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Huawei’s Trouble Spills Over to Europe’s Telecom Market

Huawei is already in trouble with the US, Australia and New Zealand as the countries have blocked the company from developing 5G networks amidst concerns of it having possible links with the Chinese g

Things are getting even worse for Chinese telecom giant Huawei with the company facing new setbacks in Europe, its biggest foreign market.

Following the US’s lead, some European governments and telecom companies have also started to shun Huawei’s network systems over data security concerns.

This may put Huawei in a bigger trouble as bans in Europe could significantly increase the financial pressures on the company.

This could also cost Europe tens of billions of dollars as the region looks to build up “5G” networks, according to a PTI report.

Allies under pressure from the US

Europe is still divided over Huawei, but the trendline is moving in a fairly clear direction as the US exerts pressure on allies to block it, according to Thorsten Benner, director of the Berlin-based Global Public Policy Institute think tank.

Germany’s Deutsche Telekom is also apparently taking the global discussion about the security of network elements from Chinese manufacturers very seriously. The company had last week said that it uses multiple companies to build its network, but they are also re-evaluating their procurement strategy.

The situation is not good in the U.K. as well. During a speech, Alex Younger, the director of Britain’s Secret Intelligence Service, or MI6, had mentioned that Britain needs “to decide the extent to which we are going to be comfortable with Chinese ownership of these technologies,” according to local media reports.

Earlier this month, British Telecom, one of the U.K.’s largest internet providers, had also revealed that it will not use Huawei’s equipment in its 5G mobile network when it is rolled out in the U.K. It also announced removing Huawei equipment from key parts of its current 3G and 4G networks as part of an internal policy not to use it for core infrastructure.

As per the PTI report, Norway’s telecom ministry said it was considering clarifying requirements from network operators, without being more specific.

Belgium’s cybersecurity agency is also reportedly considering a ban on Huawei. Following the movement, the Czech Republic’s prime minister has ordered his government office to stop using Huawei mobile phones. The decision came after the national cybersecurity agency warned that products by Huawei and another Chinese telecom company, ZTE, pose “a security threat.”

The European Union’s head of technology policies, Andrus Ansip, said “we have to be worried” about possible security risks from Huawei when asked about the company’s role in European 5G and driverless car projects.

The debate on Huawei

Geopolitical tensions over Huawei intensified after its chief financial officer, who is also the daughter of founder Ren Zhengfei, was arrested December 1 in Canada. She was held in connection with US accusations that the company violated restrictions on sales of American technology to Iran.

In August this year, the US passed the National Defence Authorisation Act which puts a ban on the use of Huawei and ZTE technology products and services by the government on concerns over the connections with Chinese intelligence.

Recently, three big telecommunication operators in Japan – NTT Docomo, SoftBank Group Corp and KDDI Corp – announced their plan to ban purchases of equipment from ZTE and Huawei to strengthen its defences against cyber attacks and intelligence leaks. SoftBank was the biggest decliner among the three telecom companies.

Huawei is already in trouble with Australia and New Zealand as the countries have blocked the company from developing 5G networks amidst the concerns of it having possible links with the Chinese government.

However, the company has repeatedly clarified that the Chinese government has no influence over it.

Huawei’s dispute with the US

The trouble with the US started in 2012, when a House Intelligence Committee report found it was a security risk and recommended that the government and private companies stop buying its network equipment.

Huawei and its rival Chinese telecom, ZTE Corp, were investigated in 2012 to check if their equipment could pose a threat to U.S. security.

Later Congress in its report concluded that “Huawei did not fully cooperate with the investigation and was unwilling to explain its relationship with the Chinese government or Chinese Communist Party, while credible evidence exists that it fails to comply with U.S. laws.”

Acting upon these findings, the U.S. launched a movement called Five Eyes, consisting of the United States, Canada, the U.K., New Zealand, and Australia to monitor the Huawei situation. Japan and Germany also joined the movement at home. While four of the Five Eyes have already banned Huawei, Canada is reportedly under pressure to add its name to the list.