European Commission presents plan for banning Huawei and ZTE

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European Commission presents plan for banning Huawei and ZTE

Commissioner Thierry Breton presented the European Commission’s plan for banning High-Risk Suppliers like Huawei and ZTE from European telecommunications networks.

The Commission also released a status report on “Member States’ Progress in implementing the EU Toolbox on 5G Cybersecurity.” Breton’s message is that the member must move more quickly to implement the 5G toolbox. Here are Breton’s key points with Strand Consult’s assessment (SC).

All EU member states are committed to implementing the EU´s 5G Toolbox. To date, 24 Member States have adopted or are preparing legislative measures giving national authorities the powers to perform an assessment of suppliers and issue restrictions.

SC: This means that all EU countries support the 5G Toolbox, the implement of which will work to remove Huawei and ZTE from European networks.

10 Member States have imposed such restrictions, and an additional 3 Member States have relevant national legislation underway.

SC: This is a significant improvement compared to a few months ago when Strand Consult’s released its report The Market for 5G RAN in Europe: Share of Chinese and Non-Chinese Vendors in 31 European Countries. Given the Commission’s communication we the remaining more operators in 14 countries to move more expeditiously to remove Huawei and ZTE equipment.

The Commission considers that decisions adopted by Member States to restrict or exclude Huawei and ZTE from 5G networks are justified and compliant with the 5G Toolbox.

SC: This statement is very important to support the member states where Huawei and China attempt to thwart the implementation of the toolbox. China has made unseemly threats in certain members states. Now these states have meaningful European Commission support. For example, in December 2019, Wu Ken, the Chinese ambassador to Germany, was quoted as threatening the German auto manufacturing industry that access to the Chinese market could be restricted should Chinese Huawei be excluded from participating in contracts to build Germany’s 5G networks. The statement dampened Germany’s enthusiasm for opening its EU toolbox and examining its requirements.

The Commission will take measures to avoid conducting its official communications via mobile networks built with Huawei and ZTE equipment.

SC: If an EU mobile operator uses Huawei or ZTE equipment in its 5G network, the European Commission will not do business with that operator. In practice EU operators which use Huawei and ZTE will be labeled as “non-trusted operators.” This will likely accelerate the exodus of corporate customers from European operators which don’t want to conduct their business on Chinese networks. Strand Consult described this in its 2019 research note The pressure to restrict Huawei from telecom networks is driven not by governments, but the many companies which have experienced hacking, IP theft, or espionage. This is a needed and important step from the Commission.

The Commission also intends to reflect this decision in all relevant EU funding programs and instruments.

SC: The EU will further restrict grants, subsidies, and financing to European entities which use Huawei and ZTE equipment. This will have consequences for rural EU operators which receive EU money and recipients of European Investment Bank (EIB) loans.
Strand Consult is not surprised by today’s announcements. They are consistent with the security analyses and recommendations Strand Consult has published for years.

Some EU countries and operators will find it difficult to implement the EU’s new security and procurement policy. However Strand Consult believes that it is good business for an operator communication that it takes security seriously and backs it up with a clean network free of Huawei and ZTE equipment.

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