Decision on Huawei Role in U.K. 5G Delayed Until After Election

(Bloomberg) -- The U.K. is set to delay a decision on the the role of Huawei Technologies Co. in its fifth-generation mobile network until after the general election, according to two people familiar with the plans.

With a national vote due on Dec. 12, and the possibility of coalition negotiations before a government is formed, a decision on the Chinese technology company is now unlikely before 2020, according to the people, who were speaking on condition of anonymity because the plans are private.

The road to a decision has been long and controversial, dividing government departments and public opinion. Some officials have pushed for tough restrictions as a result of concerns over foreign involvement in critical national infrastructure, while others said this would saddle the telecoms industry with extra costs and delay technological upgrades.

Huawei has become a lightning rod for tensions between the U.S. and Europe over trade and security policy as Washington threatens reprisals against any governments that allow Chinese equipment to form part of the crucial ultrafast networks.

As the U.K. looks toward trading relationships after Brexit, ministers have been forced to balance the competing demands and opportunities from President Donald Trump’s administration on the one hand, and the lure of possible eastern trade deals on the other.

U.K. intelligence agencies have repeatedly argued that Huawei is a manageable risk --pointing to its embedded oversight board in Oxfordshire, which reports directly to the National Cyber Security Center. But intelligence officials say it’s for politicians to decide whether the company’s oversight is at the correct level.

A meeting of the National Security Council last week discussed the possibility of allowing Huawei access to the “non-contentious” parts of the network, according to a person familiar with its deliberations. A similar conclusion was reached by Prime Minister Boris Johnson’s predecessor Theresa May.

The U.K. is seeking a balance between increasing oversight to satisfy the U.S. while allowing Huawei’s continued presence in the British market, according to the official, who was speaking on condition of anonymity.

Before being ousted, May had been close to adopting measures which would have allowed carriers to use Huawei in fifth-generation 5G wireless systems while restricting it from some sensitive parts of the network, the person said.

A full ban forcing carriers to “rip-and-replace” their existing Huawei technology from the entire network is seen as unlikely. Companies say such a drastic change would take years and cost them hundreds of millions of pounds, with that figure increasing every day they upgrade more masts to 5G.

Johnson pledged to roll out gigabit-per-second broadband speeds to the whole country by 2025 and 5G to a majority by 2027. Huawei is a crucial supplier in both segments, and a market leader in certain product segments, leading some industry executives to question whether his target is feasible if they were removed.

In July the U.K.’s Department for Digital, Culture, Media and Sport released its long-awaited telecom supply chain review, but left out any firm verdict on Huawei’s role.

Parliament is set to be dissolved for an election on Tuesday, triggering rules that restrict government communications and decision-making.

©2019 Bloomberg L.P.

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