As Britain decides, Europe grapples with Huawei conundrum
By Douglas Busvine
BERLIN (Reuters) - Britain's decision on whether to allow Huawei to supply equipment for 5G mobile networks comes at a delicate time, with debate raging in European capitals over the security implications of reliance on Chinese technology.
In Germany, Chancellor Angela Merkel's preference for applying the same rules to all equipment vendors faces growing resistance from lawmakers in her own party, who back U.S. calls to ban Huawei outright.
Even as Britain prepares to quit the European Union, the finishing touches are still being put on a bloc-wide framework to address risks in networks that will become faster and more ubiquitous in the 5G era.
Europe's leading telecoms operators, who are all Huawei customers, are lobbying against an outright ban.
At the same time, they are removing the Chinese company's gear from the "core" of their networks. The core routes traffic and manages data and is thus more sensitive than the peripheral radio network.
Here's an explainer on the current state of play:
GERMAN BACKLASH
In Germany, lawmakers across party lines are challenging Merkel's pragmatism. They agree with the Donald Trump administration's arguments that Huawei can't be trusted because it is beholden to the Chinese government. Huawei denies this.
Merkel has called for a time-out on the domestic debate ahead of a March EU summit, reinforcing a feedback loop that Brussels sources say has already slowed efforts to reach a bloc-wide consensus and delayed the 5G framework, dubbed the toolbox.
Concerns expressed by Germany's powerful car industry that a Huawei ban could provoke trade retaliation from China - its largest export market - have influenced the thinking of Merkel and senior aides.
WHAT'S AT STAKE?
Operators Deutsche Telekom <DTEGn.DE>, Vodafone <VOD.L> and Telefonica <O2Dn.DE><TEF.MC> are all Huawei clients. They warn that replacing its kit could cost billions of euros, on top of heavy outlays for German 5G spectrum at auction last year.
More broadly, Europe has emerged as a battleground in the technology 'Cold War' playing out between China and Washington. Huawei's European competitors, Ericsson <ERICb.ST> and Nokia <NOKIA.HE>, would become a supplier duopoly should the Chinese company be shut out.
Huawei leads the global telecoms equipment market with a 28% share, according to U.S. consultancy Dell'Oro. Nokia is second on 16% and Ericsson third with 13%. Its share is higher in Europe and it is banned in the United States.