The thorny issue of allowing Huawei to sell 5G products has resurfaced in the Czech Republic, more than a year since operators launched their first 5G services. In keeping with European Union woolliness, the Czech government has avoided any definitive statements about the role of Chinese equipment vendors in 5G. But its cybersecurity office has now typed up a list of stringent recommendations. They make a chilling read for Huawei and its customers.

If they were enshrined in law, they would probably disqualify Huawei from offering 5G products to Czech operators. It's clear that NÚKIB, the Czech cybersecurity office, thinks 5G vendors should come only from countries with "a democratically elected government." Its criteria for assessing that include "the existence of an independent opposition" and "free elections on the basis of which the existing government can be replaced." China looks about as democratic as Henry VIII, which would rule out both Huawei and ZTE, its smaller rival.

None of this would be a big deal had Czech operators not previously gorged on Huawei. But they have, judging by market research published in mid-2020 by Strand Consult, a Danish advisory firm. All three mobile operators – O2, T-Mobile and Vodafone – relied heavily on Huawei when rolling out their 4G networks. In fact, only O2 seemed to buy any non-Chinese 4G radio access network (RAN) products at all, according to the Strand Consult report.

Figure 1: Czech President Miloš Zeman (right) meeting Huawei founder Ren Zhengfei in 2019
(Source: Huawei)

It's well known (and documented) that operators usually need the same vendor across 4G and 5G, partly to ensure there are no interoperability problems. Switching to a new supplier with the rollout of 5G has typically meant substituting it for the older 4G vendor as well, and therefore ripping out (and writing off) that company's 4G kit. It explains why UK operators including BT incurred hundreds of millions of dollars in additional swap-out costs when the government banned Huawei.

While the Czech Republic is a much smaller market for big European operators like Deutsche Telekom (T-Mobile's German parent) and Vodafone, 5G seems more widely deployed than it was in the UK at the time of that government's ban. Vodafone's Czech unit, for instance, was crowing this time last year that 5G was available to more than a fifth of the population.

But the Czech market dynamics have changed since the early days of 4G. Back in 2013, a controlling stake in O2 was sold by Telefónica, its debt-burdened Spanish parent, to a Czech investment group called PPF, founded by local billionaire Petr Kellner, who died in a helicopter crash in Alaska last year. Since the initial takeover, PPF has upped its stake and separated O2's networks from the rest of the business. What's more, CETIN, the rebranded networks company, is providing infrastructure for both O2 and T-Mobile, which share active mobile network equipment.

The new way, not the Huawei

CETIN is also ditching Huawei as it deploys a 5G network built solely by Ericsson. Indications of this came last March. "We will now be working with our supplier CETIN to completely change the entire radio network," said Jindřich Fremuth, O2's CEO, in comments published on the PPF website. "We will be gradually replacing older technology with new Ericsson technology across the country and at the same time switching on 5G."

That overhaul means replacing not only Huawei but also Finland's Nokia, CETIN has now confirmed. "As we are replacing the previous generation technology, we are replacing Huawei AND Nokia," said a CETIN spokesperson by email, pointing out that CETIN's 4G network was built with both companies' technologies.

Yet Vodafone has not publicized details of a similar switch, and it has previously lobbied against European government efforts to ban or restrict Huawei. In mid-2020, when the UK was considering its position, executives told a parliamentary committee that a full Huawei swap-out would cost "billions" in rip-and-replace costs.

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About a year earlier, Vodafone CEO Nick Read told reporters at Mobile World Congress that banning Huawei would delay the rollout of 5G in Europe by two years. His Group-level response to government concerns was to jettison Huawei products in the core, the software-based control center of the network, at an estimated cost of €200 million ($228 million). But Vodafone would continue to build a 5G RAN with Huawei technologies "at pace," said Read.

An unwillingness to change course is probably not surprising. No other big European operator with a multinational footprint looks as heavily dependent on Huawei as Vodafone. Strand Consult reckoned Huawei was responsible for 61.6% of Vodafone's European 4G RAN footprint back in mid-2020, compared with 57.3% of Deutsche Telekom's, 47.6% of Orange's and just 25.1% of Telefónica's. Replacing all that kit would be costly.

The dangers are illustrated by the UK ban. Determined to avoid future overreliance on any one supplier, Vodafone has made a risky bet on alternatives to Ericsson and Nokia, sporting "open RAN" technologies that are still unproven in busy brownfield networks. But that project covers only 2,500 Huawei sites, leaving decisions to be made about an additional 3,500 that will also need replacing by 2028. A clampdown in other European countries is the last thing Vodafone needs.

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— Iain Morris, International Editor, Light Reading