Huawei and ZTE still in turmoil: Europe wants their skin

In the context of the rise of 5G, the telecommunications industry is facing increasing pressure from the European Commission, in particular vis-à-vis the Chinese giants Huawei and ZTE.

The telecommunications industry is once again shaken. At the center of this storm: the Chinese giants Huawei and ZTE, two behemoths of telecommunications equipment. The saga, which has been going on for several years now, is intensifying: for the first time, the European Commission has openly targeted these companies, citing risks they could pose to the security of the European Union.

Brussels has expressed “serious concerns” about the risks that certain suppliers of communication equipment for mobile networks may pose to the security of the Union. Tensions are crystallizing around the development of 5G.

Thierry Breton puts pressure on Member States

It is in this context that Thierry Breton, European Commissioner for the Internal Market, added a layer of pressure on these companies. He suggested that, as soon as possible, EU states should take action to exclude Chinese network equipment vendors of the expansion of 5G.

#5G security matters.

As of today, the EU Commission will not procure connectivity services that rely on equipment from #Huawei and #ZTE. https://t.co/3Y7MUZZrZ9 pic.twitter.com/JkFAas2Vao

— Thierry Breton (@ThierryBreton) June 15, 2023

This position marks a significant escalation in the EU’s approach to Chinese equipment suppliers. The European Commission is now calling on member states to ban or at least make it much more difficult to use Huawei or ZTE components, particularly with regard to the still widely used 4G and 5G equipment.

In France, the position is more subtle

Unlike other countries such as the United States or the United Kingdom which have adopted a more decided position, France has not instituted a “total ban” of Huawei from the French 5G market. On the other hand, the National Computer Systems Security Agency (Anssi) has introduced restrictions, granting operators operating authorizations limited to eight years, which greatly limits Huawei’s access to the French 5G market.

Any installation of antennas now requires prior authorization from the National Information Systems Security Agency (Anssi). This regulatory authority ensures that no Huawei antenna is installed near facilities deemed strategic, whether military, government or industrial sites.

The challenge of this situation is that the market for 5G equipment is extremely concentrated. Only three telecom equipment manufacturers – Europeans Nokia and Ericsson and Chinese Huawei – are currently able to provide the necessary equipment for 5G networks.

In France, this situation puts operators SFR and Bouygues Telecom at odds, which already use Huawei antennas in their 4G networks and which plan to reuse them to deploy 5G. These operators are worried about the consequences of a possible change of equipment supplier, or even the obligation to dismantle their old equipment in the event of incompatibility. They have already warned that they would ask for compensation if the state were to block the way to the Chinese group.

Despite the turmoil in the telecommunications sector, Huawei has managed to maintain a strong presence in several other areas. The group has been able to take advantage of various opportunities to continue operating in France, particularly in the fiber optic, data storage, connected objects and energy sectors.

At the crossroads of economic, security and political imperatives

These complications are part of a broader issue, where 5G technology has become a strategic issue, at the crossroads of economic, security and political imperatives. The Huawei and ZTE soap opera is therefore not about to stop. It raises fundamental questions about how Europe views its digital sovereignty in the 5G era.