GSMA looks at potential impact of possible Huawei ban on 5G infrastructure development
Mounting concerns in Western nations over the security of Huawei telecommunications and networking products are causing several European nations to consider banning the China-based company from 5G deals. Telecom industry group GSMA will hold a crisis meeting to discuss the potential impact on 5G infrastructure development, which some say could set back Europe by several years.
The Lowdown: GSMA, the worldwide telecommunications standards organization, is concerned that a Huawei ban similar to one implemented by the United States and other Western nations could severely impact the Europen telecommunications and connected industries.
The Details: Concerns over Huawei’s integrity are leading the GSMA to propose a crisis meeting over the future development of 5G networks in Europe. GSMA will likely hold its review with board members concurrent with the Mobile World Congress conference in Barcelona in mid-February.
The Impact: If European nations ban Huawei, the implications for the telecommunications and Internet of Things segments are enormous. A ban, industry observers say, will set back Europe’s 5G build-out by at least two years. Deutsche Telekom has already announced it will not launch new 5G-based services for at least that amount of time.
The first impact will be on the sale of smartphones and mobile devices. Smartphone vendors are counting on 5G networks to stimulate a refresh of device sales, which is sorely needed after a slump in 2018.
Huawei bans, though, could have far-ranging negative consequences, as the lack of 5G networks will delay the rollout of new technologies and services ranging from automated factories to self-driving cars. Without 5G networks, U.S. companies and those selling technology into Europe could see lower-than-expected sales.
Background: Huawei is a company that’s long been under the microscope of Western governments and competitors. In the early 2010s, Cisco accused Huawei of stealing trade secrets. In 2013, the U.S. House Intelligence Committee labeled Huawei and ZTE (another Chinese telecom equipment vendor) threats to national security and urged American companies to not buy their products. And several governments, including those of the United States, Australia, Japan,
More recently, Huawei has faced new legal challenges. In December, Canadian authorities arrested Meng Wanzhou — Huawei’s CFO and daughter of the company’s founder — on U.S. charges of stealing trade secrets from T-Mobile. Since then, the U.S. has indicted Huawei for stealing intellectual property from its rivals and violating trade sanctions in Iran. The U.S. also accused Huawei of operating a bounty program in which it rewards employees for stealing technical secrets from competitors.
While Western nations are moving away from Huawei, the Chinese company does have allies. The Russian government recently signed a deal to develop 5G networks based on Huawei products. Several Middle Eastern countries are also investing heavily in Huawei for the development of 5G networks.
Counterpoint: Banning Huawei from the U.S. market has not slowed the development of 5G networks. American carriers such as Verizon, T-Mobile, and AT&T are working with Ericsson and Nokia in the development of their 5G networks. And Huawei bans around the world are opening an opportunity for Samsung to enter the 5G network market.
The most direct beneficiaries of the Huawei ban in Europe are Ericsson and Nokia. The remaining question is whether the European vendors have enough capacity to make up for the shortfall created by the Huawei ban.