Germany Preparing To Crush Huawei's 5G Ambitions: Report


Germany is looking into the possibility of taking regulatory actions against Huawei and its ambitions to participate in the incoming deployment of the fifth generation of wireless networks in Europe's strongest economy, according to a new local report. No firm decisions have yet been made but the majority of decision-makers in Merkel's current cabinet are understood to be eager to do something about the Chinese company's operations as political scandals, spying concerns, and other allegations surrounding its business continue to emerge.

Right out of Australia's playbook

The currently likeliest scenario is one wherein the German government alters the legislative framework regulating mobile technology rollout efforts in the country in a way that would effectively disqualify Huawei from participating. While it's still unclear how that idea was formed in Berlin, it may have been inspired by a move Canberra made last year given how the Australian government opted for what's essentially the same thing over the summer, drawing an angry reaction from the firm and China itself.


Beijing claimed Australia is intentionally crippling its largest companies based on frivolous accusations and called for a level playing field that would allow everyone to thrive based on merits alone. Many critics found that stance disingenuous and ironically asked China to open its own markets to foreign telecom hardware juggernauts such as Nokia and Ericsson if its primary concern truly comes down to guarding the free-market principles worldwide.

The most radical version of the plan would be changing the German Telecommunications Act, at least in the context of ideas that the regulators are willing to entertain at this point, as per the same report. None of the concerned parties have yet commented on the matter in any capacity.

A regulatory change of heart


Berlin advocated for a passive approach to 5G regulations and Huawei specifically until late last year. In October, it told the parliament it's against the idea of discriminating against any 5G equipment supplier currently in contention to help bring the next generation of wireless connectivity to Germany. It argued the basis for doing so doesn't exist and hence signaled it's unconcerned with Huawei's problems with some other Western countries, particularly the United States.

It's unclear what made it change its stance as the only major development regarding Huawei that happened in the meantime is the arrest of its Chief Financial Officer Meng Wanzhou in early December, though that incident is unrelated to 5G and cybersecurity concerns. Ms. Meng, 46, was apprehended by Canadian authorities after the U.S. Department of Justice charged her of being personally involved into a global banking scheme that defrauded numerous financial institutions with intent to violate trade sanctions placed on Iran.

The CFO is still fighting her extradition request after being released on bail equivalent to $7.5 million by a Vancouver court. The ordeal sparked a diplomatic incident that saw China launch accusations of Canada being a U.S. puppet and claiming egoism and racism are at the heart of Ms. Meng's arrest. While the controversy dealt another hit to Huawei's image, it likely isn't related to Germany's new view of the Chinese firm.


All (German) roads lead to T-Mobile

Huawei recently experienced another major setback in Germany after wireless giant Deutsche Telekom dropped its 5G equipment as one of the concessions given to U.S. regulators as part of their probe into the proposed merger of its subsidiary T-Mobile and Sprint. Sprint's parent SoftBank agreed to do the same so as to accelerate the consolidation review process as the two wireless carriers are still aiming to complete their tie-up in the first half of this year which many analysts previously described as optimistic.

T-Mobile U.S. had issues with Huawei for some time now and even ended up clashing with the Chinese firm in the court of law, having accused it of stealing components and designs of its top-secret touchscreen experience testing robot "Tappy." The company won the lawsuit in 2017 but failed to prove the transgression was ordered by Huawei's management, hence being awarded insignificant damages relative to the half a billion dollars it originally demanded.


The Merkel administration is now saying it takes the issue of 5G security extremely seriously and will be focused on ensuring all critical communications in the country are sufficiently protected. Besides the aforementioned example of Australia, the U.S. already took action against the company by outlawing the use of its wireless equipment on the part of any federal agencies, having even forbidden technologies that are merely associated with Huawei. Canada is now reportedly considering the same, as are Japan and South Korea. In France, wireless carrier Orange announced it won't be relying on Huawei to build its 5G network.

No end to grievances

The U.S. may also soon take things further by forbidding private companies from relying on Huawei's wireless solutions, as one recent report suggested the White House is pondering that move which would be made in the form of an executive order. Washington has been warning allies against equipment from Huawei, ZTE, and other major wireless players in China for about a year now, citing national security concerns. Companies from the world's second-largest economy repeatedly dismissed those allegations as baseless but the Western intelligence community is mostly in agreement that China's communist party could easily leverage the laws it created to compel companies into yielding data on their foreign customers, spying on them, or compromising them via other means, and that's assuming they wouldn't be happy to do so in the first place due to any number of reasons.


Huawei's grievances in the West hence don't appear to be ending anytime soon and it remains to be seen how the company will be affected if its detained CFO is unable to avoid being extradited. Ms. Meng is by far the most high-profile Huawei executive that found itself in such legal troubles to date; not only is she a C-suite member of the world's largest telecom equipment maker but she's also one of the three children of Huawei founder Ren Zhengfei who's been with the company since its humble beginnings in 1993.