The Hague, Brussels, Washington – Huawei: the big clean up

above: Beijing, street sweepers in 1990 photo copyright©E.R.

Understandably Corona and the US presidential election have completely dominated the news in recent weeks / months. The on-going European discussion about the 5G rollout has failed to receive a lot of media attention. More and more European countries have banned or rejected Huawei, the Chinese telecom giant. Meanwhile Dutch Prime Minister Rutte and German Chancellor Merkel do probably prefer not to be reminded of the ease with which they rolled out the red carpet for the Chinese company in the recent past, an approach they justified and defended on the grounds of the European free market principle. The local media’s preoccupation with Covid-19 and the US presidential election serves as a welcome distraction in this context. However, recent local and global developments in and around the 5G rollout do give us us an indication of what to expect in the Netherlands in 2021. A brief summary

The Hague

On November 3, 2020, the Dutch Parliament adopted a motion that could mark a turning point in Dutch relations with Huawei and the so-called ‘core-periphery approach’ with regard to the security of our 5G network. After all, the motion states:

“Our cabinet policy is to keep malicious suppliers out of the critical parts of the telecom networks. The House of Representatives now sees a risk in this: i.e. if the policy is to allow suppliers to use other parts of the network, even if they have the possible intention to misuse or disable our telecommunications network. The House notes that other countries no longer make this distinction, but completely ban certain suppliers. And now asks the government to investigate whether the current policy is still sufficient. State Secretary of Economic Affairs, Mrs. Keijzer, has mentioned that this is in line with the socalled ‘structural approach’. “

Earlier this year, following the advice from Brussels, the Rutte government issued extra security requirements (“5G toolbox”) for the 5G equipment that will be used by the telecom operators involved in the rollout of the network (KPN, T-Mobile, VodafoneZiggo). The toolbox provides clear measures to avoid the use of ‘risky’ suppliers in the network, including the Radio Access Network (RAN). The Netherlands and the EU have opted for a so-called ‘country-neutral’ approach, in which no country / company is explicitly excluded from participation in advance. The Rutte cabinet has decided that equipment suppliers deemed unreliable cannot be part of the core of the network, the presumed most critical part. The RAN has not been regarded as the core or very critical part of a network by the government. *** (refer https://www.mijngroeve.nl/history/holland-huawei-and-5g-wat-next/ )

AMvB

The assessment of a supplier’s (perceived) reliability is ultimately up to the national member states, not to Brussels. Via a ‘General Administrative Order’ (AmvB or ‘Decree on security and integrity of the Dutch telecommunications’) of last December, the Dutch government stated that additional measures could be issued at any time by ministerial decree that could put new conditions on the telecom operators to safeguard the 5G rollout and national security. In other words, the cabinet made it clear it wanted to keep the full control over the rollout of 5G and have the flexibility to adjust its approach at any given time.

In order to keep up with eventual changes in threat levels and technological developments, a structural process was set up in consultation with those telecom providers in which relevant information would be continuously shared between all involved parties. Through these regular evaluations (“dynamic testing”) it would be decided whether new security measures would be required, f.e. when the government would come to the conclusion that some non-critical parts had better be treated as critical. All these dynamic evaluations are kept secret, only a select group of MPs are informed of the outcome and consequences of these discussions. What the Rutte cabinet precisely understood / understands by ‘core and periphery’ and ‘a critical part’ has never really been fully explained to the Dutch citizens.

These dynamic evaluations keep open the option of a further decrease or even a complete phasing out of the share of Huawei in the Dutch network. Or of a Huawei ban in certain strategic locations, such as Schiphol or the port of Rotterdam. But we will of course never hear any of our cabinet members publicly say that they consider Huawei an unreliable party, perhaps either out of concern for Chinese legal counter-action (against potential unlawful Dutch protectionism?) or for fear of retaliation against Dutch companies in China.

In other words, the 5G rollout in the Netherlands has been shrouded in a lot of secrecy. This presents a difficult dilemma for the mobile operators because on the basis of the AMvB no equipment supplier is excluded in advance. The operators run the risk of having invested or investing in hard-and software of a supplier (read: Huawei) which could have to be abandoned at the very last moment.

The Dutch MPs are trying to reclaim part of the control over the 5G roll-out by no longer beating around the bush: under the influence of the recently announced complete bans of Huawei in f.e. the UK, Belgium, Sweden, Denmark and a number of Eastern European countries, as well as the de-facto ban in France, they are demanding the Rutte cabinet to quickly reconsider its 5G approach, while implying they would like the Prime Minister to just follow those recent decisions made in the UK and France.

C2000

Previous blog posts also pointed to the remarkable fact that in the renewed Dutch Tetra network (C2000 / a separate digital standard for closed radio communication that is mainly used by professional users such as the police, security services or the army, the socalled ‘OOV organizations’), the services and products of a subsidiary of the Chinese company Hytera, located in Germany, have been employed, despite the initial reservations of the Dutch Intelligence Service AIVD and part of our Parliament. (refer https://www.mijngroeve.nl/history/c2000-not-or-networking-holland-hytera-the-chilly-war/ and https://www.mijngroeve.nl/history/dutch-parliamentary-debate-july-4-2019_ajax-huawei-game-over/ and https://www.mijngroeve.nl/sport-en/ajax-huawei-contract-extension/ )

Dutch Minister of Justice & Security, Mr. Grapperhaus, has recently admitted that the technical quality of the C2000 voice network is still not up to the level of the old network. Moreover, in addition to the use of C2000 for speech, the need for the mobile use of data by the emergency services is rapidly increasing: think of messaging services, video streaming and location and sensor data. The Ministry has started to explore the possibilities of providing our emergency services with safe voice and data traffic with the highest level of operational availability and continuity: between the lines one should read that the renewed C2000 system still does not meet the ( safety) requirements of modern times and should be replaced as soon as possible.

For the above data traffic, the OOVs use the regular services of the various mobile network operators. The basic idea is that for this so-called ‘mission-critical communication’ the government will have its own core network in the future and will also continue to use those radio networks of one or more Dutch telecom operators. This gives the government the most cost-efficient control over security, the best access and functionality, while ensuring optimal radio coverage and usage of frequency spectrum and network capacity, as well as smoothest international cooperation and fall-back options in the event of technical malfunctions.

‘On Broadway’

The EU has kicked off the so-called BroadWay initiative via its PSCE (Public Safety Communications Europe) organization , in which currently 11 EU countries, including the Netherlands, participate. The aim of the BroadWay program is to improve cooperation between the OOVs from different countries in Europe. In the BroadWay plan these organizations would be able to communicate (safely) with each other internationally via a pan-European network. This pan-European network would be created based on the so-called 3GPP standard, meaning every participating European country would be using the same standard for its mission-critical mobile broadband network.

At a much earlier stage, the AIVD already recommended that the mobile network in the Netherlands be switched to a solution in which the dependence of countries with an offensive cyber program (read: China) would be minimized. If the Dutch government does intend to allow its OOVs to use part of the 5G RAN of one or more telecom operators in the future and truly wishes to make Broadway a success, an exclusion of Huawei in the RAN would probably make sense, a decision which Rutte sofar has not been willing to make. The aforementioned motion of the MPs forces his cabinet to provide more clarity.

In December 2020 there will be another evaluation moment during a closed parliamentary session on the Dutch 5G rollout. There is a possibility that by then even Merkel will have changed course and have Germany agree to a de-facto 5G Huawei ban, by imposing all kinds of administrative restrictions against the installation of Huawei 5G equipment in the German network, making a choice for the Chinese telecom giant impracticable or too expensive for the telecom operators in our neighbouring country.

Berlin

The German government has been struggling for two years to determine its final position, as has been highlighted several times in this blog. Huawei and China are under heavy fire in the German parliament too. The German MPs’ preference increasingly leans towards a completely clean network, ie stripped of all Chinese elements.

Deutsche Telekom is a big obstacle. There has been increasing frustration and resistance in Parliament over the company’s deep ties with China. DT, Germany’s largest telecom provider, relies on Huawei for about two-thirds of its equipment: much of the existing 3 & 4G equipment originates from the Chinese giant. The first generation 5G frequencies/network is often built on top of existing 4G installations, i.e. consists of an integration of new and existing equipment / (updated) software. Replacing Huawei equipment with third-party equipment is believed to cost DT about $ 3.5 billion, roughly the size of its annual profit.

KPN

What the cost of such a full Huawei (and ZTE) replacement in the Netherlands would be isn’t very clear. Huawei is already in critical 3 & 4G parts of the KPN & probably of T-mobile networks as well and is allowed to be used in the RAN and the periphery of the new 5G Dutch network according to the current rules, unless the Dutch government will change its opinion in December. Perhaps the telecom operators together with Rutte thought until quite recently that they got a cheap deal by opting for Huawei. The geopolitical and security aspect in the choice of 4 & 5G suppliers has long been downplayed or neglected by the Dutch and the German governments. In 2020 they were rudely woken up by the unrelenting, heavy American pressure.

The entire Dutch Parliament appears to have grown less fond of the Chinese company and the PRC in general. Xi Jinping’s China has lost a lot of goodwill in the Netherlands and the rest of Europe over the past year. Part of our Parliament even considers the Chinese telecom giant to be complicit in the serious human rights violations in Xinjiang, Tibet and Hong Kong. For Rutte and Merkel, it is becoming increasingly uncomfortable to be publicly seen or depicted as defenders of Huawei’s interests. Because of the choices and decisions made in other European countries and by democratic nations elsewhere in the world, these two government leaders are under severe pressure to clarify their final position: will they dump Huawei in the end? And who will pay the bill for such a decision?

Do the Netherlands or KPN and T-mobile have contractual obligations towards Huawei? The cost of the core network is relatively low compared to the cost of the total network. The core is said to represent about 4% of the total cost of a complete mobile broadband network. Most of the costs are incurred in the RAN and transmission networks, where Huawei is probably omnipresent, precisely because of its lower prices compared to the European competition. That may also explain why the Dutch government and the telecom operators initially preferred not to exclude Huawei from those parts ….. A choice for frugality over security, which could eventually prove to be very costly….

But hey, what comes around goes around….

Washington

US skepticism towards Huawei goes back much further than Trump, but turned into crusade under the administration of ‘The Donald’. One of the latest American moves: the so-called Clean Network Initiative. It is an extension of the White House’s 5G ‘Clean Path plan’ announced earlier this year with the aim of keeping Chinese hardware companies such as Huawei and ZTE out of the US 5G infrastructure. The Clean Network program applies this anti-China stance not only to 5G equipment, but to telecom providers, cloud services, submarine cables, apps and app stores too. Chinese suppliers of apps (such as WeChat, Tiktok), surveillance cameras (HikVision), drones (DJI), walkie-talkies (Hytera / C2000), 5G cabling etc etc are considered ‘dirty’ in this view, meaning they should be completely shunned. .

map © USA State Department, 2020

It is a very comprehensive effort to try to secure America’s 5G network, and does not just look at one part, but at the entire chain that is / may be involved in setting up, using, maintaining and participating in a 5G system and infrastructure. Washington is trying to find supporters worldwide for the initiative, which means that China is effectively kept out of the door. Those who are still in doubt are sometimes lured with promises of American dollars: agreeing to the replacement or banning of Chinese equipment and joining American’s 5G security plan could perhaps hold out the prospect of attractive bilateral economic deals and financial compensation.

In a number of European countries (eg Norway, Sweden, Denmark, Austria) that also participate in the Broadway initiative, the local telecom operators have already joined the Clean Network initiative and professed not to purchase Huawei equipment. A number of governments in Eastern Europe have also signed 5G security treaties with Washington. This puts The Hague under extra pressure to instruct telecom operators in the Netherlands to ban Huawei if the Broadway plan is to be offered the best prospects to succeed. In addition, the Dutch government must finally be realizing that the Chinese giant will have great difficulties in guaranteeing its supplies of network equipment in the longer run: the Chinese company has been cut off from crucial supplies of American chips, a risk that mijngroeve.nl highlighted at an early stage.

Biden

Biden is likely to pursue the Trump administration’s Clean Network plan and block US chip deliveries to Huawei for 5G network devices. America has also stated that the Clean Network plan is based on internationally accepted, ‘technology-neutral’ standards of digital trust, developed by the Center for Strategic and International Studies, the 5G toolbox of the EU, and the so-called ‘Prague Proposals’, 5G recommendations from 30 countries, dating back to 2019. Russia and China were not part of any of these initiatives.

EU Commissioner Thierry Breton and US Deputy Secretary Keith Krach very recently issued a joint statement stressing the shared principles for 5G security and the synergy between the EU 5G Toolbox and the Clean Network Initiative. And despite all the bad blood between Trump and quite a few European leaders, US and EU officials held several bilateral rounds of talks in recent months to discuss their China strategy, including the 5G security issue. With Biden at the helm, more intensive consultation and cooperation with the EU on the China topic is even more likely.

Split worlds

The Rutte cabinet is hesitantly moving towards the American position, partly under pressure from the Dutch MPs too, if we may at least interpret the meaning of the aforementioned adopted motion that way. This American stance does imply that the emergence of two separate 5G spheres, one supported by reliable suppliers in the democratic part of the world, and one in which Huawei and Chinese technology and players will be dominant, can no longer be avoided.

To what extent one side will still have / get access to the 5G world of the other is currently very uncertain. In the most optimistic scenario, Biden and the EU will make another attempt to keep the Chinese on board in some limited way without wanting to run the risk of jeopardizing their own national security. Perhaps they will try to negotiate international agreements about 5G standards, the use of the internet and cybersecurity etc. together with China (and Russia) in a multilateral context.

If the US along with the EU were to completely exclude platforms / players based on their national origins, critics might argue that – ironically enough – the view of the People’s Republic of China favouring a fragmented, tightly controlled Internet over an open Internet has triumphed. After all, Google, Facebook and Twitter have been blocked in the PRC for years. There has never been a level playing field in this regard. But to give Chinese players free access to the European market and personal data just on the basis of the importance of the principle of an open internet does no longer make much sense either.

Digital sovereignty

The American clean network plan not only touches on the issue of the (national) security of a network, but also on fundamental questions about the protection of personal data, the European plans for digital sovereignty and the preferred level of openness of the internet. The EU is busy working out a ‘Digital Services Act’, a regime of rules that should better protect European citizens against the large American technology companies such as Google, Apple, Facebook and Amazon.

Should it turn out the EU does have serious objections to (the usefulness of) the American Clean Network initiative, it will nevertheless be forced to think more seriously about the growing role of Chinese technology companies (eg Huawei, Alibaba , Tencent, TikTok) in the world, all the more so as the concept of privacy is virtually unknown in the PRC and Chinese companies are forced to exchange data with their secret services if their government requests it. In that case, how does the EU intend to protect its citizens against Chinese abuse?

Brussels

Brussels lives between hope and fear regarding the investment agreement negotiated with China for over 7 years. The ultimate goal is to replace the 26 existing bilateral investment protection agreements between the EU member states and China with this in-depth agreement. The virtual summit with Xi Jinping in September did not result in a breakthrough, as mentioned before. (refer https://www.mijngroeve.nl/history/holland-china-predictions-about-the-new-relationship/) A physical summit originally scheduled for mid-November 2020 has been postponed once again, formally due to the resurgence of the Corona virus in Europe.

The members of the European Council have re-stated their intention to finalize negotiations latest by the end of this year: the ambitious comprehensive investment agreement with China should address existing inequalities in market access, contribute to a level playing field, and establish substantive Chinese commitments on sustainable development. Significant progress in the negotiations is said to have been made over the past year, but is the cancellation of the November summit perhaps a bad omen? There are still many disagreements about free market access and sustainability….

The EU will also have noticed that in its last 5-year plan the PRC is even more committed to strengthening its own state industry and is gearing up for a long period of tension and confrontation with the US. Should the EU still push for such a comprehensive investment agreement with China in these tense circumstances? Or will Europe choose to support the US in its efforts to rein in Chinese influence? Should the EU then focus more on a new trade agreement with the US under a-Europe-more-benevolent new American President?

Big Clean Up

To round up, I conclude that the mood in large parts of the EU is tending towards a big clean-up: removal of Huawei and ZTE in almost all parts of the local networks. And the Netherlands will in the end (tacitly?) change tack too, the sweepers can be pulled out the closets…

The contours of an alliance of democratic countries are beginning to emerge that want to establish 5G networks and standards in which the role of Huawei will be minimized. Agreements could even be reached to share costs and to stimulate the participation and growth of more reliable 5G players/vendors from democratic states. It will further increase the tensions in the Dutch and European relationship with China, especially if the anticipated EU-China investment agreement would fizzle out as well….


Ps: ***Mobile communication networks generally consist of a radio network, a transmission network and a core network. The radio network consists of installation points (masts with antennas) and forms the first (partly wireless) connection between the peripherals in the field. The transmission network ensures the transport of data between the antenna sites and the core network. The core network is the central network part of a mobile network. It takes care of the routing of calls and data flows, the (user) administration, user rights, composition of mobile services, security and eventual billing