Pressure builds on Huawei (part 2)
28 Jun 2019|

The Trump administration’s moves against Huawei could not have come at a more critical time. They appear calculated for maximum impact on the policy decisions soon to be made on European 5G mobile networks. Europe will be one of the key theatres that will determine both Huawei’s future and the adoption of 5G mobile worldwide.

The appearance of new communications technologies raises what Paul Starr identifies as ‘constitutive choices’ in terms of how the technology will be used. Constitutive choices are not preordained by the features and capabilities of a new form of technology. They relate to fundamental decisions regarding how technology will be used socially—who will control it, for what purpose, and under what institutional arrangements?

Constitutive choices are associated with path dependence. Initial decisions give shape to system architecture, and the larger and more established the architecture becomes, the higher the expense and disruption associated with changes to it. Once matters are moving in a particular direction, it’s difficult to change course. The constitutive choices made when a new technology first appears are of vital importance—they set the parameters for all future developments surrounding the technology.

Europe will have a major effect on the constitutive choices made in relation to 5G. Europeans will be among the first adopters of 5G and will be a key early market for hardware providers. Decisions that are soon to be made in Europe will have a strong influence over the subsequent rollout of 5G in other regions.

European policymakers are currently considering the constitutive choices on 5G. In March, the European Commission called for the development of a ‘common EU approach to the security of 5G networks’, urging all member states to complete a risk assessment by the end of June 2019.

The decisions they make in the coming days will not only determine the path of 5G development in their own countries, but will also have major geopolitical implications. This is because the most significant decision facing policymakers is the scope for Huawei’s participation in European 5G. Gaining permission to provide Europe’s 5G infrastructure would be a major coup for Huawei—not only because of the commercial potential associated with capturing the prized European market, but because of the geostrategic implications associated with Huawei’s position at the leading edge of China’s ‘Digital Silk Road’ project.

Servicing the 5G market is one of Huawei’s priorities, and it is well positioned to provide hardware to the nascent European 5G network. It already has a considerable share of the global market for mobile network components and the ability, due to the financial support of the Chinese party-state, to offer considerably lower prices than its competitors.

It is the strategic dimensions of 5G that make Huawei ‘desperate’, in the words of one European telecoms executive, to capture the market. It has spared no effort to do so. From Britain to the former Eastern bloc, Huawei’s representatives have busily advocated for the company to develop the continent’s 5G networks.

Although final decisions are yet to be made, pronouncements from European policymakers have so far left the door ajar for Huawei. In April, a leaked decision from the UK National Security Council—which led to the sacking of Defence Secretary Gavin Williamson—appeared to give permission for Huawei to participate in some aspects of Britain’s 5G network. Germany’s chief communications regulator has also suggested that there could be scope for Huawei’s participation in German 5G, as has the Italian minister for industry.

There are also strong commercial pressures for Huawei equipment to be incorporated into European 5G network architecture before decisions are made to prevent it. In April, Huawei claimed to have signed contracts to supply 5G equipment to 40 network carriers around the world (the majority of which were in Europe). On 30 May, British network provider EE launched the UK’s first 5G network. EE, along with its rival Vodafone UK, had responded to security concerns by barring Huawei 5G handsets; however, both networks are using Huawei equipment in their networks ‘at least for the first few years’.

These decisions were made despite the fact that a ruling from the British government on the terms of participation in the 5G network is imminent. ‘At the moment we have no instructions to change our plans’, EE CEO Marc Allera stated.

This reveals a vulnerability of the liberal and open state of affairs in Europe, in which a company, desperate to be the first adopter of a new technology, can make decisions on a purely commercial basis with no regard for other considerations. It’s not confined to just Britain. In April, the Netherlands’ largest network, KPN, decided to procure its 5G network equipment from Huawei, which is reported to have undercut a rival bid from Ericsson by 60%. In Spain, Huawei has signed agreements with the nation’s three biggest mobile networks, Telefonica, Vodafone and Orange, to provide 5G hardware for services due to be launched in coming months.

However, a growing number of voices are expressing unease at the prospect of Huawei’s participation in European 5G. A recent report from the Henry Jackson Society urges the British government to rescind its openness to Huawei’s participation in building the nation’s 5G networks, describing the government’s assurances as ‘insufficiently robust to justify the associated risks’. The impending departure of Theresa May from Downing Street makes it likely that her successor as prime minister will make the final decision, cognisant of US President Donald Trump’s threats to limit intelligence sharing if Huawei is permitted into Britain’s 5G networks.

At the beginning of May, attendees from 32, mostly European, countries met in Prague to discuss the arrangements that will apply to 5G mobile networks. The conference culminated in a declaration stressing the primacy of security concerns in constituting 5G. Though ostensibly country-neutral, the Prague statement was clearly directed at Huawei. In relation to technology, it declared that ‘risk assessments of [a] supplier’s products should take into account all relevant factors, including [the] applicable legal environment and other aspects of [the] supplier’s ecosystem’—an unmistakable reference to Beijing’s National Intelligence Law. Furthermore, it cautioned against the allure of low prices: ‘Achieving a proper level of security sometimes does require higher costs. Increased costs should be tolerated if security necessitates it.’

But the Prague declaration should not be mistaken for the official views of those governments with representatives present. It’s an effort to shape European discourse around 5G to ensure an appropriate emphasis on security, in anticipation of looming deadlines. A series of parallel debates are underway within European governments, which are yet to finalise their constitutive choices around 5G. Ultimately, the decisions of these governments, in accordance with the European Commission’s directive, will shape 5G’s future.

The US moves against Huawei, along with threatening the long-term viability of the company, are also a way to counter the foothold it has gained in Europe at a critical point in time. Without reliable vendor supply chains, European networks will need to think carefully about proceeding to install Huawei equipment that may need to be replaced later at considerable cost. Coupled with threats to limit intelligence sharing with European allies, it’s a bid to reduce the appeal of Huawei’s low prices and shape the choices that will influence the deployment of 5G in Europe and elsewhere in the world.