UK U-Turn on Huawei: 5G kit ban announced for 2027

July 21, 2020

2 min read

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What's going on here?

On Tuesday 14 July, the UK’s Secretary of State for Digital, Culture, Media and Sport, Oliver Dowden,  announced a ban on Huawei, preventing UK telecommunications networks from purchasing Huawei’s 5G kit as of Thursday 31 December. Telecoms companies have until 2027 to remove such equipment from their mobile networks.

What does this mean?

It is feared that the Chinese government could exert pressure on Huawei and use data gathered by the company to spy on other countries (to read more about this, click here). As a result, the US and the UK have banned Huawei citing security concerns. This decision comes at a time of heightened political tension between the US and China due to the ongoing trade war. 

Chinese officials have criticised the UK’s cooperation with the US, accusing the UK of politicising commercial and technological issues and warning that such a move would come at a “cost”.

What's the big picture effect?

The UK’s decision to ban Huawei has certainly created political tension between the UK and China and will likely also impact other telecoms providers in the UK.  

Whilst Chinese officials have not specified the “cost” to the UK, China has often responded to disadvantageous US trade laws with sanctions of its own, making it likely that the UK will also suffer strengthened trade restrictions.

Favourable trade deals with powerful economies such as China are highly important given the UK’s swiftly approaching exit date from the EU. Whilst US and UK relations are currently cooperative and promising for post-Brexit trade deals, the upcoming US presidential election may shake this up if President Trump is not reelected for a second term. The decision to cooperate with the US over China may thus prove to be the wrong move in the long-run. 

The ban is predicted to add an extra £2bn to the cost of constructing a 5G network and delay completion for another two years, putting the UK into the “the digital slow lane”, as Huawei puts it. However, it’s not all doom and gloom. Telecoms executives have expressed their relief that the ban on Huawei focuses solely on 5G and that the 2027 deadline leaves ample time to remove Huawei equipment. Companies such as BT could have faced added costs of £500m had the deadline been set for an earlier date.

Furthermore, the ban has opened the market for other network equipment providers such as Nokia Corp. and Telefonaktiebolaget LM Ericsson to establish their foothold in the UK’s 5G networks. As both companies are already well-established telecoms providers in the UK such a move would be relatively undisruptive to the market.

It remains to be seen how the UK government will balance the demands of both Beijing and Washington and how this influences the outcome of future trade deals as well as the completion of 5G networks in the UK.

Report written by Emily Noble

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