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* UK frustrates U.S. campaign to block Huawei
* Washington "disappointed"
* China's Huawei welcomes British 5G decision
* UK says intelligence cooperation is safe
(Adds further details on market share, competitors)
By Paul Sandle and Jack Stubbs
LONDON, Jan 28 (Reuters) - Prime Minister Boris Johnson
granted Huawei a limited role in Britain's 5G mobile network on
Tuesday, frustrating a global attempt by the United States to
exclude the Chinese telecoms giant from the West's next
generation communications.
Defying Britain's closest ally in favour of China on the eve
of Brexit, Johnson ruled that "high-risk vendors" such as Huawei
would be allowed into the non-sensitive parts of the 5G
network.
Yet such high-risk companies' involvement will be capped at
35%, they will be excluded from the sensitive core, where data
is processed, and they will be banned from all critical networks
and locations such as nuclear sites and military bases.
Such an explicit rejection of U.S. concerns that Huawei
could be used to steal Western secrets dismayed President Donald
Trump's administration but was welcomed by the Chinese firm,
founded in 1987 by a former People's Liberation Army engineer.
"There is no safe option for untrusted vendors to control
any part of a 5G network," a Trump administration official said.
"We look forward to working with the UK on a way forward
that results in the exclusion of untrusted vendor components
from 5G networks."
5G's much faster data speeds and increased capacity will
make it the foundation stone of many industries and a driver of
economic growth.
In what some have compared to the Cold War antagonism with
the Soviet Union, the United States is worried that 5G dominance
is a milestone towards Chinese technological supremacy that
could define the geopolitics of the 21st century.
But as a critical centre for Chinese investment, trading and
banking in Europe, Britain sided with Beijing, in one of the
biggest public breaks with Washington in decades.
"I fear London has freed itself from Brussels only to cede
sovereignty to Beijing," said Senator Tom Cotton, an Arkansas
Republican, adding there should be a review of intelligence
sharing with Britain.
"Allowing Huawei to build the UK's 5G networks today is like
allowing the KGB to build its telephone network during the Cold
War. The CCP (Chinese Communist Party) will now have a foothold
to conduct pervasive espionage... and has increased economic and
political leverage over the United Kingdom."
CHINA VS USA
The United States had repeatedly warned London against
allowing Huawei into 5G, arguing that the distinction between
"edge" and "core" will blur as data is processed throughout 5G
networks, making it difficult to contain any security risks.
Huawei, the world's biggest producer of telecoms equipment,
has said the United States wants to frustrate its growth because
no U.S. company could offer the same range of technology at a
competitive price.
"This evidence-based decision will result in a more
advanced, more secure and more cost-effective telecoms
infrastructure that's fit for the future," Huawei's vice
president Victor Zhang told reporters.
"It gives the UK access to the world's leading technology
and ensures a competitive market," Zhang said.
The only other large-scale telecoms equipment suppliers are
Sweden's Ericsson and Finland's Nokia.
Huawei has invested heavily to achieve market leadership,
despite being excluded from U.S. networks. Zhang said it spent
$15 billion last year on research.
In 2018, it committed to invest 3 billion pounds in Britain,
a country Huawei views as a global innovation hub and strategic
location, Zhang said.
Huawei UK vice president Jeremy Thompson said the 35% cap
was "pretty much in line with its expectations".
"We welcome the diversity element and that's what I'm sure
our customers will be looking for as well," he told reporters.
Huawei has around a 35% share of the non-core 4G mobile
network in Britain, a government document said last July.
INTELLIGENCE
Britain said the decision protected national security while
delivering world-class connectivity. It said
intelligence-sharing, including with the U.S.-led 'Five Eyes'
alliance, would not be jeopardized.
"How we construct our 5G and full fibre public telecoms
networks has nothing to do with how we will share classified
data," Foreign Secretary Dominic Raab told lawmakers after a
meeting of the National Security Council chaired by Johnson.
"Intelligence-sharing will not be put at risk..."
British cyber security officials said they had put special
measures in place to mitigate risks.
"We've never 'trusted' Huawei and the (measures) you can see
… exist because we treat them differently to other vendors,"
Britain National Cyber Security Centre (NCSC), part of the GCHQ
signals intelligence agency, said in a technical post.
The NCSC said the notion that there was no way to separate
core and edge parts of the 5G network "remained untrue".
A British official, speaking on condition of anonymity, said
excluding Huawei would have delayed 5G and cost consumers more,
echoing warnings from the telecoms industry.
Huawei's equipment is already used by Britain's biggest
telecoms companies such as BT and Vodafone, but
it has been largely deployed at the edge of the network.
Sources told Reuters last week that senior British officials
had proposed granting Huawei a limited 5G role, a "calculated
compromise" which could be presented to Washington as a tough
restriction, while accepted by British operators.
(Reporting by Jack Stubbs, Kylie MacLellan, Kate Holton and
Paul Sandle; Writing by Paul Sandle and Guy Faulconbridge;
Editing by Jon Boyle, Alexander Smith and Gareth Jones)
