Via Yahoo Finance

This week the Government is expected to give the green light for Huawei to have a role in the UK’s 5G network, coming after months of wrangling over the decision.

The UK’s National Security Council gave the Chinese company the green light in April, but a final decision was pushed back after Theresa May stepped down as Prime Minister. 

Recent weeks have seen the US ramp up pressure on the UK to ban Huawei, with a delegation having been sent to Britain earlier this month to lobby on the Huawei matter, claiming it would be “nothing short of madness” to grant them a contract. 

But, as the drama surrounding Huawei and the UK’s networks looks set to come to a crescendo, just what is it all about? 

What does Huawei make?

Over the past few years, there has been much discussion about whether allowing Huawei into our 5G networks would put our privacy at risk, but it can be difficult to understand why this would be the case. After all, doesn’t Huawei just makes phones? 

Well, no – it does make smartphones, and has certainly carved out a big piece in this very competitive market, alongside Samsung and Apple. But, a much bigger, complex and more strategic business for Huawei has been in designing, manufacturing and supplying the networking gear that all these phones connect to.

When you select your phone, you’ll also choose a network provider. In the UK, those include names like Vodafone, EE, O2 and Three, and each of those pays for a licence to operate a service across the UK. What that means they are responsible for putting down the technology and servers to deliver that service for its users. 

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To do this, those operators divide the network into something called cells, which require base-stations, inside which are antennas, to deliver communications to your phone. Your phone seamlessly hands over from cell to cell as you move around the country, so you wouldn’t even notice, and this is the non-core part of the network, called “Radio Access Network”. Huawei is a major provider of kit for this part of the network. 

Behind that is the “core network”, which manages traffic across the entire network, as well as being responsible for other essential features like giving your phone an IP address, meaning you can connect to the internet, and authenticating whether you have a contract with a network provider. Huawei also provides a lot of this core networking gear. 

In fact, Huawei is one of the few companies which provides an “end-to-end 5G solution”, meaning it can make everything from the basic equipment to far more complicated software for the new wave of wireless technology. Compared to 4G, 5G will significantly boost the speed and capacity of wireless networks. 

Discussions around including Huawei in the 5G networks have seemed to suggest the hardware won’t be used in the “core” networks. Instead its tools are expected to just be allowed at the edges of the networks, like radio antennas at phone mast sites. 

So why is it so hard to remove from our networks now?

For years, Huawei’s equipment has been used in the core part of 3G and 4G networks which were built well before any row around whether to trust the Chinese company kicked off.

Even when it comes to things like undersea cables, which all global companies and tech firms rely on to receive and transmit data, Huawei probably makes the tools for signal processing at both ends of the fibre.

But perhaps the biggest problem operators would have in trying to remove Huawei’s kit is that the company has the highest market share in Europe for base-stations, and when it comes to 5G networks, they run on top of 4G networks and 3G networks, which are using Huawei-built tools. 

That would make it difficult to just strip it out, and many of the operators have warned it would be very costly to have to replace all the Huawei parts, because they would have to strip out the 4G systems, and buy new 4G and 5G systems from other equipment providers. 

It’s not hard to see why British carriers chose Huawei for so many years. After all, Huawei has established a reputation for selling high quality kit at low prices, thanks to the huge domestic market it has in China and the lower manufacturing costs. 

In fact, the UK’s BT was one of the first companies outside China to strike a deal with Huawei for equipment fifteen years ago – and it had since established good relationships in the UK. 

As public opinion has changed, these relationships have become more strained. BT, for example, has been stripping out Huawei devices from its core 4G network for the past year, deciding to do so just months after it praised its tools saying others such as Nokia and Ericsson needed to “catch up”.

Vodafone has also paused the deployment of Huawei’s tech in its core networks. 

However, both providers have reportedly been urging the Government not to implement an entire ban.

Could we just make our own?

Although the UK is known for its world-class research and actually was one of the pioneers of communication technology, right now there is no major British industrial player in the telecom equipment market. 

Actually, it is a space where the number of suppliers has dried up over the past ten years, from around a dozen to now basically just Huawei, fellow Chinese supplier ZTE, Nokia, Ericsson and Samsung. 

Even the US has slipped behind in this race, and also does not have its own domestic champion which could make the same tools Huawei produces. 

For the UK at least, it is a space it seems almost impossible to catch up in – after all, this year Huawei will be spending $15bn (£11bn) on research, more than even US giant Apple. For context, across the whole of the UK, businesses spent £25bn in 2018.