The history books might not be kind to Angela Merkel. During the roughly 16 years she spent as Germany's chancellor, she was often hailed as a level-headed, compassionate and wise politician in an era of firebrands and opportunists. These days, she is the woman who allowed Germany to become gas-dependent on Russia and telecom-reliant on China.

Bequeathed that legacy, Olaf Scholz, her successor, moved swiftly to crush and dump Russia's Nord Stream 2 gas pipeline like an empty can of pilsner. But despite a western backlash against Chinese vendors, Huawei's presence in Germany's mobile networks remains strong, and it has increased with the transition from 4G to 5G technology.

It is one of the headline findings of a new investigative report by Strand Consult, shared with Light Reading ahead of publication next week. In 2020, the Danish advisory firm exposed how reliant many European countries had become on Chinese equipment vendors for their 4G services. The data appalled critics of Huawei and ZTE. If those companies could exert as much control over the emerging 5G market, China would conceivably be able to bring down critical infrastructure and systems based on the new-generation technology, warned China's opponents. Yet Strand Consult's latest report shows their nightmare scenario has come to pass.

Figure 1: The Chinese equipment vendor still has a major presence in Europe.
(Source: Karlis Dambrans on Flickr, CC 2.0)

The findings may surprise more than a few onlookers while horrifying US hawks. Several European governments and operators have imposed strict limits on Huawei and ZTE, just as the US has hit them with several sanctions. Combined with a 29% drop in Huawei's revenues last year, that created the perception that Chinese suppliers were struggling to retain as much as a regional foothold.

But while there have been a few successful attempts to evict Huawei, they are confined to smaller countries such as Denmark, Sweden, Norway and the Baltic states, accounting for less than 3% of the European customer base. At the same time, some of the region's biggest mobile markets and economic powerbrokers have done little or nothing to rid themselves of Huawei.

'Huawei can switch us off'

From Strand Consult's perspective, Germany is the chief worry because of its population size and economic and strategic importance. In its 2020 report, the Danish firm calculated that 57% of Germany's 4G radio access network (RAN) products were supplied by "non-trusted vendors" – which in this case meant Huawei. Regarding 5G in December 2022, the corresponding percentage is 59%.

The Merkel rationale seemed to be that Germany could mitigate any security concerns by keeping Chinese vendors out of the network's core, the control center. Deutsche Telekom, the incumbent, shifted to Ericsson as its main core network vendor and began trialing a 5G "standalone" core from Mavenir, a smaller US vendor. But telecom executives and security experts who have spoken with Light Reading say the RAN is not impervious to a cyberattack.

"I guess we settled on a situation where Huawei can switch us off and we can switch ourselves back on," said Karsten Nohl, a Germany security expert, in a previous discussion with Light Reading. "It might take some weeks, but we are talking about World World 3 here anyway. Why would China switch off Germany if not for a war situation?"

Critics say Germany is unwilling to restrict Huawei because it fears the consequences for German exports. A destination for German cars and machine tools, among other things, China last year ranked as Germany's second-biggest export market after the US, accounting for nearly €104 billion ($111 billion) in trade. Germany also imported goods and services from China worth more than €142 billion ($151 billion), a figure exceeding the value of imports from any other country.

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For Germany's operators, restrictions on Huawei introduced now would potentially cost hundreds of millions of euros. Deutsche Telekom, for instance, already claims to have blanketed 93.5% of German households with 5G, using Huawei and Ericsson as its two RAN suppliers. Across a 5G network comprising about 20,000 sites and 63,000 antennas, ripping out Huawei and replacing it with another vendor would mean writing off a huge amount of equipment.

Nor does the operator seem to have a quick fix in mind. Since 2020, it has been experimenting with open RAN, a set of interfaces that would supposedly allow different suppliers to be combined at the same mobile site. Instead of buying a full system from Huawei, Deutsche Telekom could, in the future, use radios from one specialist with baseband software from another. But this month, it acknowledged that it is still in the process of "qualifying" vendors invited to participate in a request for quotation – the details were first revealed way back in February.

Unhealthily dependent

Germany is not the only big western European country that looks unhealthily dependent on Chinese RAN equipment. According to Strand Consult's upcoming report, 51% of Italy's 5G network components are Chinese. Among smaller countries, the Netherlands and Austria also exceed the 50% threshold, with 72% and 61%, respectively. KPN, the Dutch incumbent, counterintuitively leaped from Ericsson to Huawei as its sole RAN vendor when other telcos were going the opposite way – a move that seems rather like jumping from a seaworthy vessel onto a burning ship.

Meanwhile, Romania counts 76% of its 5G RAN components as Chinese, while Hungary is at 53%. The implication is that many regional governments paid little heed to earlier US warnings about the risks of relying on Chinese technology to build 5G networks. "Many large EU countries have not taken this issue seriously," said John Strand, the CEO of Strand Consult, in presentation slides shared with Light Reading.

Operators, including Deutsche Telekom and Vodafone, have lobbied heavily against formal bans on Huawei, arguing that its eviction would drive up costs and leave them with only Ericsson and Nokia as viable alternatives. It explains the interest in open RAN, yet the concept has made next to zero progress in large carriers outside greenfield deployments. Even with new interfaces, combining vendors turns out to be extremely difficult.

For Germans worried that Chinese overlord Xi Jinping could wreak digital havoc at the touch of a red button, there is at least a silver lining, according to Strand. Germany stands out in Europe as a particularly "slow adopter of digitization," he said in his presentation. "The country still uses cash and fax."

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— Iain Morris, International Editor, Light Reading