Germany Considers Imposing Limits on Huawei, Triggering Opposition from Telecommunication Companies

22 Sep, 2023

Germany Considers Imposing Limits on Huawei, Triggering Opposition from Telecommunication Companies

In a move that has ignited heated discussions and faced resistance from telecommunications companies, Germany's Interior Ministry is contemplating the imposition of stringent regulations aimed at reducing the presence of equipment supplied by Chinese tech giants Huawei and ZTE.

According to an anonymous government official quoted by The Economic Times, the ministry's proposal is driven by concerns regarding Germany's significant reliance on these Chinese suppliers, particularly in the realm of 5G networks, which are considered a critical part of the country's infrastructure.

As Berlin reevaluates its relationship with China, viewing it as both a partner and a systemic rival, this decision carries substantial implications for the telecommunications landscape in Germany.

To address potential disruptions, the Interior Ministry has outlined a phased approach. By 2026, telecom operators will be mandated to remove all critical components sourced from Chinese vendors in their 5G core networks. Furthermore, they must limit the proportion of Chinese components in their Radio Access Network (RAN) and transport networks to a maximum of 25 percent by October 1, 2026.

Telecommunication operators have expressed their opposition to these proposed changes. In particular, Huawei Germany has criticized what it perceives as the "politicization" of cybersecurity within the country. Huawei issued a statement quoted by The Economic Times, stating that "Such an approach will have a negative impact on the digital transformation in Germany, inhibit innovation, and significantly increase construction and operating costs for network operators." The company argued that these additional costs would ultimately be borne by German consumers.

Deutsche Telekom criticized the 2026 deadline, deeming it unrealistic and drawing comparisons to the extended efforts in the United Kingdom to impose restrictions on Huawei. The company also warned of potential degradation in the quality of service for its customers. Meanwhile, Telefonica Deutschland indicated its intention to explore legal action against the German government and seek damages.

Presently, Huawei holds a dominant 59 percent share of Germany's 5G RAN networks, according to a survey by telecommunications consultancy Strand Consult. Notably, in particularly sensitive regions such as Berlin, where the federal government is situated, the use of Chinese technology is discouraged entirely, a distinction that Strand Consult found to be "arbitrary."

The Interior Ministry plans to present its strategy to the cabinet in the coming week. However, it may face opposition from the Ministry for Digital Affairs, which is concerned that these measures could further impede Germany's sluggish progress in digitalization. A spokesperson for the Ministry for Digital Affairs emphasized the importance of maintaining stable, fast, and affordable access to mobile internet.

Germany has faced criticism for its delayed implementation of the European Union's security measures for 5G networks. These measures, designed to limit the involvement of "high-risk" vendors like Huawei and ZTE, were agreed upon three years ago due to concerns about potential sabotage or surveillance, allegations that both Chinese companies vehemently deny. Notably, the government recently revealed that it had not banned the use of any new Chinese critical components in 5G networks, a fact that has drawn criticism from opposition conservatives.

As Germany adopts a tougher stance on China and seeks to reduce its dependence on individual countries, particularly in light of the energy crisis exacerbated by reliance on Russian gas, the use of Huawei has come under heightened public scrutiny. The Interior Ministry views this decision as an "urgent necessity" to prevent a recurrence of the Nord Stream situation—a project aimed at delivering Russian gas to Germany that has since been abandoned.