The thorny issue of allowing Huawei to sell 5G products has resurfaced in the Czech Republic, more than a year after carriers launched their first 5G services. In line with the European Union’s sluggishness, the Czech government has avoided any definitive statement on the role of Chinese equipment suppliers in 5G. But its cybersecurity office has now typed in a list of strict recommendations. They make for chilling reading for Huawei and its customers.
If enshrined in law, they would likely prevent Huawei from offering 5G products to Czech operators. It is clear that NKIB, the Czech cybersecurity office, believes that 5G providers should only come from countries with a “democratically elected government”. Its evaluation criteria include “the existence of an independent opposition” and “free elections on the basis of which the government in place can be replaced”. China seems about as democratic as Henry VIII, which would rule out both Huawei and ZTE, its smaller rival.
None of this would be a big deal if Czech carriers hadn’t been glutted with Huawei before. But they did, judging by market research published in mid-2020 by Strand Consult, a Danish consulting firm. The three mobile operators O2, T-Mobile and Vodafone have relied heavily on Huawei when rolling out their 4G networks. In fact, only O2 appeared to buy non-Chinese 4G radio access network (RAN) products, according to the Strand Consult report.
Czech President Milo Zeman (right) meets Huawei founder Ren Zhengfei in 2019
(Source: Huawei)
It’s well known (and documented) that carriers generally need the same vendor for 4G and 5G, partly to ensure there aren’t any interoperability issues. Switching to a new provider with the rollout of 5G usually meant switching to the old 4G provider as well, and therefore ripping off (and canceling) that company’s 4G kit. This explains why UK carriers, including BT, incurred hundreds of millions of dollars in additional exchange fees when the government banned Huawei.
While the Czech Republic is a much smaller market for big European carriers like Deutsche Telekom (the German parent company of T-Mobile) and Vodafone, 5G appears to be more widely rolled out than it was in the UK in the past. time of this government’s ban. Vodafone’s Czech unit, for example, sang at this time last year that 5G was available to more than a fifth of the population.
But the dynamics of the Czech market have changed since the beginnings of 4G. In 2013, a majority stake in O2 was sold by Telefnica, its indebted Spanish parent company, to a Czech investment group called PPF, founded by local billionaire Petr Kellner, who died in a helicopter crash in Alaska the year last. Since the initial takeover, PPF has increased its stake and separated O2’s networks from the rest of the business. Additionally, CETIN, the renowned network company, provides infrastructure for O2 and T-Mobile, which share active mobile network equipment.
The new way, not the Huawei
CETIN is also ditching Huawei as it rolls out a 5G network built solely by Ericsson. Indications of this came last March. “We will now work with our supplier CETIN to completely change the entire radio network,” Jindřich Fremuth, CEO of O2, said in comments posted on the PPF website. “We will gradually replace old technology with new Ericsson technology across the country, and at the same time we will upgrade to 5G.”
This overhaul means replacing not only Huawei but also Nokia in Finland, CETIN has now confirmed. “While we are replacing previous generation technology, we are replacing Huawei AND Nokia,” a CETIN spokesperson said via email, noting that CETIN’s 4G network was built with technologies from both companies.
Yet Vodafone has not made public details of a similar change, and it has previously lobbied against European government efforts to ban or restrict Huawei. In mid-2020, as the UK considered its position, leaders told a parliamentary committee that a full Huawei swap would cost “billions” in replacement costs.
About a year earlier, Vodafone CEO Nick Read told reporters at Mobile World Congress that banning Huawei would set back the rollout of 5G in Europe by two years. Its group-level response to government concerns has been to jettison Huawei products at the core, the software control center of the network, at an estimated cost of $200 million ($228 million). But Vodafone would continue to build a 5G RAN with Huawei technologies “at pace”, Read said.
A reluctance to change course is probably not surprising. No other major European operator with a multinational footprint seems as heavily dependent on Huawei as Vodafone. Strand Consult estimated that Huawei was responsible for 61.6% of Vodafone’s European 4G RAN footprint in mid-2020, compared to Deutsche Telekom’s 57.3%, Orange’s 47.6% and just 25.1% from Telefnica. Replacing all that kit would be expensive.
The dangers are illustrated by the UK ban. Determined to avoid overreliance on a single vendor in the future, Vodafone has made a risky bet on alternatives to Ericsson and Nokia, sporting “open RAN” technologies that have yet to catch on. evidence in busy brownfield networks. But that plan only covers 2,500 Huawei sites, leaving decisions to be made on another 3,500 sites that will also need to be replaced by 2028. A crackdown in other European countries is the last thing Vodafone needs.
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Iain Morris, International Editor, Light Reading