Huawei says reports the UK is poised to ban it from the country's 5G market "don't make sense" just weeks after the government allowed it to continue selling products at a restricted level.
The Chinese equipment maker, deemed a security threat by US authorities and some other Western officials, was reacting to reports in the UK's Guardian and Telegraph newspapers that say Boris Johnson, the UK's prime minister, has drawn up plans to ensure Huawei is totally excluded from the UK's 5G sector by 2023.
"We've seen the reports from unnamed sources which simply don't make sense," said Victor Zhang, Huawei's vice president, in emailed comments. "The government decided in January to approve our part in the 5G rollout, because Britain needs the best possible technologies, more choice innovation and more suppliers, all of which means more secure and more resilient networks."
The Conservative Party government proposed new rules at the start of the year restricting Huawei to just 35% of any single 5G or full-fiber network, measured on the number of 5G basestations or fiber-connected properties that use Huawei equipment.
The decision not to impose a total ban on Huawei upset US officials and a number of Conservative politicians who have argued that Huawei's products could include software features that allow China's government to spy on other countries or even cripple networks.
Opposition to Huawei, whose critics also regard it as a trade cheat and intellectual property thief, appears to have risen in lockstep with anti-China sentiment during the outbreak of coronavirus, which first appeared in the Chinese city of Wuhan.
Critics have complained that China initially downplayed the severity of the crisis and has subsequently looked for economic and geopolitical opportunities amid the disruption the virus has caused.
According to the report in the Guardian newspaper, Johnson has now been forced to adopt a much tougher line against Huawei by members of his own party, who were prepared to vote against the government's original proposals designed merely to restrict Huawei's role.
If confirmed, the reports will be welcomed by the Trump administration, which has leaned heavily on the UK government to exclude Huawei from its telecom sector and was reportedly upset when restrictions were proposed instead of a ban.
But the move would hurt UK service providers BT, Vodafone and Three: All rely to varying extents on Huawei's 5G equipment and have insisted that restrictions will drive up costs and hinder the UK rollout of new 5G services during a critical time for the country's economy.
Currently, the main cost problem on the mobile side stems from the need to buy 4G and 5G equipment from the same vendor to guard against interoperability problems. For that reason, a restriction or ban on 5G means stripping out 4G equipment as well.
BT, the national incumbent, is heavily reliant on Huawei in its mobile and full-fiber networks. The Chinese vendor is reckoned to account for about two thirds of BT's 4G footprint, with Finland's Nokia supplying the rest, and it currently exceeds the 35% threshold in BT's full-fiber network, the operator has acknowledged.
Earlier this year, BT estimated the costs of complying with the 35% cap in 5G and full-fiber at about £500 million ($608 million) over the next five years. A total ban could feasibly double this figure.
BT is also working to replace Huawei in the intelligent "core" of its mobile network, naming Sweden's Ericsson as a new supplier in recent weeks.
Vodafone has previously indicated that about 32% of its basestations come from Huawei and said a ban would cost "hundreds of millions" in rip-and-replace costs. Three, the smallest of the UK's four operators, has relied on South Korea's Samsung for its 4G radio equipment but last year announced Huawei as its sole 5G vendor.
Telefónica-owned O2, which recently announced a merger with cable giant Virgin Media, appears less at risk, having used Ericsson and Nokia to build its radio access network.
The latest UK reports come at the end of a dreadful week for Huawei, which is also facing new US sanctions that could restrict its access to vital semiconductors needed for its network equipment and smartphones.
Having previously blocked Huawei's access to components made on US soil, the US Commerce Department late last week proposed modifications that would cut off access to chips made with US equipment.
The rule change could devastate Huawei by shutting it off from TSMC, a Taiwanese contract manufacturer on which the Chinese vendor is heavily dependent.
"For the operators that are already reassessing the amount of Huawei equipment they will use with 5G, this latest effort by the US government to curb the rise of Huawei could be one more reason for these operators on the fence to revisit the 5G supplier landscape," said Stefan Pongratz, an analyst with Dell'Oro, in a research note.
- Openreach still has a Huawei problem
- Tough UK limits on Huawei's role in 5G threaten telco plans
- Huawei is running short of friends, but it still has options
- Huawei gloomy about 2020 as US sanctions take toll and COVID-19 threatens
- Openreach's fiber splurge is a boon for non-Chinese vendors
— Iain Morris, International Editor, Light Reading