March 1, 2019 / 11:11 AM / in 5 months

Breakingviews - Europe is better off policing than banning Huawei

BARCELONA, Spain (Reuters Breakingviews) - American government officials attending this year’s Mobile World Congress at least avoided endorsing the company they had come to lobby against. The delegation from the U.S. State Department brought their own lanyards to the telecom industry’s annual shindig to avoid wearing the standard-issue passes bearing the name of conference sponsor Huawei. 

Lisa Duan, a visitor from China, holds a sign in support of Huawei outside of the B.C. Supreme Court bail hearing of Huawei CFO Meng Wanzhou, who is being held on an extradition warrant in Vancouver, British Columbia, Canada December 10, 2018. REUTERS/David Ryder

That might be the extent of Americans’ achievements in Barcelona, however. European telecom operators gathered in the Spanish city mostly rejected U.S. pleas to banish the Chinese supplier from their mobile networks. The continent’s regulators may yet force them to – at great expense and to the detriment of the region’s consumers. Industry proposals for a tough testing regime seem like an appealing compromise. 

SPECTRUM OF OPINION 

“There has never been more interest in Huawei. We must be doing something right,” Guo Ping, the current holder of the company’s rotating chairmanship, joked at the start of his keynote address on Tuesday. Guo vociferously denied allegations that Huawei’s telecom equipment has “back doors” that allow Chinese intelligence services to access sensitive information. He added that the U.S. CLOUD Act explicitly permits Washington to access data across national borders. 

Still, it’s easy to see where the Huawei hawks are coming from. China’s National Intelligence Law, passed in 2017, appears to oblige all companies to assist the country’s security services. And the Middle Kingdom is a known perpetrator of cyber attacks. Britain’s National Cyber Security Centre said in December it believes “with the highest level of probability” that a group acting on behalf of the Chinese Ministry of State Security carried out a “malicious cyber campaign” to steal intellectual property and sensitive commercial data. A UK body set up to monitor Huawei kit found “shortcomings in Huawei’s engineering processes”. 

FUZZY SIGNAL 

The U.S. State Department’s Rob Strayer reeled off those arguments in Barcelona, and told delegates that Huawei was “duplicitous and deceitful”. He said Europe understood the risks. American officials want the likes of Vodafone and Deutsche Telekom to follow stateside peers by using equipment supplied by Scandinavian duo Nokia and Ericsson to build their super-fast 5G networks. European operators, though, have at least three good reasons to object. 

First, America has yet to provide evidence of Huawei back doors; European telecom executives interpret this as a sign that no such evidence exists. Britain’s National Cyber Security Centre, part of spy agency GCHQ, hasn’t revealed any major holes during eight years of inspecting Huawei’s kit. Many in Barcelona suspected America is more interested in holding back a successful Chinese company. 

Nor would excluding Huawei necessarily make European networks safer. The Chinese company, Ericsson and Nokia respectively accounted for about 36 percent, 32 percent and 22 percent of the market for radio-access equipment in Europe, the Middle East and Africa in 2017. A ban would create a Nordic duopoly, making life harder for telecom bosses who prefer to use a variety of suppliers. Besides, non-Huawei kit could still be vulnerable. Russian state-backed actors last year attacked Britain’s telecom infrastructure, according to the National Cyber Security Centre. They were targeting weak network design, not compromised equipment. 

Excluding Huawei would also be costlier for European telcos. Unlike their American rivals, European companies would have to rebuild the parts of their networks that already include the Chinese company’s equipment. Vodafone Chief Executive Nick Read reckons this could take years. It would also mean diverting budgets currently reserved for investing in 5G equipment.  

BIT BY BIT 

That argument could prove decisive for the European Commission, which faces U.S. pressure to implement a ban but is also keen to promote faster mobile networks. Digital Single Market Commissioner Mariya Gabriel said on Monday the commission would take a decision soon. 

Telecom lobbyists have come up with a sensible-sounding alternative to a ban. The GSMA, which represents operators, wants a Europe-wide equipment-testing regime for suppliers like Huawei. The plan is vague, but ideally this would be a souped-up version of the regime that exists in the United Kingdom, though run and owned by an independent body rather than the Chinese group. The European Union is in a powerful position to dictate terms. Huawei has already offered to spend $2 billion fixing problems found in Britain. Governments could even combine rigorous testing with a ban on Huawei software in the particularly sensitive parts of operators’ networks. 

That wouldn’t satisfy the U.S. government and other Huawei hawks, who argue that the most determined attacker could bypass tests. That’s true; no IT system is invulnerable. But in the absence of more compelling evidence, Europe is better off policing those threats, rather than banishing Huawei entirely.

Breakingviews

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