UK set to impose 50 percent cap on Huawei kit – report

As the UK government’s review into what to do about the perceived security risk posed by Huawei reaches its conclusion, some kind of ban seems likely.

The Telegraph reports, citing those handy ‘telecoms industry sources’, ‘officials are preparing to recommend a 50pc cap on the proportion of equipment that can come from the Chinese giant when the review is completed in spring.’ They presumably mean ‘the Spring’, which could mean any time from now until the end of May.

How this cap, if it is imposed, would be implemented and enforced remains unclear. The report suggests it would apply equally to the core and the RAN, which seems like an escalation on previous assumptions that the UK was only worried about the core. Such a scheme would prove burdensome to UK MNOs and the prospect of a retrospective cap, which would be much more so, doesn’t seem to be off the table, although the Telegraph headline refers only to 5G.

Last month it was reported that some UK intelligence experts reckoned any risk from Huawei could be managed. However that was soon contradicted by the view of a defence and security think tank, which warned against naivety on this matter. Then at MWC 2019 Vodafone CEO Nick Read warned that banning Huawei could make the kit vendor market disastrously uncompetitive.

The Telegraph piece indicates that this arbitrary 50 percent cap is apparently being considered to ensure no MNO goes all-in on Huawei for their kit, but they would be mad to do so anyway. As we saw with ZTE the US can critically damage a Chinese kit vendor anytime it wants and it would be incredibly negligent of any MNO to allow themselves to be over-exposed to such a risk.

There is already good diversity of supply in the UK between the three big kit vendors, with some other suppliers thrown in too. No MNO currently has the majority of its kit supplied by Huawei and they presumably have no plans to, so this looks like the usual government attempt to look like its doing something without adding anything of consequence. Still, better that than it suddenly getting funny ideas about significant market intervention.