Huawei 5g Deal Defended By Deutsche Telekom Boss As 6g Ban Looms

Deutsche Telekom's CEO insists his use of Huawei in 5G poses no risk as Germany's chancellor says it will be banned from 6G.

Germany has become masterful at the fake or show ban, appearing to wave a red card without sending the player off the pitch. Since Western authorities first began talking Chinese telecom vendors as threats to national security, the German government has struck the pose of the tough referee but done little to restrain Huawei, China's biggest supplier of 5G network products. Last year's moves were so skillfully executed that sections of the mainstream German and international press were successfully fooled into thinking Huawei would be hounded out of Germany by the end of the decade.

It was left to Börje Ekholm, the boss of Ericsson, to set people right on a recent earnings call. "I would say first that there isn't a need to swap out Chinese vendors by 2029," he said. "The legislation is rather clear that it allows high-risk vendors in the 5G network beyond 2029." After the latest government pronouncement last week, Huawei could still be on the field well into the decade, somewhat obstructed but certainly not dismissed.

Speaking at a business conference in Berlin, Friedrich Merz, Germany's chancellor, was reported by Bloomberg to have said that network operators will not be allowed to source components for their future 6G networks from Chinese companies. Where possible, he added, Germany will also replace Chinese parts of existing 5G networks with locally sourced equivalents. Huawei had not commented on the report at the time of publication.

To government critics, it is yet another sign of Germany's prevarication. The 6G mobile network technology to which Merz referred is still on its journey through the international standardization process. It is not expected to land in commercial services until 2030. If authorities did nothing else to impede Huawei, this would allow it to keep playing in Germany for at least another four or five years, and potentially much longer. Rather as 5G did alongside 4G, the 6G standard is expected to coexist with its immediate predecessor for several years.

While banned from a few other European countries, Huawei is almost as common a sight in Germany as the bratwurst or foamy-headed pilsner. At the latest reckoning, it accounted for 60% of the country's radio access network (RAN) infrastructure and was present in all three of the big mobile networks – those operated by Deutsche Telekom, Telefónica and Vodafone.

The relationship developed when operators were rolling out older generations of mobile technology and has continued in 5G, to the dismay of European Union (EU) watchdogs. In its "5G toolbox" recommendations, published several years ago, the EU warned member states to avoid "high-risk vendors," a euphemism for Huawei and ZTE. Since then, its officials have spoken more bluntly, naming the Chinese companies and criticizing countries where they are still resident in 5G networks. The concern is that Huawei's network software could be used by China's government for spying or sabotage – a charge Huawei has long denied.

Germany's government is undoubtedly worried that banning Huawei would carry the risk of retaliation and threaten €90 billion (US$105 billion) worth of German exports to China each year. To placate the EU and other critics, authorities last year introduced legislation requiring operators to replace Huawei in the "core," the critical software brain of the network, by the end of 2026. But telcos had already done this, and German regulators continued to regard most RAN components as non-critical. The exception was a part of the management system used for RAN configuration. Last year's rules ordered telcos to replace Huawei's configuration system by the end of 2029 but allowed them to keep everything else.

Telcos, accordingly, have been working to develop their own management systems for use with Huawei's RAN. What's unclear is whether Merz was alluding only to this when he talked last week substituting locally sourced 5G components for Huawei's technology.

Germany, however, does not have its own RAN vendors. Today, all the products used in Germany's mobile networks are supplied by a handful of companies from other parts of the world. Besides Huawei, they comprise Ericsson (Sweden), Fujitsu (Japan), Nokia (Finland) and Samsung (South Korea). Producing other RAN components from scratch would be much harder than developing new configuration management software. And Deutsche Telekom has been keen to emphasize the difficulty of even that, saying "the associated financial expenditure represents a challenge for us" in a statement last year.

That was reemphasized when Timotheus Höttges, Deutsche Telekom's CEO, spoke with reporters last week the operator's latest results. "We talked to the federal government and signed a legally binding agreement," he said via translator. "Now this agreement costs us double-digit millions because we are now to replace the original software with new software."

The implication is that replacing other components would unnecessarily increase that burden, with Höttges defending Deutsche Telekom's continued use of Huawei's technology. The operator, he said, is "not seeing any restrictions or security risks by having an antenna somewhere out there in the infrastructure that doesn't pose any kind of security risk. Now, all these optical networks, the connection networks and the core network architecture, where a signal turns into information – all of this is free from the Chinese already."

But various technical experts, including people who work for operators and vendors, disagree with Höttges that replacing Huawei's configuration system eliminates the risk. The latest rules still allow Huawei to provide basestation products including signal-processing software, which could theoretically include backdoors and boobytraps. "The baseband unit is a security issue," said Earl Lum, the president of analyst company EJL Wireless Research, during a conversation.

The Bundesnetzagentur, which regulates Germany's telecom market, also appears to have changed its mind the criticality of the RAN. In a recent consultation paper, it extends the definition of critical to cover the gNodeB, the technical term for a 5G basestation, and not just the management system. As the agency says in its paper, "all functions of gNodeB are classified as critical functions."

Barclays, a bank, has also awkwardly downplayed the expense of a Huawei swap-out for German telcos, effectively arguing it would not be "billions of investment" for Deutsche Telekom, as Höttges said on the call, but a more manageable amount. In a research note last year, Barclays estimated the full cost of removing Huawei from Germany's 5G infrastructure would come to €2.5 billion ($2.9 billion), including €1 billion for Deutsche Telekom and €700 million ($814 million) for each of Telefónica and Vodafone.

"If the ban is gradual and is allowed to take place over the natural upgrade lifecycle of the equipment the impact could be minimal as it would be part of the annual capex," said the report authors. Deutsche Telekom alone spends €300 million ($349 million) on its RAN each year, they added.

But even Höttges would probably agree that Huawei's days are numbered in Germany if today's government is planning to ban it from the 6G market. Just as operators have used the same vendors across 4G and 5G, so they are likely to bolt an existing supplier's 6G technology onto later-stage 5G networks. Telcos have broadly pushed for 6G to be introduced via software upgrade as much as possible, and even Ericsson's Ekholm has recently talked it as an "evolution" of 5G. The compute infrastructure in place in the late 2020s could be the hardware platform for the initial wave of 6G services.

Germany's telcos, Deutsche Telekom included, are clearly preparing for a time when Chinese vendors are unwelcome. Across 3,000 mobile sites in Germany, around 8% of the total it claimed to operate last year, Deutsche Telekom is replacing Huawei with Nokia (plus some products from Fujitsu). It is, said Höttges, "very happy with what Nokia is doing right now." Vodafone is similarly introducing Samsung to provide RAN technology for new sites and replace existing vendors at some others. Huawei has survived five or six years of turbulence in 5G, but the conditions are getting worse.

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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