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By Douglas Busvine
BERLIN, Jan 22 (Reuters) - Britain's impending decision on
whether to allow Huawei to supply equipment for 5G
mobile networks comes at a delicate time, with debate raging in
European capitals over the security implications of reliance on
Chinese technology.
In Germany, Chancellor Angela Merkel's preference for
applying the same rules to all equipment vendors faces growing
resistance from lawmakers in her own party, who back U.S. calls
to ban Huawei outright.
Even as Britain prepares to quit the European Union, the
finishing touches are still being put on a bloc-wide framework
to address risks in networks that will become faster and more
ubiquitous in the 5G era.
Europe's leading telecoms operators, all Huawei customers,
are lobbying against an outright ban. At the same time, they are
removing the Chinese company's gear from the "core" of their
networks. The core routes traffic and manages data and is thus
more sensitive than the peripheral radio network.
Here's an explainer on the current state of play:
GERMAN BACKLASH
In Germany, lawmakers across party lines are challenging
Merkel's pragmatism. They agree with the Donald Trump
administration's arguments that Huawei can't be trusted because
it is beholden to the Chinese government. Huawei denies this.
Merkel has called for a time-out on the domestic debate
ahead of a March EU summit, reinforcing a feedback loop that
Brussels sources say has already slowed efforts to reach a
bloc-wide consensus and delayed the 5G framework, dubbed the
toolbox.
Concerns expressed by Germany's powerful car industry that a
Huawei ban could provoke trade retaliation from China - its
largest export market - have influenced the thinking of Merkel
and senior aides.
WHAT'S AT STAKE?
Operators Deutsche Telekom, Vodafone and
Telefonica are all Huawei clients. They warn
that replacing its kit could cost billions of euros, on top of
heavy outlays for German 5G spectrum at auction last year.
More broadly, Europe has emerged as a battleground in the
technology 'Cold War' playing out between China and Washington.
Huawei's European competitors, Ericsson and Nokia
, would become a supplier duopoly should the Chinese
company be shut out.
Huawei leads the global telecoms equipment market with a 28%
share, according to U.S. consultancy Dell'Oro. Nokia was second
on 16% and Ericsson third with 13%. Its share is higher in
Europe and it is banned in the United States.
WHAT ABOUT THE TOOLBOX?
The toolbox will create a framework to analyse and address
network security issues, sources say. It will be able to make
recommendations only because EU rules stipulate that security
policy is a matter for national governments.
The critical factor will be whether the toolbox explicitly
differentiates between vendors deemed trustworthy and those
where closer scrutiny and mitigating steps are required.
There would be no up-front bans, but European Commissioner
Thierry Breton, of France, has made it clear - in a coded
message to Huawei - that the EU will assert its status as a
sovereign space when it comes to telecoms networks.
THE FRENCH EXCEPTION
In France, market leader Orange, which is partly
state owned, does not use Huawei for its domestic network. It
does, however, rely on Huawei in Spain and Poland.
Rivals Bouygues Telecom and Altice Europe's SFR
are both Huawei customers, which raises potential
uncertainty as France prepares to sell 5G spectrum early this
year.
PRAGMATISTS AND SCEPTICS
Across the EU, no government has yet imposed an outright ban
on Huawei. Attitudes range from welcoming to sceptical,
reflecting diverging risk perceptions and attitudes towards
Washington and Beijing.
At the friendly end of the spectrum, there has been scant
debate in Spain about any risks that Huawei might pose. Hungary
has welcomed Huawei, saying it sees no evidence to support U.S.
claims about security risks. Austria wants to coordinate with
its European partners.
Among the sceptics, the Czech Republic's cyber-security
watchdog has issued a warning to all critical network companies,
identifying risks of equipment from Chinese vendors Huawei and
the smaller ZTE.
Elsewhere, the Netherlands and Italy have talked about
retroactive mechanisms for removing Chinese equipment should it
be found wanting. Poland might impose stricter security
requirements on elements of the network core that route traffic
and handle sensitive information.
Taken as a whole, Europe appears to lack the appetite for
outright bans, and any consensus reached on a standards-based
toolbox would represent a big win for Huawei. That would not,
however, eliminate the risk that it is kicked out of individual
markets at a later stage.
(Reporting by Douglas Busvine
Additional reporting by Elvira Pollina, Isla Binnie, Toby
Sterling, Anna Koper, Jan Lopatka, Gergely Szakacs and Radu
Marina
Editing by David Goodman)
