Editorials

The Huawei challenge

Fifth-generation (5G) mobile networks herald a real social and economic revolution. The introduction and integration of digital capabilities into the fabric of daily life has created new opportunities and novelties, but their transformative potential will only be realized with 5G, the speed and capacity of which will enable entirely new and mind-bending possibilities. That transformation and the absolute need to ensure infrastructure at the heart of the 5G revolution is safe is the core concern about Huawei Technologies, the Chinese telecommunications giant. There are good reasons to worry about Huawei, but those worries can be addressed.

Huawei was formed 31 years ago by Ren Zhengfei, a former People’s Liberation Army officer. From modest beginnings, the company has become the world’s largest telecommunications provider and the second-largest vendor of smartphones. Its revenues exceed $92 billion, it employs 180,000 employees in 170 countries and spends an estimated $15 billion on research and development annually. It is the flagship of the Chinese economic model, “too big to fail,” and the embodiment of national pride and initiative.

Ren’s military background in combination with Chinese President Xi Jinping’s determination to make China the leading country in critical technologies, to promote self-reliance, and the integration of the civilian and military economic sectors, have sparked concerns around the world that Huawei is a stalking horse for Chinese national interests and that acquisition of its equipment exposes users to security risks.

As early as 2011, the U.S. Department of Defense warned of “close ties” between Huawei and the PLA. A year later, a congressional report recommended that the government and the private sector avoid using its products, warning that Huawei “cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems.” In 2015, the FBI noted that the proliferation of Huawei equipment and services in the U.S. meant that “the Chinese government’s potential access to U.S. business communications is dramatically increasing.”

Those concerns culminated in legislation passed this year that bars U.S. government agencies from buying equipment and services from Huawei and other Chinese telecommunications companies. Similar legislation or regulations have been passed in Australia, Britain and New Zealand prohibiting the company’s inclusion in 5G networks. European Union officials have expressed concern and one of France’s leading telecoms providers has announced that it too will shun Huawei products.

Last week, Japan joined the movement, announcing that it too was banning Huawei (along with another Chinese company) from official contracts. As Prime Minister Shinzo Abe noted, “It is extremely important to make sure we would not procure equipment with functions of malicious intention.” The private sector is reportedly taking similar measures. The country’s three biggest telecom operators, NTT Docomo, KDDI and SoftBank, are reportedly set to ban Huawei from existing networks and the 5G network that will soon be rolled out, although they deny a final decision has been made.

Huawei and the Chinese government deny there are any illegal or problematic ties between the two. The Chinese Embassy in Japan posted a statement on its website saying there is “no evidence” that Huawei products have security risks. A Chinese Foreign Ministry spokesman warned against “discriminatory treatment” of its companies and reminded Tokyo of the need to provide “a fair, transparent and nondiscriminatory environment for Chinese companies’ operation and development in Japan.”

Banning Huawei will slow the rollout of 5G networks that would rely on the company’s technologies. Japan’s plans to have a 5G network ready for the 2020 Olympics could be impacted. In Britain, telecom executives complain that a ban would push back deployment of 5G by as long as a year. Meanwhile, in an industry where first mover advantages are profound, China will be moving ahead without any such obstacles.

There is a way to solve this problem. British concerns prompted Huawei to allow U.K. intelligence officials to test its equipment and software code. As a result, the company has agreed to technical changes in its practices in Britain that could cost the company $2 billion. The top Huawei official in Europe has said that the company would do “anything needed” to reassure other governments of its security practices and good intentions: “Restructure the organization, rebuild the processes, rebuild the products. … Process, personal skills, engineering capability, anything.”

Huawei consumers should take him up on that pledge. Working with Huawei will ensure the safety and integrity of 5G networks and avoid the balkanization of global 5G networks. It would help ensure that a vital technology is not another source of tension and friction in relations with China. It would help fulfill the promise of 5G.