Huawei’s 5G Ban Will Benefit Ericsson, Nokia – But Will They Keep Up?

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National security is a major concern on the US government's mind as 5G networks start to mature. American carriers, especially smaller ones based in rural areas, use Huawei's equipment extensively to provide telecommunications services to users who might not be able to stay connected otherwise. But in 5G, courtesy of the Trump administration's hard stance, Huawei has been unable to make inroads in the US.

The Chinese giant which is also the world's largest telecommunications equipment provider has a good presence in Europe too, with carriers in Germany and Italy using Huawei's equipment for their 5G infrastructure. Additionally, in the UK, Vodafone (NASDAQ:VOD) and EE's limited 5G deployment uses Huawei's equipment on peripheral parts.

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The company's also got strong deals in place with Russia, and even Panama has stated that once the country starts to roll out 5G, it'll rely exclusively on Huawei's equipment for the infrastructure. With these details in mind, we've taken a look at which companies stand to gain the most should American calls for being wary of Huawei end up taking effect; calls supported by groups such as the Global Cyber Policy Watch. The GCPW held an extensive teleconference yesterday, stating that Huawei is one of the biggest security risks to the US.

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When talking about the 5G cold war between the US and China, it's important to start by highlighting the difference between what consumers will have in their hands and the equipment that telecommunications service providers will use to provide 5G services to users. Huawei's threat to US national security interests, as highlighted by former Governor Pennysylvania Tom Ridge during a teleconference with reporters, lie around the networking equipment that Huawei provides to carriers.

The US' primary concern at the time being is should the country's European allies install Huawei's equipment for 5G, then data sharing will be compromised. US telcos don't use 5G networking equipment from Huawei, and forums such as GCPW have stepped up their efforts to make the world aware of the threat they deem Huawei poses due to China's National Intelligence Law to the American-European cooperation.

These efforts come just days before the European Commission's EU wide risk assessment for 5G is due. The report, which will be made public on October 1st, will combine the national risk assessments submitted by the 24 EU member states on the 19th of July earlier this year. Now, in light of yesterday's teleconference and the European Commission's upcoming report deem, here are the companies that stand to win if Huawei is kicked out of Europe.

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One EU country with Huawei equipment is Italy, and the carrier that uses Huawei's products is Vodafone. Vodafone is also the carrier that found backdoors in Huawei's non-5G equipment earlier this year, but this doesn't seem to have deterred it from trusting the company's products. Vodafone started to provide 5G services in five cities this June, and it expects this number to rise to 100 by the end of 2021.

Vodafone uses network equipment from Huawei and Nokia, so it's clear that the carrier will switch to Nokia completely in case the EC decides that Huawei's 5G telecommunications equipment is unsafe. This is due to the fact that switching vendors is cost-prohibitive, as different pieces of equipment have to be compatible; a fact that's a central premise behind the argument to create interoperable standards through organizations such as O-RAN (Open Radio Access Network).

At the Asia day held in Chengdu China on the 16th of this month, Huawei claimed that it's signed contracts for delivering 150,000 5G base stations globally. A big chunk of these contracts might just originate from the United Kingdom - a nation that's yet to decide whether to leave the European Union. Vodafone's dealings with Huawei aren't limited to Italy as the carrier is building base stations in six of the seven cities with Vodafone's 5G deployment. Huawei is also providing equipment to EE, and the company has won contracts with Three and O2.

These developments are interesting since the British government will now have to consider a delayed 5G rollout if it bans Huawei's 5G equipment from the country. Vodafone's likely to shift to Nokia and O2 will rely on Ericsson with whom it already has extensive dealings in such a scenario.

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Germany has taken a more lax approach on the threats that using Huawei's 5G would supposedly produce. In an interview to Der Spiegel, the country's information security head Arne Schönbohm stated that potential risks of data theft and network disruption from using Huawei's 5G networking equipment can be mitigated through encryption and supplier diversity. Resultingly, all German carriers with 5G use Huawei's equipment - a fact that doesn't sit well with the US.

Deutsche Telekon, Vodafone and Telefonica Deutschland all use Huawei's 5G networking equipment. Deutsche and Vodafone also use Ericsson's equipment for 5G, while Telefonica relies on Nokia's gear. Therefore, it's clear that Ericsson will be the big winner in a no-Huawei scenario, with Nokia coming in second place for Germany's 5G coverage.

In Austria, both T-Mobile. and A1 have deployed 5G networks. Of these, only T-Mobile uses Huawei's equipment, while A1 relies exclusively on Nokia. T-Mobile has a larger presence, with with 25 base stations (all from Huawei) having been activated in March. French carrier Illiad will not use Huawei equipment for its 5G rollout in the country, choosing to rely on gear from Nokia instead. Orange France, will not use Huawei's products, but Bouygues Telecom will. Bouygues also uses equipment from Cisco.

Iceland's only carrier Nova is also testing Huawei's 5G equipment.

Global Cyber Policy Watch Has Its Work Cut Out When Advocating For Reduced Space For Huawei In Europe

Carriers in Poland, Norway, Spain and Netherlands all use Huawei's equipment. Therefore, it's clear that Huawei stands to lose a lot of business if it's banned in the EU. Additionally, the countries and carriers that have already invested in Huawei's equipment stand to lose both money and time if their plans are halted. Things have progressed fast in the 5G space in Europe, and it looks as if the Global Cyber Policy Watch might be fighting an uphill battle.

However, ass Governor Ridge who sits on GCPW's advisory board pointed out in his conference yesterday, the fact that Huawei offers cheaper equipment that's ahead of its competitors for deployment does not mean that the security risks that the group believes are associated with the Chinese company's equipment can be overlooked.

One solution that the governor and his cohorts advocate for reducing reliance on Huawei's RAN (Radio Access Network) equipment is to make the company join the O-RAN association. O-RAN aims to develop interoperable equipment that reduces reliance on a single vendor, with telcos having the opportunity to simply replace one interoperablee module with another. Huawei, for its part states that the White Boxes proposed by O-RAN reduce performance and are cost ineffective in the long run.

As we said above, looks like the Global Cyber Policy Watch is fighting an uphill batlle, but Europe's 5G fate will be clear in a couple of days once the European Comission finalizes its report. Till then, stay tuned and let us know what you think in the comments section below. We'll keep you updated on the latest.