council (NSC) of the United Kingdom met to discuss on Huawei, and its decision was announced to the House of Commons by the Media Secretary, Oliver Dowden that by 2027 all the existing equipment will be removed from the UK’s 5G network. He also announced a ban on the purchase of any new equipment from the company from 31 December 2020. The only positive for the company was that the existing 2G, 3G and 4G kit has been allowed to remain until they are no longer needed.
The decision is undoubtedly going to delight Washington, who has supposedly been pushing the Prime Minister Boris Johnson in reversing the decision taken by him in January this year.
To know more, do read: Huawei's Tussle for Setting up 5G Network in the UK
Incorporated in 1987, Huawei, a Chinese multinational telecommunications equipment and services company, is the second-biggest smartphone maker all over the world, preceded by Samsung.
Is Huawei Posing a Threat to the UK Economy?
Most of the countries suspect China to be the main culprit behind the evolution of the coronavirus infection. Misleading the world with the number of cases present in China or about the transmission of the disease, the country has already been facing a backlash in a lot of countries.
Washington had earlier accused Huawei, claiming that Beijing was using Huawei's gear for spying. On the other hand, Huawei has constantly been denying such allegations. US administration has been insisting that the UK should also be taking such steps to ban Huawei completely.
The company has been under observation after the Canadian police arrested the CFO of Huawei, Meng for having violated the international sanctions against Iran, in 2018. It has also been under the allegation of having stolen intellectual property rights from Cisco, a US-based network hardware maker.
These instances built considerable evidence that Huawei, as well as China, cannot be trusted.
The UK Taking a U-turn on China
In January 2020, the United Kingdom had given a green-signal to Huawei for its involvement in the 5G network; however, it later restricted the company to a 35 per cent market share, and it was also stated that the Huawei's gear must be removed from the nation's core network.
The US Government had banned Huawei from sourcing microchips which required American technology. This decision had forced the British officials to review the matter which was concerned with the security of using Huawei 5G equipment.
Boris Johnson's conservative party had also proposed the idea of banning Huawei from the British economy and part ways with Beijing.
Internet Usage in the UK
According to an annual report Online Nation, published by the Ofcom, the adults of the UK spent an average of four hours and two minutes online daily, in April 2020. While it was under three and a half hours in September 2020 and three hours and eleven minutes in September 2018, the graph of daily internet usage has surged during the lockdown.
For the 12 months ending in February 2020, 52 per cent of the people were sending text messages using WhatsApp and Facebook Messenger, while forty-one per cent using SMS and 26 per cent email. Thirty-one per cent of the people used online voice calls daily. People have adopted online services to communicate with each other during the tough times of pandemic. Thirty-five per cent of the people used to make video calls before the lockdown in comparison to the seven out of ten users making video calls every week now.
Usage of applications like Tiktok, Zoom, Snapchat, Instagram and Youtube also increased.
Huawei has got some support as well- BT Boss Warns of Outages
It’s not that everyone is against the Chinese company, Philip Jansen, the chief executive of BT, has said that it would be impossible to remove the Huawei products out of the telecommunications network of the United Kingdom within the next ten years. He has also warned the Government of the outages and security threats that could follow if the industry was asked to curtail all its business ties with the Chinese company.
Huawei has been a part of the UK's telecoms base for about two decades. It has also been one of the major suppliers to BT and others prominent players in the British telecom industry. Philip Jansen also said the decision of rolling out Huawei from UK's telecom networks could lead to the UK facing repercussions.
BT Group PLC (LON: BT.A) stocks were trading at GBX 115.00 at 1:41 PM on 14 June 2020, up by 3.51 per cent from its previous day close of GBX 111.10. The stock’s 52-week low price was GBX 110.40, and the 52-week high price was GBX 209.20. It was having a market capitalisation (Mcap) of £11,017.80 million. The volume traded at the time of reporting was 17,437,083. The company recorded a negative return on price, which was 43.33 per cent on YTD (Year to Date) basis.
Conclusion
The British Government’s decision to disallow Huawei to provide the 5G network infrastructure in the United Kingdom is going to be a big setback for the company. A change of policy was expected from the British Government as US administration has been one of its closest allies. A new bill by the British Government is expected soon with reference to roll-out of 5G services, and it has been clearly stated that Huawei won’t be having any chance of re-entry in the nation. Though, it is going to delay the roll-out of 5G in the nation by another 2-3 years, putting a burden of around £2 billion to telecom companies.
