Huawei could be about to find itself at the center of an intense political rift between Britain and the United States this week.
London is expected to grant the Chinese tech giant some access to its 5G network, according to a Financial Times report. Citing people close to the discussions, the FT reported that U.K. Prime Minister Boris Johnson is looking at imposing a cap on Huawei’s share of the market.
It’s believed that Huawei, the world’s largest telecommunications equipment maker, could be allowed to provide non-core telecom gear like the antennas and base stations seen on rooftops, rather than the key infrastructure used for processing customer information. But the U.S. has demanded an outright ban, like the one implemented in Australia.
“The security and resilience of the U.K.’s telecoms networks is of paramount importance,” a U.K. government spokesperson told CNBC in a statement. “The Government continues to consider its position on high risk vendors and a decision will be made in due course.”
‘Three is better than two’
Competition is a primary concern in the row over Huawei. Washington wants allies to block it on national security grounds, but doing so in a market like the U.K. would narrow the competitive landscape for 5G equipment providers down to Sweden’s Ericsson and Finland’s Nokia.
“Huawei has become the poster child of the U.S.-China tech battle,” Dexter Thillien, a senior TMT analyst at Fitch Solutions, told CNBC over the phone. “It’s almost being seen to the outside world as the only player.”
Thillien said there was a concern that the major mobile network operators would be restricted in choice if Huawei is blocked from the country’s 5G rollout. Three out of four of the U.K.’s big carriers — EE, Vodafone and Three — already use Huawei equipment in their networks.
“Three is better than two,” he said. “If you ban Huawei, you have a choice between Ericsson and Nokia. You lack competition.”
Vodafone stressed that it doesn’t use Huawei in its “core,” and has “multiple layers of security and encryption” between Huawei and Vodafone’s masts. Three said it remained in “close contact” with the government and would “abide by any directions given by them.” EE was not immediately available for comment.