5G: USA, UK & Europe. Go Dutch?

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Yesterday, Feb 6 2020, there finally was a debate in Dutch parliament regarding the 5G roll-out (…the related frequency auction in which T-mobile, KPN en VodafoneZiggo will participate has been postponed to June 2020…), Huawei and national security. Last December the Dutch government issued a socalled “Algemene Maatregel van Bestuur”, a general administrative regulation, for which parliamentary approval was not required. Without mentioning Huawei by name, the AMvB states that “unreliable suppliers of 5G equipment” must be excluded from the core of the network. https://www.mijngroeve.nl/history/the-die-is-cast-huawei-banned-from-core-of-dutch-5g-network-at-last/

The AMvB gives the Dutch government the right to force telecom operators to exclude or remove those unreliable equipment suppliers from the critical part of the network. Who could be considered unreliable? A supplier who is suspected of being involved in espionage or sabotage and who has the ability to shut down the entire network. Or a supplier who comes from a country that obliges its citizens and companies to work closely with its governmental and intelligence services. The final assessment will be done in consultation with the NCTV (National Coordinator for Counterterrorism and Security) and the Dutch intelligence services (AIVD), meaning Dutch parliament has little say, insight and control over the whole evaluation process or execution by the Dutch government…

Dutch parliament

Parliament doesn’t feel very comfortable about this lack of transparency. It has been quite unclear how the Dutch government will exactly implement the AMvB. What does the Dutch cabinet f.e. consider the critical and non-critical components of the 5G network? What will be the role of Huawei in the periphery? The Dutch MPs regularly referred to the transparency offered by the UK, where ex-European Boris Johnson’s decision on Huawei was followed by a list identifying those critical and non-critical parts of the network. https://www.ncsc.gov.uk/guidance/ncsc-advice-on-the-use-of-equipment-from-high-risk-vendors-in-uk-telecoms-networks . The UK list was accompanied by clear statements that Huawei would be completely banned in the network’s core and around strategic locations (military bases, airports, parliament etc), while its share in the periphery of the network would be kept to a max of 35%… https://www.mijngroeve.nl/history/uks-huawei-decision-merkel-to-follow/

Even Dutch telecom operator KPN has criticized the secrecy which surrounds the Dutch goverment’s approach towards the 5G roll-out. According to KPN, it runs the risk of not being able to timely and correctly inform its shareholders on its future business, as last minute decisions by the government could impact investments by the Dutch telecom company. It is also getting tired of having to respond to all sorts of speculation in the media on its business ties and projects with Huawei. Dutch Cabinet members did not give much relief to either parliament or KPN yesterday: they kept on claiming the government could not publicly identify the critical parts of the network or vital infrastructure for reasons of national security… The cabinet only promised to give confidential briefings to selected members of parliament about the conclusions of the NCTV/AIVD and the implementation of the AMvB. Telecom providers will be kept informed on a “structural base” about the government’s moves.

Motions in Dutch parliament

Dutch parliament responded by issuing motions which call for the government to not just look at the core of the network but also take into account the high risk parts of the periphery, as described in the EU’s own risk assessment report. The Green Left party issued a motion demanding telecom operators will only be allowed to use reliable suppliers for the RAN (radio access network) in geographical areas with vital infrastructure (f.e. Schiphol, Rotterdam harbour, Bijlmer Arena), while dependency on a single supplier in the complete periphery of the network should be avoided. For 5G, the RAN is the largest focus of carrier capex…

In short, in Dutch parliament a growing number of MPs would like to further limit the role of Huawei, demanding more restrictions than the Dutch government itself has been willing to (publicly) announce. In yesterday’s debate several MPs also sounded in favor of putting a cap on Huawei’s share in the periphery, as done in the UK. And Dutch parliament called again for the government’s support to push for a consistent European approach…..

USA & UK

Dutch government and parliament ‘d better pay close attention to the developments in the discussions between the USA and UK on 5G. U.S. Attorney General William Barr, a former general counsel at Verizon, said on Feb 6 the US and its allies should consider the highly unusual step of taking a “controlling stake” in Finland’s Nokia and Sweden’s Ericsson to counter China-based Huawei’s dominance in next-generation 5G wireless technology, according to Reuters. Barr added China has emerged as the “top geo-political adversary: China has stolen a march and is now leading in 5G … They have already captured 40% of the market and are now aggressively pursuing the balance.”

This remarkable statement was preceded by an announcement in London by UK’s digital minister Nicky Morgan saying that the UK would try to leverage its international allies to find Huawei alternatives for its 5G tech: “It may well be we have to work with our international allies as well to make sure we either get another provider who’s operating elsewhere to operate in the UK, or potentially to perhaps have another company that’s able to offer that equipment so that we are able to have that resilience in our system,” she said….

A new giant western telecom equipment company?

The Trump administration, with bi-partisan support, wants to accelerate its efforts to have the West break off its ties with Chinese tech giant Huawei when it comes to building the next-generation 5G cell networks. In other words, the anti-Huawei campaign isn’t about to stop. The goal could be to create common engineering standards for 5G networks in the West that would allow tech and telecom companies to use US- and/or European made equipment over Huawei’s. “The big-picture concept is to have all of the US 5G architecture and infrastructure done by American firms, principally,” Larry Kudlow, a White House economic adviser, told the WSJ. “That also could include Nokia and Ericsson because they have big US presences.” And Barr concluded: “Putting our large market and financial muscle behind one or both of these firms would make it a far more formidable competitor and eliminate concerns over its staying power, or their staying power.”

The White House is also tapping companies like Dell and Microsoft to build out proper 5G-centric hardware businesses. Earlier this month, Senate lawmakers drafted a bill to push the federal government toward creating a $1 billion-plus fund to help develop the technology required to cut Huawei out of both the domestic US market and the overseas one, where the US hopes those Scandinavian firms with their long-term ties to Silicon Valley can pitch in…

Relentless American pressure

The contours of a new round of American pressure and of America’s concept of 5G’s future in the Western world are emerging….Even though the UK accepted a (limited) role of Huawei in its 5G infrastructure, I wouldn’t be surprized if Boris Johnson has already promised to Trump to completely phase out all Huawei equipment from the UK network in the medium term and have it replaced (with American support?) by other suppliers. Boris does badly need his trade deal with the USA, after all. While the German government is still in complete paralysis over its 5G roll-out approach, the ex-Europeans in London seem to already have embarked on a new strategy, which -ironically- could perhaps begin to appeal to more governments and parliaments across continental Europe too…

British telecom reported that lowering Huawei’s presence in their RAN network to beneath the 35% cap imposed by the government would cost them around £500 million over the next 5 years. They are not alone in facing such expense. While Vodafone does not have Huawei equipment in the core of its UK network, CEO Nick Read has said that the company has taken the decision to remove Huawei from the core across its European networks. The process will take around five years and cost approximately €200 million. The other UK Telecom operator, Three, which does rely solely on the Chinese manufacturer for its RAN infrastructure, could be paying an even more heavy price for its dependency on the Chinese…

Going Dutch

Despite the EU reluctance to officially ban ‘high risk’ operators, Orange has opted for a Huawei-less approach for its French network. This news came just after the launch of Orange’s new European strategy, “Engage 2025”, which will see, among other things, a focus on “upgrading” its RAN… Orange may not be the only company to forego Huawei in the coming months/years. Many operators may simply decide that business with Nokia and Ericsson will be less complicated than with Huawei in the long term.

All EU member states should get prepared for having to pay a higher price for the 5G roll-out if Huawei would be squeezed out…Telecom operators might demand to be compensated. Though Barr’s idea does come across as outlandish and unrealistic, could perhaps some deal be in the making between the self-proclaimed king dealmakers in the US and the UK (and possibly the EU) on the future of 5G?

Will Trump go Dutch and be willing to split the costs for the eventual replacement of telecom equipment if the UK (&EU?) would accept to drop the Chinese and join the American initiatives for the creation of a giant Western 5G company and Western 5G standard? Just a crazy thought…Alternatively the EU would perhaps prefer to opt for complete European digital sovereignty by embarking on its own industrial strategy to spur the build up of innovative European technology companies and giant data centers, while in the meantime defending leading high-tech and equipment companies such as Nokia and Ericsson against Chinese and American competition. Will, in other words, the cherished free-market principles come under increasing attack if the US, China and the EU won’t be able to resolve their (geopolitical) differences anytime soon?

Patent wars

Yet to create a 5G standard without Huawei is easier said than done. Huawei holds the most patents in 5G technology, having also made the most technology contributions. Huawei’s intellectual property is integral to fast 5G deployment. Just a few days ago Huawei announced that it’s suing Verizon for alleged patent violations, marking the latest twist in the Chinese tech giant’s adversarial relationship with the US. The lawsuit, filed in Texas, claims that Verizon is using 12 patents owned by Huawei without authorization. None of these patents involve 5G, but they are being described as crucial to network functionality…

Could it be a harbinger of what’s awaiting the West if it tries to go it alone without the Chinese in 5G? Moreover, if Huawei were excluded from the market, wouldn’t the roll out of the European digital networks face serious delays? US and European companies would not only have to agree to common standards, but also build comparable hardware and deploy it in such a way that 5G networks get off the ground nationswide in the time frame telecom companies have kept on promising, a truly daunting challenge…

source; iplytics.com
source: iplystics.com

Unless the US, China and the EU manage to resolve their political and economical disputes in an amicable, multilateral manner, an increasingly bitter geopolitical technology war could turn into a fierce and prolongued 5G patent conflict and ultimately into a division in worldwide 5G standards…

Huawei’s response

Huawei is fully aware of the risks it is facing: in the midst of the U.S.’ continued pressure on the EU, the Chinese tech giant has already promised to establish manufacturing hubs in Europe. In March last year, Huawei opened a Cybersecurity Transparency Centre in Brussels in an ongoing effort to provide concrete measures to ensure the cybersecurity of its 5G solutions. “Huawei is more committed to Europe than ever before,” said Huawei executive Abraham Liu during the Lunar New Year reception in Brussels about a week ago… The company wants to deliver “5G for Europe made in Europe”, said Hu, adding: “The industry lacks a unified set of technical standards for security, as well as systems for verification. This is complicated by the globalization of the value chain. Digital products include components from many different countries, with many different standards, or no standards at all”. Will the West still be willing to sit down with the Chinese to define global 5G security and verification standards?

Spies in Brussels and the USA

Gerhard Sabathil No copyright infringement intended. All rights belong to their respective copyright owners.

In yesterday’s debate in The Hague not many words were spent on the spying and sabotaging allegations made against Huawei by the Americans. While no Dutch MP trusts Huawei, all of them do admit no conclusive evidence has been presented regarding the American accusations. The past few weeks -coincidentally- several international reports on Chinese spying activities have caught the eye, though. Brussels was rocked by the news of a spy affair involving the flamboyant former EU ambassador from Germany, Mr. Gerhard Sabathil, who spent over 30 years working for the EU, including posts as the European Commission’s head of foreign policy strategy (!) and as the bloc’s top representative in Germany. German authorities suspect he has been at the center of a clandestine Chinese operation aimed at delivering European secrets to Beijing….Sabathil has vehemently denied all accusations of working as an agent for the Chinese secret service…

“The theft of American trade secrets by China costs our nation anywhere from $300 to $600 billion in a year,” William Evanina, director of the USA National Counterintelligence and Security Center, said just a few days ago. Of 137 publicly reported instances of Chinese-linked espionage against the United States since 2000, 73% took place in the last decade, according to the Washington-based Center for Strategic and International Studies (CSIS). The think-tank’s data, which excludes cases of intellectual property litigation and attempts to smuggle munitions or controlled technologies, shows that military and commercial technologies are the most common targets for theft. In the area of medical research, of 180 investigations into misuse of National Institutes of Health funds, diversion of research intellectual property and inappropriate sharing of confidential information, more than 90% of the cases have links to China, according to an NIH spokeswoman.

The Harvard Professor

Charlie Lieber No copyright infringement intended. All rights belong to their respective copyright owners.

Until about a week ago, Harvard professor Charlie Lieber was best known as chair of the university’s prestigious chemistry and chemical biology department and for his innovations in nanoscience. Then, last week, the feds dropped a series of bombshell allegations: according to the US Attorney’s Office the Chinese government paid Lieber seven figures to help set up a university in China’s Wuhan province and to participate in a talent recruitment program that the FBI believes was a front for stealing proprietary research—which Lieber allegedly did not disclose to Harvard and later lied about when asked about it by law enforcement. He faces up to five years in prison and was released on a $1 million bail!

Yesterday’s announcement by the Dutch foreign minister that new measures are being taken to prevent unwanted technology and knowhow transfers by introducing more stringent student screenings and foreign investment probes should come as no surprize…

The Chinese government is confronted with an increasingly hostile European political environment and climate. While it already seems to have lost the battle for sympathy in American Congress, will it still have and grab the chance to stop the growth of negative perceptions in European political circles? Xi Jinping and his overseas diplomats better re-think their (communication) strategies, Chinese threats are only likely to put more oil on the European fire..A EU-China summit is scheduled in Spring, if viruses and 5G fever permit…

https://www.mijngroeve.nl/history/holland-europe-china-strategic-questions/ https://www.mijngroeve.nl/history/america-first-vs-china-first/

see f.e. also www.reuters.com and www.politico.com

about the growing importance of the OPEN RAN initiatives, see https://www2.deloitte.com/nl/nl/pages/technologie-media-telecom/articles/navigating-the-5g-obstacle-course.html and https://www.lightreading.com/mobile/fronthaul-c-ran/open-conflict-over-open-ran/d/d-id/749437?page_number=1