Sweden has become the latest country to ban the use of Huawei equipment for 5G roll out. The European country announced the decision on Tuesday after consultation with its security services.
“In accordance with new legislation, which entered into force on 1 January 2020, an examination of applications has been conducted in consultation with the Swedish Armed Forces and the Swedish Security Service, to ensure that the use of radio equipment in these bands does not cause harm to Sweden’s security.
“New installations and new implementation of central functions for the radio use in the frequency bands must not be carried out with products from suppliers Huawei or ZTE. If existing infrastructure for central functions is to be used to provide services in the concerned frequency bands, products from Huawei and ZTE must be phased out 1 January 2025 at the latest,” the Swedish Post and Telecom Authority (PTS) said in a statement.
Security concerns over the use of Huawei’s 5G infrastructure has been gaining momentum in Europe, following US pressure.
In January, Sweden enacted a law to protect its communication from security breaches. Under that law, a radio license holder must take technical and organizational actions to ensure that the use of the radio does not cause breach of Sweden’s security. Based on national security concerns that have forced many nations to sever ties with Huawei, Sweden can’t guarantee that the embattled Chinese company can be trusted to keep the law.
Sweden’s security service called China “one of the biggest threats against Sweden”.
The development followed London’s decision to oust Huawei from its 5G infrastructure in July. Belgium also announced the ban of Huawei from its 5G deployment earlier this month. The decisions however, may result in slower and higher costs of 5G roll out in Europe, and risk a possible backlash from China who has been fighting to protect Huawei’s global 5G leadership.
“The ban leaves network operators with less options and risks slowing the rollout of 5G in markets where competitions is reduced,” said Ben Wood, chief of research at CCS Insight.
Chinese government may target European commodities in retaliation, especially now that the EU is seeking bilateral partnership to overcome the economic strains of the coronavirus pandemic.
“It could be that some of the European vendors will sell less in China going forward if the Chinese are selling less in Europe going forward,” said Kjell Johnsen, CEO of Swedish-based telecom operator Tele2 in a post-earnings conference call.
The bans on Huawei have placed Finish Nokia and Swedish Ericsson in a lucrative position as their participation in the 5G roll out has increased significantly in the past few months.
The PTS approved the participation of Sweden’s Hi3G Access, Net4Mobility, Telia Sverige and Teracom in the planned spectrum auction of 3.5 GHZ and 2.3 GHz, key bands crucial for the roll out of 5G.
Tele2 and Telenor will participate together as Net4Mobility to secure spectrum for a joint nationwide 5G network.
Tele2 uses Huawei equipment but said, according to Reuters, “that the decision of PTS will not change our plan substantially”.
“Many operators have already proven that when they rip and replace Chinese equipment, it doesn’t have a negative impact on their capital spending,” said John Strand, and industry consultant.
Among the European countries facing the decision to axe Huawei, Germany has been dragging its feet in fear of ruining its chances of developing new business relationships with China.
The WSJ reported in July that China is considering retaliating against European telecom companies, Nokia and Ericsson if the European Union follows the United States and Britain in banning Huawei.
China’s Ministry of Commerce is looking into export controls that would prevent Nokia and Ericsson from sending products it makes in China to other countries, according to the report.
Germany is in economic talks with China aimed at revamping its economy plummeted by the COVID-19 pandemic. The European economic power is wary that any move to disengage Huawei will affect its chances of securing a deal with the world’s second largest economy.
Sweden appears to have little to lose as Ericsson is positioning itself as a gainer of increasing Huawei’s fallouts with many countries. But while some European countries have insouciantly followed the steps of the United States in axing Huawei, others are carefully trying to avoid picking the axe in fear of retaliation from China.