Germany to kick Huawei can further down the road

According to press reports this week, Germany is set to ban Huawei from the core, where it has no presence, and the RAN management software, where taking it out looks unviable.

Iain Morris, International Editor

July 11, 2024

6 Min Read
Technicians on a mast
Deutsche Telekom uses Huawei at most of its mobile sites in Germany.(Source: Deutsche Telekom)

German leaders, urged to adopt a tough line on Huawei, have gone as wobbly as an Oktoberfest drunk. While Germany is one of the main power brokers in the European Union (EU), its networks are festooned with 5G equipment from Huawei, a Chinese vendor labeled "high risk" by EU officials. A rip-and-replace job, recommended by Huawei's opponents, would cost billions, potentially disrupt 5G services and upset Germany's trade relations with China. But the solution reportedly devised by German politicians is a colossal fudge, largely unworkable, and it should antagonize anyone genuinely worried about Huawei.

It will delight Huawei by having almost no impact on its German business activities. In the first instance, according to numerous local press reports, operators will have to remove any Huawei products from the "core" by the end of 2026. This software-based core is effectively the brain stem of the whole system, a repository of important data that also controls and takes critical decisions about the management of the network. Even when the UK's telcos were happy to shop with Huawei, they avoided using it in the core.

German legislation here, then, would surely be a positive development as far as EU officials are concerned? No doubt, if Huawei's eviction from Germany's core networks were not already a fait accompli. "We are working towards a Chinese-free core network infrastructure," said Timotheus Höttges, the CEO of German telco incumbent Deutsche Telekom, way back in early 2020.

Since then, the operator has shifted to core network products supplied mainly by Sweden's Ericsson (although Mavenir, a US software company, has also shown up in trials). Deutsche Telekom has long seemed to hope that its proactivity in the core would soothe regulators sufficiently for them to otherwise leave it alone.

Rival Vodafone, meanwhile, unveiled a €200 million (US$217 million, at today's exchange rate) plan to flush Huawei out of all its European core networks at around the same time, when Nick Read was still the company boss. "In non-sensitive areas, Huawei is an important supplier reflecting its high-quality technology," he said, similarly hoping a core network transplant would mollify officials. Ericsson has subsequently identified Vodafone as a 5G core customer in Germany. 

That leaves Telefónica as the only other big German network. Today, it operates two cloud cores in parallel, and neither is provided by Huawei. The main one, supporting about 45 million customers, is also all Ericsson. A more experimental approach, announced this year, introduces Nokia as the provider of core network applications and AWS as the cloud infrastructure platform. Any trace elements of Huawei in Germany's 5G cores seem to be fading like condensation on a glass.

Giving Huawei the RAN around

None of this really worries Huawei or China because the core accounts for a relatively small fraction of total spending on mobile networks. The big bucks are in the radio access network (RAN), and Huawei is by far Germany's largest RAN vendor, accounting for between 50% and 60% of all mobile sites, according to estimates from Barclays, a bank, and Strand Consult, an analyst company.

These 5G networks, moreover, have been extensively deployed in recent years, all while countries such as the UK were clamping down on Huawei. Deutsche Telekom boasted 5G population coverage of 96% at the end of 2023, up from 94.8% the year before. Telefónica has increased it from 80% to 95% over the same period, while availability at Vodafone has risen from 80% to 91%, according to its press releases.

Removing Huawei would effectively mean ripping out equipment at more than 45,000 sites, according to Barclays estimates, and replacing it with politically acceptable alternatives. Barclays has put the cost to Germany's operators at €2.5 billion ($2.7 billion), including about €1.1 billion ($1.2 billion) for Deutsche Telekom and €700 million ($759 million) each for Telefónica and Vodafone.

John Strand, the CEO of Strand Consult, says this works out at just €29 ($31.50) per German and would secure networks from Chinese interference. "In the same way that the Russians shut down the gas pipeline, the Chinese can shut down (or slow or meddle with) the mobile network," he said in emailed comments. "It will devastate the European economy," he went on, pointing out that Germany accounts for 25% of the EU's mobile customers, 20% of its population and 29% of its GDP. "It will make the Russian gas story look like a trailer to a horror movie."

Germany's government, nevertheless, fears Chinese reprisals and disruption to 5G services. When Sweden banned its 5G license winners from using Chinese equipment, Chinese officials were outraged and Ericsson's market share in China soon collapsed, its China sales falling from about $1.8 billion in 2020 to less than $1 billion a year later. UK telcos have blamed their slow deployment of 5G partly on the government-ordered swap-out of Huawei kit.

Management fudge

Instead of banning Huawei outright, then, Germany reportedly wants operators to ensure it is not used in the management software for the RAN by the end of 2029. But this supposed compromise would not address the risk of malicious code being included in basestation software, according to one industry source. It also looks impractical, say two others.

That's because in traditional 5G networks – of the kind deployed in Germany – this management software, known as the element management system (EMS), is tightly coupled with the RAN through proprietary interfaces. To combine one company's EMS with another's RAN, those interfaces would have to be opened, something Huawei has never shown any willingness to do. The separate companies would have to work in close partnership.

Deutsche Telekom, which previously declined to comment on the issue, has been developing its own EMS to support Huawei's RAN, according to a fourth source with knowledge of the matter. But given the probable need to involve Huawei in this project, officials worried about a Chinese security threat are unlikely to be satisfied.

Another option is open RAN, an initiative that seeks to replace proprietary with open interfaces throughout the RAN. In future open RAN infrastructure, the EMS will be replaced by a service management and orchestration platform linked to the RAN via an open interface called O1. All being well, this should make it easier for telcos to pair vendors. Yet Huawei remains publicly opposed to the entire concept. Unlike Ericsson and Nokia, it is not even a member of the O-RAN Alliance, the group developing specifications.

Efforts to keep Huawei out of management software, as futile as they appear, could precede or necessitate a more comprehensive removal. There is other speculation in the German press about the possibility of limiting Huawei to just 25% of the network. Unsurprisingly, it has been derided by Huawei's critics. "This is the equivalent of saying that the government accepts that airbags fail in 25% of the crashes," said Strand. By then, of course, countries might be thinking about 6G.

None of this constitutes "smoking gun" evidence of Huawei's criminality. The Chinese vendor has long insisted it is run at arm's length from the Chinese state, owned by its employees and not about to jeopardize relations with European customers. Before the introduction of bans in other European countries, it was highly regarded for its technical achievements and 5G competitiveness.

The problem for Germany is that it has long seemed to be fundamentally at odds with the EU on high-risk vendors. If the latest reports are true, its best hope is that EU officials deem the plans acceptable and stop hassling Germany. But no other EU country has attempted anything like the German workaround on management software. There is a good reason.

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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