World leaders are growing distrustful of Huawei as the advent of the fifth generation of mobile networks is making them accelerate their next wireless buildout plans, new reports indicate. Even the United Kingdom, one of Huawei's largest market in the West where the firm has been successfully selling its network equipment for many years now, is now becoming wary of deepening its relationship with the Shenzhen, China-based telecom juggernaut. National Cyber Security Centre Ian Levy recently told FT that while London is always in the process of (re-)assessing the security threat potentially posed by any network hardware supplier, its currently largest concern in regards to Huawei is how easily would the Chinese government be able to force the company into turning off all of its gear installed in the UK and what consequences such a move would have for the European country.
While surrounding Huawei-made gear with other hardware has so far been the go-to method of ensuring it cannot compromise any critical system in the UK in the event Beijing attempts to hurt London in any manner, such techniques are unlikely to be effective in the 5G era wherein a significantly larger volume of cloud operations will rely on edge computing, requiring a vast number of systems to work together. In that scenario, isolating hardware from any particular manufacturer with gear from other firms is likely to be a massive logistical challenge that simply won't be worth the risk, Mr. Levy said. As a result, the UK wireless industry is likely to reduce its reliance on Huawei's products amid its 5G expansion.
Even if the telecom segment found a way to continue purchasing high volumes of Huawei hardware and scattering it in accordance with its existing practices, such a move would only make the future UK 5G network inherently less safe by introducing a wide variety of variables to it. "If you are looking at how to attack a network then complexity is your friend," according to Rick Ledgett, former Deputy Director of the National Security Agency.
Background: Security concerns about Huawei are nothing new in the West, with the United States being the number one opponent of the company's global ambitions for some two decades now for a variety of reasons. The UK has been more acceptive of the Chinese firm but that stance now appears to be slowly reversing, despite the fact Huawei pumped approximately $3 billion into the country in recent years and pledged to invest $4 billion more this past February. Mr. Levy has been warning British wireless carriers against using equipment from another Chinese firm — ZTE — for the better part of this year as well, with his appeal first being made just as the U.S. Commerce Department hit the said company with a denial order over trade sanction violations and ultimately almost put it out of business by denying it access to American technologies.
The National Cyber Security Centre has been more careful with its approach to the topic of Huawei and its UK business but appears to be growing firmer in its skepticism about the tech giant's solution as months go by. This July, an oversight board of the British government downgraded its security assurances given to Huawei after discovering major vulnerabilities in its network products. The manufacturer downplayed the report, asserting that the issues highlighted by it are only evidence that its collaboration with London and its agencies is working as intended, helping it continue improving its products from the security aspect. Huawei also vowed to investigate the problems identified by the report but an update on the matter has yet to arrive, with its oversight board's level of security assurances staying in place for close to five months now. Last week, the security agency even publicly reminded Huawei it has yet to address the findings of its July report with any concrete actions.
Several weeks back, Australia indirectly banned Huawei from participating in its nationwide 5G project by raising the level of security clearances required from hardware suppliers to one that the Chinese company will never realistically reach. The development met a fierce response from both Huawei and the Chinese government, both of whom called the move a baseless attack on the free market. Simultaneously, opponents of Huawei's global ambitions and China's trade policy have been arguing that Beijing should open up its borders to foreign investments in wireless and other sectors, allowing the likes of Nokia, Ericsson, and Samsung to take on Huawei on its home soil if it's concerned about fair competition.
While the other side has been dismissing those arguments as biased, politicized, and generally frivolous, the fact remains that the majority of the opposition Huawei is now facing in the West stems from its lack of transparency, as government officials often pointed out. While the firm remains adamant it's owned by its employees, its shares cannot be held by former workers and its overall structure is highly opaque. Existing Chinese laws allow Beijing's law enforcement and intelligence agencies to force Huawei into spying on its customers or using its equipment to assist the Chinese government in other ways, U.S. intelligence officials previously argued. Huawei has always been highly dismissive of those claims, maintaining that it's no more prone to being forced into doing anything by Beijing than Western companies are susceptible to the influence of their own governments.
Impact: While Huawei is still firm in its stance that the opposition it's facing in the U.S. won't stop it from growing internationally, it appears the ongoing stateside efforts aimed at mobilizing Washington's allies against the Chinese firm are now yielding some success, even if only indirectly. In spite of that state of affairs, Huawei is currently on course to conclude its most lucrative fiscal year to date with over $100 billion in revenue. However, a significant portion of its current success can be attributed to the global wireless segment which may begin shutting it down in the West with the advent of 5G. As for the UK in particular, Three already signed a supply agreement with Huawei and is among some two dozen carriers around the planet to have done so this year, though it remains to be seen whether the British government's latest warnings make the rest of the sector more reluctant to partner with the Chinese telecom equipment maker.