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8 June 2021

Vodafone Italy on verge of Huawei 5G deployment despite dilemmas

The saga of Huawei’s involvement in 5G deployments across Europe continues amid strong indications from sources published by global news agency Reuters that Vodafone Italy has been given conditional clearance to deploy equipment from Huawei in its 5G RAN.

The sources indicated that Italian prime minister Mario Draghi authorized the deal between Vodafone and Huawei on May 20, which would appear to represent a U-turn.

In October 2020, the government blocked Swisscom subsidiary Fastweb from deploying 5G RAN equipment from Huawei, the operator having earlier adopted the Chinese vendor as its preferred broadband supplier.

Then in April 2021, Telecom Italia (TIM) was rumored to have caved into political pressure and cancelled a 5G contract with Huawei. At the same time, TIM became one of Europe’s first operators to launch an Open RAN deployment program after linking up with Deutsche Telekom, Orange, Telefónica, and indeed Vodafone in February 2020 by signing a memorandum of understanding (MoU) to encourage this technology.

However, it may be that the Italian government, under pressure to deploy 5G as quickly and inexpensively as possible, has come round to the idea that perceived security risks associated with Huawei can be contained by imposition of tough conditions. This is broadly in line with some other European countries such as Germany, unlike the UK and Sweden, which have imposed blanket bans, while some such as France have effectively done so.

Germany has been trying to steer a middle ground that appeases the Americans while avoiding too much damage to its own roll-out, as well as minimizing impact on its Chinese export business spanning multiple manufacturing sectors. Deutsche Telekom, in particular, had become more dependent on Huawei than other European tier 1 telcos for both 4G and ongoing 5G roll-out. That led DT to argue that no vendor should be left out of the country’s 5G infrastructure on purely political grounds, and also to propose a two-layer security vetting process on 5G RAN vendors and their equipment.

This has broadly been adopted and while it raises the bar over which Huawei has to jump to gain approval in Germany, DT has calculated it can at least live with that and continue using the equipment, even if future orders are curtailed. Indeed, DT had already in 2019 agreed to phase out both the Chinese 5G equipment vendors, Huawei and ZTE, from the safety-critical core and then a year later shifted some of the 5G RAN deployment from Huawei to Ericsson to mollify its government.

A similar security conformance layer has been enacted elsewhere, including Italy, raising the question of what their substance is and whether they will have any real impact as opposed to being smokescreens to allow continued deployment. There are three dimensions to this conundrum, technical, commercial and geopolitical.

Security experts are divided over the technical question but the consensus is that all 5G infrastructures pose security risks on account of their criticality and any additional threat from Huawei can be mitigated by various measures, including these security layers. Some consider that virtualization lifts security into a domain above the physical infrastructure that can isolate threats posed by specific equipment in any case.

Broadly, the first layer involves detailed technical scrutiny of all hardware and software components. The second layer then comes into play in the case of Chinese vendors, or others suspected of posing a security risk, involving an examination of the manufacturer’s reliability and future good faith.

This runs into the political dimension, since no matter how clean the infrastructure might appear, a vendor can be banned on the basis of its government’s perceived future threat.

The commercial dimension is more about supply chain diversity and potential of Open RAN to compensate for the further reduction of choice resulting from Huawei bans. This dimension leads some operators to oppose outright bans on Huawei and others to adopt Open RAN more enthusiastically than they might otherwise have done.

The geopolitical dimension has been dominant, although it has raked in the security dimension and distorted it somewhat as propaganda for the cause. This is caught up by the wider global technological battle between China and the USA where the latter woke up to the supremacy the former was building up over mobile communications. There are various subplots and themes, such as the attempts to suffocate Huawei’s supply of advanced semiconductors by imposing restrictions on use of American technology in products or components supplied to China.

The upshot has been pressure on US allies especially, but also other countries, to expunge Huawei from their 5G plans. Outside Europe, Australia, New Zealand and Japan have imposed bans, while elsewhere China has enjoyed more success sustaining at least partial deployment of equipment from Huawei or ZTE on the back of its Belt and Road Initiative, its global infrastructure project instigated in 2013. Russia is embracing Huawei for 5G roll-out with no ban at all, while several countries in the Middle East and Africa are also on board, as are some in Latin America, such as Argentina, Colombia and Chile.

Brazil is now also allowing Huawei equipment to be included in bids for spectrum at the impending 5G auction, after regulator Anatel in line with government instructions declined to impose any restrictions. The country’s president Jair Bolsonaro had been sympathetic to the Trump administration’s call to ban Huawei, but changed tack partly as a result of the changing US administration although mainly in the light of pressure from the country’s telcos arguing that shutting out Huawei combined with replacing existing 3G and 4G equipment from the vendor would cost severalbn dollars.

India is one other major country that has been on the brink of a ban on Huawei, but is in a unique position because of the debate over whether to insist that 5G infrastructure conforms with its own national 5Gi version of the standards. We have discussed before how 5Gi arose as an attempt to fashion 5G for its own terrain and requirements, as well as to reinforce the country’s ‘Make in India’ campaign, but was floundering on concerted industry opposition. The main point for this article is that consensus seems to be emerging around Open RAN as a way of stimulating greater choice of RAN equipment and the Huawei situation plays into that.