The interminable UK Supply Chain Review has now been concluded and while there might be limitations, it is pretty good news for under-fire Chinese vendor Huawei.
In short, vendors which are deemed ‘high-risk’ will not be able to provide equipment for the core of the UK’s 5G networks and will be limited to providing no more than 35% of the RAN equipment. These vendors will also be banned from providing equipment to Critical National Infrastructure or sensitive geographic locations, such as nuclear sites and military bases.
There are limitations for Huawei which could prove to be awkward, and perhaps a step-down from the market dominance it exhibited in the 4G era, but this is still a significant win for the vendor.
“We want world-class connectivity as soon as possible but this must not be at the expense of our national security,” said Digital Secretary Baroness Nicky Morgan. “High-risk vendors never have been and never will be in our most sensitive networks.”
Morgan is not 100% correct in this statement. The EE core network uses Huawei equipment, and under the guidelines provided by the National Cyber Security Centre (NCSC), Huawei falls under the definition of a ‘high-risk vendor’. Either that, or the Government has and does not consider EE’s 4G network that important.
“The government has reviewed the supply chain for telecoms networks and concluded today it is necessary to have tight restrictions on the presence of high-risk vendors,” Morgan continued.
“This is a UK-specific solution for UK-specific reasons and the decision deals with the challenges we face right now. It not only paves the way for secure and resilient networks, with our sovereignty over data protected, but it also builds on our strategy to develop a diversity of suppliers.”
The supporting documentation itself is perhaps just as interesting as the main announcement. The definition of ‘high-risk’ is effectively nuanced, not pointing the finger directly at Huawei or China. UK telcos will have three years to get below the 35% access equipment network share. This ratio could also be reduced in coming years as the market diversifies, most notably, if OpenRAN progresses at its current pace.
While the end of the Supply Chain Review will be celebrated throughout the UK telecoms industry, there are a still few unknowns:
- What is the definition of Critical National Infrastructure? It is unclear whether the EE Emergency Services Network which is being constructed for the Home Office falls into this category
- Will the 35% cap be applied to new equipment which is going in the network, or will it have to be back dated through the generations? Rip and replace will cause a significant headache
- Could the 35% cap be too low to offer telcos leverage over other network infrastructure vendors and drive competition? Nokia and Ericsson now know it is effectively a duopoly for 65% of the RAN
Perhaps the most significant question is how this will impact the telcos and 5G deployment plans over the short- to mid-term.
O2’s network has been largely supplied by Ericsson and Nokia. EE is reliant on Huawei though there is healthy supplier diversity. Vodafone might find itself above the 35% cap, though it also works with Ericsson and Nokia. Three is in a precarious position as it has agreed to swap out Samsung equipment with Huawei to become its sole supplier of 5G RAN equipment.
Huawei is currently present in the EE 4G network core, though EE has already said it will search for a new supplier for its 5G core. None of the other MNOs have Huawei in the core.
On the fixed infrastructure side, Openreach currently only works with two suppliers for its access network, with Huawei being one. It has already begun the process of seeking a third supplier and should not be impacted too greatly by the announcement.
There are still grey areas to be addressed, but the conclusion of the Supply Chain Review is a monumental step forward for the UK telecoms industry. The I’s still need to be dotted and the T’s crossed, but this is huge progress towards the goal of clarity and continuity.