UK’s National Cyber Security Centre launches another Huawei probe

The National Cyber Security Centre (NCSC) has confirmed it is attempting to understand what impact potential US sanction directed towards Huawei would have on UK networks.

With Huawei equipment and components delicately woven throughout the complex tapestry of telecoms in the UK, sanctions from the US which would materially inhibit Huawei operations should be a major concern.

“The security and resilience of our networks is of paramount importance,” a cross-government statement reads. “Following the US announcement of additional sanctions against Huawei, the NCSC is looking carefully at any impact they could have to the UK’s networks.”

There have been reports circulating through the press suggesting UK Prime Minister Boris Johnson is once again considering the role of Huawei in the telecoms landscape. These rumours are a separate story, but directly linked; the US wants to reduce the commercial opportunities for Huawei, and this is yet another attempt.

First, the US Government attempted the diplomatic approach, with Secretary of State Mike Pompeo attempting to prove his debating skills. Secondly, fear was introduced with the US attempted to reignite xenophobic fears of communism. The third strategy was more directly aggressive; work with Huawei or have access to our intelligence data, you can’t have both.

None of these strategies worked, but the latest attempt is an interesting one. If Huawei’s supply chain can be compromised, the UK (and other) Governments might have to turn its back on the Chinese vendor because it does not meet the standards required for resiliency tests.

Should the UK Government be revising its position, it would certainly be a blow to Huawei’s credibility.

“We’ve seen the reports from unnamed sources which simply don’t make sense,” said Victor Zhang of Huawei. “The government decided in January to approve our part in the 5G rollout, because Britain needs the best possible technologies, more choice, innovation and more suppliers, all of which means more secure and more resilient networks.

“As a private company, 100% owned by employees, which has operated in the UK for 20 years, our priority has been to help mobile and broadband companies keep Britain connected, which in this current health crisis has been more vital than ever. This is our proven track-record.”

Looking at the other rumours outside this confirmed investigation into the impact of US sanctions on Huawei, the underlying cause could be directed back tor Conservative backbencher Sir Iain Duncan Smith. Once a prominent voice in the House of Commons, Duncan Smith’s influence has been wilting rapidly, so much so this is one of the first times anyone has paid attention to him for what feels like decades.

In March, Duncan Smith led a small group of Tory revolters in opposition of the Supply Chain Review. Instead of limiting ‘High Risk vendors’ to 35% of any telecoms network, this group wanted them banned completely. These politicians clearly did not understand the complexities of the situation and debates were riddled with inaccuracies, but it appears the pressure has been enough to turn the head of Prime Minister Boris Johnson.

What is worth noting is that while the industry has been in firm support of Huawei in recent years, this staunch stance seems to be softening.

Vodafone Group CEO Nick Read recently discussed the Huawei situation during the telco’s earnings call, and while Vodafone had been warning of catastrophic consequences to prevent work with Huawei, the current rhetoric is no-where near as firm. The executive talked of removing certain firms “moderately” and investments into alternatives. It does appear Vodafone is preparing for the worst-case scenario.

While the rumours are nothing more than rumours, with the US undermining Huawei’s ability to operate as desired some uncomfortable questions will be asked. Top of the list is whether the vendor can maintain security and resiliency credentials for its products and components following such a disruption to its supply chain. This could drastically impact its position in the UK telecoms landscape. Daily Poll:

Should Huawei be allowed to operate in the UK?

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More US Senators try to pressure UK over Huawei

While the impact on UK policy is questionable, that does not seem to be deterring US politicians from attempting to influence decision-making on Huawei’s 5G fortunes.

In a letter to Parliament, 20 Senators have urged UK politicians to reconsider their position on Huawei in the era of 5G connectivity. There is already dissent amongst the ranks in the House of Commons, though whether this trans-Atlantic communique has any catalyst impact remains to be seen.

“We write to express our significant concern with the Government of the United Kingdom’s recent decision to allow Huawei Technologies into its 5G network infrastructure,” the letter states.

“Given the significant security, privacy, and economic threats posed by Huawei, we strongly urge the United Kingdom to revisit its recent decision, take steps to mitigate the risks of Huawei, and work in close partnership with the U.S. on such efforts going forward.”

Led by Senators Ben Sasse and Chuck Schumer, the cross-aisle communication to influence decision making outside its borders is another attempt from the US to stamp its authority on the global landscape.

In the letter, the Senators have asked the UK to take a sterner stance against Huawei, but also enter into a partnership with the US to drive forward innovation and competition in this sparse segment of the telco industry. US politicians have already allocated funds to accelerate the development of OpenRAN technologies, touted as a challenge to the RAN status quo, to open-up the field of options.

Interestingly enough, this seems to be the carrot approach to influence, seeing as the stick wielded by Secretary of State Mike Pompeo has been as effective as a chocolate tea pot. Or has it?

The US might not have gained the outright ban which it has been chasing, but arguably lobby efforts have influenced UK policy. Would the UK introduced have restrictions on the telcos for ‘high-risk vendors’ if it was not at least partially listening to the trans-Atlantic drone? The UK Government does not want to place financial burdens on its telcos, but it has effectively done so with the Supply Chain Review. BT/EE, Vodafone and Three have all been forced into a rethink on how to deploy 5G, with Three facing significant disruptions.

With the conclusion of the Telecoms Supply Chain Review, UK telcos are free to work with ‘high-risk vendors’, a category which includes Huawei, though there are restrictions. The share of infrastructure equipment in a telcos inventory must not exceed 35% from a high-risk vendor, while no more than 35% of the total internet traffic for a telco can cross equipment from these suppliers. High-risk vendors are banned from contributing equipment to the network core.

The argument from the US is that the individual components of the network cannot be separated, therefore the risk cannot be mitigated. This same rationale has been put forward in objections from a group of UK politicians in opposition of the Telecoms Supply Chain Reivew.

Led by Sir Iain Duncan Smith, a few dozen MPs met to criticise the outcome of the Review. While some of the claims were mind-boggling and some of the statements quite inaccurate, the resounding message from this small group was an outright ban for Huawei and any other equipment vendors who would be deemed ‘high-risk’.

This is another area where the US lobby has seemingly gained traction, as none of the MPs present were particularly vocal during the Supply Chain Review. In fact, few politicians outside of the Department of Digital, Media, Culture and Sport paid much attention, occasionally posing questions when the topic was raised in the House of Commons. Only a small handful campaigned against Huawei, though now there are plenty who are seizing the opportunity to criticise the Review.

The conclusion of the Supply Chain Review was supposed to put this matter to bed, but it seems this is an argument which refuses to defuse. Secretary of State Mike Pompeo has already suggested his lobby mission would continue, and perhaps this is evidence the US is having more of an influence on UK policy than previously believed.

Huawei position in UK called into question by rowdy politicians

A small group of UK politicians are gathering steam in opposition of the Telecoms Supply Chain Review, calling for zero involvement from high-risk vendors, and the Government did not directly disagree.

Led by Sir Iain Duncan Smith, a debate in Westminster Hall of the Houses of Parliament took place this morning with several politicians calling for a complete ban for Huawei, aligning the UK to the approach taken in the US and Australia. While the debate itself was full of wild claims and inaccuracies, the message from this small group of opponents was clear; Huawei should be banned from the shores.

There will of course always be opposition to every decision made by the Government, but this is an evolving conversation people should certainly pay attention to.

Smith and other politicians questioned the logic of a 35% limit for companies designated ‘high-risk vendors’, instead asking whether this should be formally reduced to 0% over a definite period of time. Warman, representing the interests of the Government, seemingly agreed with this position. The following exchange should be noted:

Warman: We want to get to a position where we do not have to use a high-risk vendor in our telecoms network.

Smith: I think this is a very important point. I want to know, and I think the rest of the House would like to know, is it now Government policy to drive to 0% involvement by Huawei and other non-secure vendors? Is that now the policy not just 35%?

Warman: Our aim is to not be reliant on high-risk vendors at all and I appreciate he would like me to set out a timetable for that, and I can’t do that today.

What Warman appeared to state is that the Government intends to reduce the involvement of high-risk vendors to 0% at some point in the currently undefined future.

Without an official statement from the Department of Digital, Culture, Media and Sport, it is difficult to understand the consequences of these comments. However, Warman agreed with the opponents that high-risk vendors should be gradually removed from communications infrastructure. For the moment, the approach of mitigated risk will be maintained, though the Government does seem to back tracking on statements that it can manage high-risk vendors in the network.

This is a statement of some intent from the Government. There is clear and very vocal opposition to the Telecoms Supply Chain Review conclusion, and it does appear the fate of those companies deemed high-risk vendors is once again unknown.

While Huawei might be sitting comfortably today, these comments paint a slightly different picture. What should be worth noting is the language which is currently being employed, as should Huawei be able to prove it is not a high-risk vendor, this developing conversation would be redundant, but even the bravest optimist would admit it is going to be very difficult, if not impossible, to remove this tag.

Once question which will sit rather uncomfortably with those in the telecoms industry is where were these opinions during the Supply Chain Review? Sir Iain Duncan Smith, Chi Onwurah and Stewart McDonald are just some of the opponents to the Telecoms Supply Chain Review, but surely it would have been more useful to speak to the experts, understand industry nuances and competition to raise concerns during the summer of 2019 whilst the Review was taking place?

John Nicolson, the Scottish National Party MP for Ochil and South Perthshire, even suggested the UK should hit the brakes on the deployment of 5G. This motion seemed to attract some interest from other members of the debate.

Over the course of the session, which lasted for roughly 90 minutes, some very bold and strange statements were made. Smith suggested Samsung had stated in a letter that Huawei could not be trusted, Fujitsu is apparently a credible alternative, and one backbencher even suggested Huawei was involved in illegal organ harvesting. Some of the claims are of course very questionable, but the opposition to Huawei is gathering steam.

One point which was touted, and there is some credibility, is whether the Huawei restrictions are somewhat of a homage towards the Chinese Government as the UK pursues a valuable trade deal with the nation. In the Brexit-driven world of today, this is not entirely unbelievable, though it does beg the question as to whether the Government is prioritising the right objectives.

What this does seem evident of is a change in policy for the UK Government. Suggestions high-risk vendors should be reduced to 0% in the future have not been made by the Government to date, and this does appear to be the first signs of a new approach.

For the industry, this is a worrying sign of inconsistency so soon after a collective sigh of relief was made following the conclusion of the Supply Chain Review. It might be costing the telcos a substantial amount to adjust deployment plans to meet the new restrictions, but these comments will need to be clarified and validated by the Government very quickly to avoid any more confusion.

At the time of writing, no clarity has been offered by the Department of Digital, Culture, Media and Sport.

This is an interesting position for Huawei. The Government has seemingly set its sights on irradiating high-risk vendors from communications infrastructure, perhaps thanks to pressure from certain allied nations. If it can remove the ‘high-risk vendor’ tag from its biography, all these problems would disappear for Huawei, though this might well be an impossible ambition considering the global political climate.

US Congress moves to denounce UK decision on Huawei

It would be fair to say the Supply Chain Review conclusion received a less than enthusiastic response in the US, and now it appears Congress is stacking the deck for an offensive.

The House of Representatives has introduced what is known as a ‘Simple Resolution’ condemning the UK accepting attitude of the UK, Huawei effectively as an agent of the state and the Chinese Government.

Presented to the House by Congressman Michael McCaul, House Republican Conference Chairwoman Liz Cheney, and Representatives Ted Yoho, Mike Turner and Mike Gallagher, the Resolution denounces the UK decision to include Huawei in 5G plans, though it is not entirely clear what the end game here actually is. This Resolution could be used to force a firmer stance against the UK, a worrying sign with trade talks set to commence in the very near future.

“We are extremely disappointed that the United Kingdom seems poised to allow CCP [Chinese Communist Party] controlled Huawei to build much of their next generation 5G networks,” the politicians said in a joint statement.

“Huawei equipment is absolute poison – providing them access to any aspect of a 5G network compromises the integrity of the entire system and will result in network data being sent back to Communist Party leaders in Beijing.

“We hope the UK will reverse course on this consequential decision and work with us to build a 5G future that will not only protect our mutual interests but will safeguard the values we share.”

While the Resolution does not propose any new rules or amendments, it contains dozens of statements to paint a picture. This could be viewed as the prologue, setting the scene, creating the bad guy, before the main part of the story begins. Some of the points include:

  • All Chinese companies, private and state-owned, are under the effective control of the Chinese Communist Party
  • Supply Chain Review measures are not enough to ensure the security and fidelity of the United Kingdom’s 5G network
  • China has a series of laws which forces Chinese companies to effectively act as the intelligence gathering arm of the Government

This document could represent the opinion of the House of Representatives and could be used as a weapon against China and the UK.

There are two key takeaways from the Supply Chain Review. Firstly, Huawei has been deemed a ‘high-risk vendor’ but can continue to operate in the UK. Secondly, ‘high-risk vendor’ equipment will be limited to a 35% share of a telcos radio inventory, while said share can only carry 35% of the total internet traffic.

While this is a position which has been welcomed in the UK, it faced fierce criticism in the US, despite President Trump staying quiet on the matter. Arkansas Senator Tom Cotton suggested the UK was handing the front door keys to the Chinese, while several has maintained the stance that the sensitive and non-sensitive parts of the network cannot be separated.

Secretary of State Mike Pompeo took a much more mellow approach when visiting London last week. Pompeo was not overly critical, but statements were made suggesting the UK had time to change its mind. Perhaps this is a hint that the US will continue lobbying the UK to ban Huawei while trade talks are conducted.

Looking at what this actually means is a bit more nuanced and speculative, however.

A ‘Simple Resolution’ is a legislative measure passed by one of the two House’s of Congress. As it has not been passed by both, it cannot be written into law, but it can be used to express a sentiment of the politicians in the House. This sentiment could be used to create a Committee, pave the way for a Bill to be introduced, or force policy decisions in other departments.

This Resolution is important, but unless the Senate passes a similar Resolution, its impact will be limited. In this Resolution, the politicians are effectively condemning the UK’s actions and every Chinese company as an agent of the Chinese state, therefore we suspect it wouldn’t take much to gain support in the Senate.

However, if both Houses pass the same Resolution, the US will have an official stance against every Chinese company and the UK’s adoption of Huawei technology. Some of the wording in this document makes for a potentially hyper-aggressive position against China.

As an official Resolution of Congress is a measure of the opinions of the members, it could be a powerful document. The State Department could be forced to take a much more aggressive stance against the UK in trade talks, the President could be convinced by the majority into signing some sort of executive order, or it could pave the way for much more aggressive legislation against ‘high-risk’ companies.

What is always worth remembering is that the US Constitution bans the Government from legislating against a single company, but this does look like a political preparation for a renewed assault against Huawei.

With Senator Cotton’s proposed Bill still on the floor of Congress, an official intelligence sharing ban with the UK and other countries which are deemed Huawei friendlies is still a possibility. And with the trade talks looming, the US still has a few carrots and sticks in store for the UK.

Some might have suspected this would be the end of the Huawei debate and the beginning of the UK’s 5G future, but while the US can still poke and prod politicians, the Huawei debate is still alive. It remains to be seen what impact this Resolution in the House of Representatives has, but it could be very significant.

Boris Johnson is starting to look short of friends

Transatlantic conflict was to be expected following the Supply Chain Review decision, but Downing Street could soon become the battleground for some ‘blue-on-blue’ warfare.

Secretary of State Mike Pompeo is en route, presumably to sit in Downing Street before huffing and puffing, but it is enemies closer to home which might case the most immediate of problems. Alongside the enthusiasm for the Huawei compromise, there have of course been just as many critics.

The House of Commons proved to be somewhat of a tough test for the Supply Chain Review.

“The Prime Minister has gone for the cheapest, least secure option, but it does not take a genius to work out why Huawei is so competitive in cost,” said John Nicolson, an MP representing the Scottish National Party. “It is the Chinese Communist party branded as a company, and the Conservative Government have chosen low cost over security.”

“I cannot work out whether it is naivety or arrogance that prevents the UK Government from seeing the high risk presented to our national security by Huawei,” said Carol Monaghan, another SNP MP. “This is a company financed by the Chinese Communist party, and we are giving it an open door to our security.”

And unfortunately for Prime Minister Boris Johnson, there are also vocal critics within his own party.

“It was founded by a member of the People’s Liberation Army. Even if it were not an arm of the Chinese Government, the 2017 law requires that it take instruction from the Chinese intelligence agency,” said Conservative MP David Davis. “In the future, the size and complexity of the problem we are trying to protect against will be enormous. Huawei alone—forget the rest of China—has tens of thousands of researchers working on this, and I am afraid that the only way to protect our safety is to ban it.”

“I have spoken at length to security officials, who will always say that defending in cybersecurity is a game of catch-up – always catching up with the next algorithm change, and we can never guarantee that we spot it sometimes until too late,” said another Conservative MP Sir Iain Duncan Smith.

Criticism from the other side of the political aisle is part and parcel of the game, but internal sniping, blue-on-blue warfare if you will, could cause damage. With Brexit still a potential hot spot for Downing Street, Johnson could use as much support as possible internally.

That said, the impact of the Supply Chain Review on European relations might be somewhat positive, though this is a long-shot.

The UK stance on Huawei and relationships with China now looks much more aligned with the Europeans than the US. In 5G security guidance offered to member states, the European Commission has suggested nations air on the side of caution, but it has made no direct links to Huawei or China as a state. The dangers have been identified, but the finger of accusation has not been pointed.

There are also European nations who are looking to the UK. Germany and France, amongst others, might well be buoyed by the decision. Numerous EU member states have been distancing themselves from a complete ban, and the UK might well be the first domino to fall in favour of Huawei. Despite the Brexit fracas, the UK is still an influential voice; if Huawei is considered safe for London, it might well gain traction elsewhere on the bloc now.

This is of course the polar-opposite position from the US, where the reaction to the Supply Chain Review has been varied.

“Allowing Huawei to build the UK’s 5G networks today is like allowing the KGB to build its telephone network during the Cold War,” said Senator Tom Cotton.

Cotton is one of the most strident opponents of Huawei, who’s attitudes towards China flirt with the line of xenophobia, so it is hardly surprising to hear such statements. Although President Donald Trump has been relatively quiet on the announcement, Cotton has effectively been a White House puppet over recent months, very enthusiastically portraying the party line.

“British decision to accept Huawei for 5G is a major defeat for the United States,” said Newt Gingrich, a former-Speaker of the US House of Representatives. “How big does Huawei have to get and how many countries have to sign with Huawei for the US government to realize we are losing the internet to China? This is becoming an enormous strategic defeat.”

This is perhaps what the UK and the US will have to accept over the coming months; the special relationship is coming to an end. In dismissing demands and threats from the White House with regard to Huawei, the UK is effectively distancing itself from the US. This is a strained friendship already, and we suspect the White House does not like to be ignored.

The issue with many compromises is that no-one is entirely satisfied. This decision from the UK Government looks to be the most logical and proportional response to genuine concerns on both sides of the argument, though as it is a half-way house, it has been opened-up to political dissection.

With disagreements in the Conservative Party and contradiction to US policy, the Prime Minister is losing friends. In aligning the telecoms policy with the European Commission, he might look to the continent for allies, though considering the on-going Brexit conflict, this will also be a tricky sell. Downing Street is looking like a very lonely place.

UK made the correct call on Huawei but the devil is in the detail

The UK government’s decision to opt for a classic British fudge on the matter of Huawei’s involvement in its 5G networks was the least bad choice.

The options essentially boiled down to: 1. A total ban, 2. No ban at all; 3. Some form of restriction, and we went for number three. Lots of commentators, many of whom only recently acquired their telecoms industry expertise, have pointed at that you can’t have it both ways and either Huawei poses a security threat or it doesn’t.

They do have a point, but the government seems to be saying it’s not a binary matter and that Huawei poses just a bit of a threat and that it’s managable. Again, it’s reasonable to question the wisdom of allowing any threat when there are alternative networking kit vendors who everyone seems to think wouldn’t harm a fly.

All this simplistic analysis fails to take into account the commercial reality on the ground. Not only is there already a fair bit of Huawei kit dotted around UK networks that would have to be replaced at considerable expense, but artificially reducing competition to just two players would be bound to drive up costs. Furthermore many still think Huawei’s is the superior offering in a lot of cases, meaning the resulting networks could be materially inferior for Huawei’s absence.

The other aspect that seems to have upset people the most is the implication of the decision on our relationship with the Americans. They’ve been hassling us for ages to ban Huawei entirely but have presumably failed to present any compelling evidence of why we should. So then it came down to a political decision around whether or not we dare upset the US. Well it turns out we do.

Some of the Twitter hissy fits from US politicians have been hilarious. Here’s a selection.

President Trump, however, has been uncharacteristically silent on the matter. This possibly implies that he understands the dilemma his British counterpart faced and doesn’t want to throw a genuine attempt at compromise back in the face of a key ally. Having said that we’re only one tweet away from that theory becoming hopelessly obsolete.

For sober balanced analysis it’s best to step away from the rent-a-gobs in politics and the mainstream media and speak to people who have devoted themselves to the business of telecoms. “The decision seems to be consistent with the sentiment of our closest neighbours, though clearly out of sync with many of our Five Eyes partners, and the political arguments are going to rumble on,” Phil Kendall, Analyst at Strategy Analytics told

“As operators push network functions out to the edge, the NCSC is taking a clean view of what it wants to see – if it’s a core network function, irrespective of where that is being run, then the virtualization software can’t come from Huawei or any other HRV [high risk vendor].

“Irrespective of the rights or wrongs of the NCSC’s assessment of exactly where the risks become unacceptable for a critical national infrastructure, what we have here is finally some clarity. The UK’s operators can now move forward and plan their 5G network  rollouts accordingly. A three year window to get Huawei down to 35% of the 5G RAN feels achievable, though not painless for all involved.”

This 35% of he RAN threshold is the main ‘devil in the detail’ part of the assessment, since it wasn’t immediately obvious how it would be measured.

Kendall was once more on the case.

Overall, the UK policy will send a strong signal to the rest of Europe and the world that the use of Chinese equipment poses a security risk and should be limited,” said independent telecoms Analyst John Strand. “I believe that UK have created the framework for a European model and it will put a lot of more focus on security in telecom networks. There is a big chance that Germany will copy the UK model with some small changes.

“The use of Huawei equipment will be expressly prohibited in sensitive geographical areas in the UK, areas selected for national security reasons. Indeed, this is already practiced in France where Huawei equipment in restricted in Toulouse, home of Airbus and the European aerospace industry. A similar policy exists for Brest where French nuclear submarines are located.”

We also spoke to Ovum analyst Dario Talmesio and asked him for his initial thoughts “Not surprising at all, the only bad news for Huawei and CSPs is that Huawei need to be restricted to 35% share of the radio, which is a significant restriction,” he said. “Overall reducing the number of players, and thus industry diversity, is harmful for any technology. Diversity helps ecosystems and the UK will have a bit less differentiation as a result of the decision.

“CSPs in the UK have benefitted from the commercial pressure coming from Huawei. Specifically, margins in the UK are relatively low by international comparison meaning that any increase in cost to deploy and maintain networks will directly impact 5G rollout plans.”

On the other hand polling firm YouGov recently asked a bunch of random Brits what they thought of letting Huawei be involved and sentiment seemed to be against the idea. But then again those punters were presumably deriving their views from information provided by the aforementioned media dilletantes and partisan politicians, so it’s probably best to stick with a policy of not letting the man in the street dictate industrial policy.

The long and short of it is that Huawei is a major part of the UK telecoms industry and banning it entirely would have created major problems. Our security experts think the risk it poses can be mitigated and managed, and have clearly seen nothing from the Americans to contradict that. From a political perspective it’s good to see the UK making its own minds up, rather than just picking which superpower to appease.

Supply Chain Review offers clarity and new headaches for MNOs

Any decision is better than the purgatory of uncertainty which the telcos have been sitting in for months, but the Supply Chain Review offers a whole new wave of headaches.

There are still grey areas to consider, but the Department of Digital, Culture, Media and Sport (DCMS) has offered a foundation for telcos to build on. Some might be slightly disappointed by the decision, certainly some more than others, but any decision was better than playing the waiting game; action can now be taken.

Huawei’s contributions to a UK MNOs 5G radio inventory can not exceed a 35% share. However, another interesting element to consider is that Huawei radio equipment cannot carry more than 35% of internet traffic either. This presents new questions as to how networks are built. Huawei technology might not be able to be clustered in certain urbanised areas, which has been the trend in the past.

But new questions are arising for each of the players in the market.

Is Huawei to lose leadership position in the UK market?

Speaking during a call to the press, Huawei VP Jeremy Thompson said capturing 35% market share in any nation would be a job well done for Huawei, though this is assuming customer relationships are rebalanced.

For Huawei to capture 35% market share, it would have to be a major supplier to all the UK MNOs and for all the MNOs to use every inch of the 35% network share. This is a situation which is very unlikely to happen.

EE and Vodafone are over the 35% limit for Huawei equipment in their 4G networks, therefore these relationships will have to be structured down. Three named Huawei as its sole 5G RAN supplier, Samsung provided 4G RAN equipment, therefore it will definitely lose business here as well. There is room for growth at O2, but this is a telco it has not had notable success in recent years.

Huawei’s RAN equipment makes up less than 1% of O2 radio inventory, only present due to trials, and this is unlikely to change.

As Thompson pointed out, Huawei’s market share in the UK when the Supply Chain Review was initially launched was 35%. Its business with its three main customers will have to decrease for them to meet the targets in three years, and it is unlikely to increase its commercial activity with O2.

Huawei could very feasibly lose its RAN leadership position due to bureaucracy as opposed to head-to-head competition.

Three has the biggest headache of all

Three is not in a healthy position but fortunately its 5G deployment is not that advanced.

“We note the government’s announcement and are reviewing the detail,” said Three UK CEO Dave Dyson.

Last year, Three began stripping Samsung 4G equipment out of its network to ensure interoperability with its sole 5G RAN supplier, Huawei. Fortunately, Three has not been accelerating its deployment plans as quickly as EE or Vodafone, therefore does not have as much work to undo. Three will not have to start again from the beginning, but it will have to redevelop the strategy.

As a city-centric telco, the Huawei decision made sense as the Chinese vendor arguably has the best equipment for the situation. Investing so significantly in Huawei might have been a bold decision two years ago, but it is now looking like nothing short of a disaster.

Business as usual for O2

“Huawei kit makes up less than 1% of our owned network infrastructure,” said an O2 spokesperson. “We will continue to develop our 5G network with minimum disruption with our primary vendors Nokia and Ericsson.

“Whilst we agree with the government that diversity of supply is the best way to serve customers, careful consideration must be given to the distinction between ‘core’ and ‘non-core’ as 5G networks develop and evolve. We’ll now take time to review the full report.”

There are roughly a dozen Huawei radios in the O2 network, a legacy of trials during yesteryear prior to supplier decisions being made. O2 has said it will work exclusively with Ericsson and Nokia in the past, painting a gloomy picture for Huawei, though there is always room for change.

Earlier this month, O2 announced it would be aiming to integrate OpenRAN alternatives into some areas of the network. This was slightly unexpected news and would have altered deployment plans in pursuit of commercial efficiencies. This demonstrates that the plans are not 100% set in stone.

Huawei’s commercial relationship with O2 can only get better, and if it does want to maintain its RAN leadership position in the UK, it will have to figure out how to break into this business. Ultimately, very little changes for O2 unless it wants to change itself.

EE and Vodafone have some thinking to do

“While Vodafone UK does not use Huawei in its core – the intelligent part of the network – it will now analyse the potential impact of today’s decision on the non-core elements of its network (masts and transmission links),” a Vodafone statement reads.

“Vodafone UK uses a mix of Huawei, Ericsson and Nokia equipment for its 4G and 5G masts, and we continue to believe that the use of a wide range of equipment vendors is the best way to safeguard the delivery of services to all mobile customers.”

For its 4G network, Ericsson supplies 50% of the radio inventory, Nokia 12% and Huawei 38%. Vodafone CTO Scott Petty has previously suggested plans to phase out Nokia, though that position might have to be reconsidered. Vodafone will have to scale down its Huawei relationship moving forward into 5G and find a suitable replacement.

Interestingly enough, Vodafone has also launched its own OpenRAN initiative, though whether this technology is resilient for a straight swap remains to be seen. It will at some point, but Vodafone will not want to wait until that point.

EE is in a similar position.

“This decision is an important clarification for the industry,” said a spokesperson from EE parent company BT.

“The security of our networks is an absolute priority for BT, and we already have a long-standing principle not to use Huawei in our core networks. While we have prepared for a range of scenarios, we need to further analyse the details and implications of this decision before taking a view of potential costs and impacts.”

EE currently works with Huawei and Nokia. The share of Huawei radio inventory exceeds the 35% limit, though it has time and options to renegotiate over the next three years. It is a bit of a headache for the team, but not the end of the world.

The difficulty which EE faces is the current structure of the network. Huawei provides the radio equipment for the urbanised areas, while Nokia is focused on rural. The internet traffic crossing Huawei radios on EE’s network will dramatically exceed the 35% restriction.

Are Nokia and Ericsson in a stronger negotiating position?

For cut-throat sales opportunists, this is a very interesting position for Ericsson and Nokia. Unless OpenRAN makes significant progress in the short-term future, or Samsung starts swinging punches, 65% network share is effectively a straight shootout between the two.

As Heavy Reading Analyst Gabriel Brown has pointed out, the limits are only directed towards 5G access and is therefore more manageable, but the knowledge of restrictions will always be in the mind of some salespeople; this adds weight to the vendor negotiating position.

Ericsson and Nokia will of course never acknowledge this position, but these are commercial organisations who have seen profits eroded over the last few years. And the guys sitting at the negotiating table are salespeople who like getting big bonus checks.

Could this be the catalyst for OpenRAN and Samsung?

When there are challenges for some, opportunities will always be presented for others. Ericsson and Nokia are certainly set to prosper thanks to Huawei limitations, though the same could be said for the OpenRAN ecosystem and Samsung.

OpenRAN has been touted by US politicians as a potential alternative to Huawei equipment, Senator Mark Warner is proposing a $1 billion fund for the ecosystem, though needs might accelerate demand.

With Huawei’s RAN equipment under restriction, there is certainly a dent in the competitive landscape. It could have been a lot worse, but it will have an impact. The question is how much enthusiasm will be placed in the OpenRAN movement to compensate and create the competitive environment so many are hoping will emerge.

Vodafone and O2 have already dipped their toes into the OpenRAN waters, with commercial deployments to accelerate over the next 2-3 years, though the Huawei saga could make this seem like an attractive alternative to more. The UK Government has seemingly not banned Huawei completely for competition fears, therefore it might be tempted to invest in some developing ecosystems, as would EE and Three.

Samsung is a different story.

This is a vendor which has credibility in the RAN market but has never made a significant impact on the UK telco industry. It did have a healthy relationship with Three prior to the Huawei shift, but activities otherwise have been limited in this segment. Huawei limitations could present an opportunity.

At Three, it would make sense to head back to tried-and-tested waters, while other telcos might consider the Korean vendor to ensure increased diversity in the supply chain. If reliance and variety is the goal, few would want to put more eggs in the Ericsson or Nokia baskets.

With relationships in Korea with KT and SK Telecom, as well as Verizon in the US, Samsung has credibility. The Huawei woes might just be enough to tip the scale in this vendors favour, if it start to throw the right punches.

End of the UK road for ZTE?

The 35% limit is not a restriction for a single supplier, but for any suppliers who are deemed ‘high-risk’. Huawei and ZTE both fall into this bracket therefore it is likely to present a question to the telcos; do we work with Huawei or ZTE? There is room for a slice for each, but this is highly unlikely to happen, especially since the review concludes there is no way to mitigate the risk posed by ZTE.

When it comes to the global market share of RAN, ZTE is a company which falls into the ‘also ran’ category. It has experienced success in Africa and Asia, and of course in China, but exposure in Western Europe has been incredibly limited. In the UK, there is very little evidence of success, though Jersey Telecom named the vendor as its sole 5G RAN supplier.

Jersey Telecom will have to have a complete rethink of its strategy, like Three, but the writing seems to be on the wall for ZTE. This could be the end of the vendor as a player in the UK market.

Huawei gets the greenlight from UK Government

It seemed like it would never end, but the Supply Chain Review has now been concluded and while there might be limitations, it is pretty good news for under-fire Chinese vendor Huawei.

In short, vendors which are deemed ‘high-risk’ will not be able to provide equipment for the network core and will be limited to providing no more than 35% of the RAN equipment . These vendors will also be banned from providing equipment to Critical National Infrastructure or sensitive geographic locations, such as nuclear sites and military bases.

There are limitations for Huawei which could prove to be awkward, and perhaps a step-down from the market dominance it exhibited in the 4G era, but this is a significant win for the vendor.

“We want world-class connectivity as soon as possible but this must not be at the expense of our national security,” said Digital Secretary Baroness Nicky Morgan. “High-risk vendors never have been and never will be in our most sensitive networks.”

Morgan is not 100% correct in this statement. The EE core network is Huawei equipment, and under the guidelines provided by the National Cyber Security Centre (NCSC), Huawei would likely fall under the definition of a ‘high-risk vendor’. Either that, or the Government has and does not consider EE’s 4G network that important.

“The government has reviewed the supply chain for telecoms networks and concluded today it is necessary to have tight restrictions on the presence of high-risk vendors,” Morgan continued.

“This is a UK-specific solution for UK-specific reasons and the decision deals with the challenges we face right now. It not only paves the way for secure and resilient networks, with our sovereignty over data protected, but it also builds on our strategy to develop a diversity of suppliers.”

More to follow…

UK MP lets rip on Huawei as US Senator wants to fund ‘alternative’

Tom Tugendhat, the MP for Tonbridge and Malling, has become on of the few UK politicians to publicly state an opinion on Huawei, condemning the firm though tweets and interviews.

While the Supply Chain Review to decide the future of Huawei in the UK has been a highly publicised saga, few UK politicians have stepped-forward to add their own thoughts to the debate. Tugendhat seems to be breaking rank, risking a feud with Prime Minister Boris Johnson with his thoughts.

“Allowing Huawei to run the UK’s 5G network is a staggeringly bad idea. Nesting a dragon in our central nervous system will cost us for decades and leave us hostage to a hostile state,” Tugendhat said on Twitter.

As the Chairman of the Foreign Affairs Select Committee during the last Parliament, Tugendhat certainly is in an interesting position. He is an influential MP, though breaking the silence which has generally been upheld across the political arena, he might find retaining this prominent stance difficult. The statements made on Twitter, and also to Sky News, are somewhat contrary to the Prime Minister.

“Of course, you can individually guard every chicken, but isn’t it better not to let the fox into the hen house in the first place?” Tugendhat said.

This statement is directed toward the verification and validation work which is done by GCHQ in the Huawei Cyber Security Evaluation Centre (HCSEC). From Tugendhat’s perspective, the work to include Huawei’s equipment does not justify the outcome. There is some sanity to his thoughts, but the point of the HCSEC is to ensure telcos have access to be best technologies and an appropriate level of competition is maintained.

Tugendhat is one of the few taking to the soap box to weigh into the debate, though he does seem to be standing in opposition to Prime Minister Johnson.

“The British public deserve to have access to the best possible technology,” Johnson said on Tuesday (14 January). “If people oppose one brand or another, then they have to tell us what’s the alternative.”

Johnson does seem to be hinting he will side with Huawei and against the White House. The alternatives are few and far between, though the Democrat Senator for Virginia, Mark Warner, has introduced a new bill to Congress which could do so.

The Utilizing Strategic Allied (USA) Telecommunications Act, aims to provide $1 billion to create Western-based alternatives to Chinese equipment providers Huawei and ZTE. The idea has been raised before in the states, but an OpenRAN approach to network deployment would open-up the market to a flood of alternative, niche, solution providers. Or at least in theory.

“Every month that the U.S. does nothing, Huawei stands poised to become the cheapest, fastest, most ubiquitous global provider of 5G, while U.S. and Western companies and workers lose out on market share and jobs,” Warner said.

“It is imperative that Congress address the complex security and competitiveness challenges that Chinese-directed telecommunication companies pose.

“We need to move beyond observing the problem to providing alternatives for U.S. and foreign network operators.”

While this sounds like an attractive move for the ecosystem, realistically it is not an alternative for Huawei and ZTE.

The concept of OpenRAN is not new and it is only just gaining traction in the industry. Vodafone, MTN and Sprint are testing out new ideas, it is still not a viable, scaled alternative to the status quo. It would most likely take years of R&D to get OpenRAN to a point where it can be used as the foundation of a network.

Are the UK, Germany, Italy, Spain and the dozens of other countries who want to work with Huawei supposed to wait for this dream to become a reality? Warner’s idea sounds nice, but it is not an alternative because investments needs to be made today.

Huawei conundrum starts heating up (again)

In among the trade war rhetoric, 5G launch announcements, privacy scandals and smartphone rumours, the UK is also supposed to be making a decision on the fate of Huawei.

Despite the Supply Chain Review being one of the most critical decisions in recent history of the UK’s telecommunications industry, it seems to have become background noise as the Government has become so well-practiced at kicking the can. However, the debate is rearing its head once again as US diplomats are in town for a lobby mission and the MI5 declares it isn’t that worried about the threat of US intelligence starvation.

“Perhaps the thing that needs more focus and more discussion is how do we get to a future where there’s a wider range of competition and a wider range of sovereign choices than defaulting to a yes or no about Chinese technology,” said Sir Andrew Parker, Director General of the MI5, the UK’s domestic counter-intelligence agency.

Sir Parker was surprisingly upbeat about the situation, despite the threats moving from chest-beating to a paper trail.

Last week, the Republican Senator for Arkansas, Tom Cotton, presented a new bill to Congress which would officially ban the US from sharing intelligence with any country which had Huawei components or equipment in telecommunications infrastructure. Should this bill pass into law, this would no-longer be considered an idle threat, but a piece of legislation the US Government would (theoretically) be forced to obey.

But speaking to the Financial Times, Sir Parker has said he does not feel there would be any reason the data-sharing relationship between the US and UK would be in jeopardy. The intelligence chief believes relationships between the ‘Five Eyes’ nations are the strongest ever, and this is not going to change in the near future.

That said, it is difficult to understand where Sir Parker’s optimism originates. Perhaps he assumes the bill will not pass to law, or there is some clause in US law which would supersede the bill? Or perhaps the intelligence community will just revert to back channels and secretive communications? As you can see from the extract below, the bill does not leave a lot of wiggle room.

“(a) PROHIBITION – Intelligence of or under the control of the United States, including intelligence products of the intelligence community, may not be shared with any country that permits operation within its national borders of fifth generation (5G) telecommunications technology of Huawei Technologies Co. Ltd.”

The above text is quoted directly from the bill introduced to Congress by Senator Cotton last week. It is very explicit and does not leave much (or any) room for interpretation.

Sir Parker seems to be leaning on the idea that everything will be fine as long as Huawei is excluding from the network core, though there is no evidence to support the US would agree to this state of affairs. The US does not seem to buy into the idea that risk can be mitigated by separating the network into dumb (radio and transmission) and intelligent (core) segments. This is a popular idea in the UK, which has gained traction in the industry.

Alongside Sir Parker’s comments, a US delegation is currently in London to hold discussions with Prime Minister Boris Johnson and senior officials on the future of Huawei in the UK. As with other visits from US representatives, this delegation is very much likely to be pushing for a complete ban.

The US stance in this equation is not very difficult to guess, but when the UK might actually say something material is. Some are expecting a decision on whether the telcos can buy components and equipment from Huawei will be made this month, though considering the track record, it is perhaps just as likely to see another delay.

After being debated for what seems like years, the UK telco industry is no clearer on what the outcome will be. After Matt Hancock was replaced by Jeremy Wright as the Secretary of State for Digital, Culture, Media and Sport (DCMS), Wright decided to delay any decision as there was a change of leadership in Downing Street. Once Johnson had settled in as PM, the decision was again delayed due to the General Election in December.

The current Secretary of State for DCMS Nicky Morgan complicated matters by stating she would no-longer be standing as an MP at the General Election, but the decision to make her a Life Peer allowed her to continue leading the department.

The current political landscape is a mess, largely thanks to the B-word. It does appear that there might be a decision in the immediate future, though we are just as likely to be waiting until the summer. That will certainly be getting the telcos a bit twitchy.