America pressure failed to halt Huawei, the Chinese telecommunications equipment company, from taking part in the UK’s 5G network. While the move has implications for New Zealand, little is likely to change here in the short term.
The British government said it would not ban Huawei hardware despite more than a year of heavy lobbying from the Trump administration. Much of the case against the company rests on claims it has close ties to China’s Communist Party and poses a security threat.
Britain’s move is significant because the nation is seen as one of the US’s closest allies. It is also a member of the “five eyes” group of countries, which also includes Australia, Canada and New Zealand. The five nations have a intelligence sharing agreement.
Huawei has found itself at the centre of a geopolitical power play. The US has threatened to curtail intelligence sharing with countries that allow Huawei equipment into strategic networks. Meanwhile China has hinted at economic retaliation against nations that reject Huawei hardware.
One reason nations like the UK are willing to permit Huawei’s involvement in strategic networks is that it gives a diversity of of suppliers. Only a handful of companies are capable of building and installing advanced 5G mobile networks.
Huawei was not mentioned by name when the British government announced its decision. Instead it talked in terms of “high-risk vendors” that pose greater security and resilience risks.
The decision is something of a compromise. Huawei, and any other ‘high risk vendors’ will only be able to supply certain parts of the network infrastructure. This might include antennas and base stations.
High-risk vendors are limited to a 35 percent share of any network.
The official word from America is that the US government is“disappointed” by the decision. It reiterated its claims about Huawei being mistrusted.
Huawei has repeated denied that it is controlled by the Chinese government. To date no-one has found any credible evidence of the company or any national government using Huawei hardware for intelligence gathering.
Huawei is the world’s largest telecommunication equipment supplier. It has grown rapidly in the last decade to the point where it dominates development in the mobile sector. Huawei was also the driving force behind getting 5G standards accepted.
Officially the UK decision has no influence on Huawei’s role in New Zealand mobile networks. Yet Britain’s acceptance of the company is likely to alter perceptions in many markets including here. It also gives Huawei ammunition in its New Zealand campaign.
There are arguments for and against Huawei, but it’s hard to get away from the negative case being at least as much about geopolitics as security.
At BusinessDesk Paul McBeth writes: “Andrew Bowater, deputy chief executive of Huawei New Zealand, said the UK decision was encouraging and showed it was time for New Zealand’s government to engage with his company and its customers on how to find a way forward.”
Another angle that will be of interest here is the realisation that a Huawei ban could have cost the UK billions. Without Huawei, there is significantly less competitive pressure on equipment makers, which means higher prices.