While the UK decision to ban Huawei from national 5G infrastructure does not, as it stands, cover the China-based firm’s ability to supply private cellular to UK enterprises, it will effectively disrupt its involvement in the space – and its scope may yet expand to preclude its involvement, altogether.
The decision could also undermine UK operators’ pursuit of lucrative new private 5G contracts with industrial sectors, as Huawei prefers to use operators for supply into enterprises, and operators are forced to put focus on redesigning and recommissioning their national networks in the period to 2027, when the government has stipulated all Huawei 5G gear must be removed.
This is the sense among industry analysts polled by Enterprise IoT Insights, keenly watching both the surging global interest in private LTE and 5G infrastructure and the reverberation of the US sanctions on Huawei in international markets. The question remains, whether Huawei, characterised as a ‘high-risk vendor’ (HRV) by the UK government, will be available even for ‘non-critical’ in-building 5G systems.
The jury is out, they say. But, then, Huawei, unavailable for comment itself, is not doing much business in the in-building market anyway, it seems, and has not been particularly busy, either, with private industrial networking in Europe, they note – especially compared with European vendor rivals Ericsson and Nokia, nor with the slew of new virtualised radio network (vRAN) and cloud-based core providers in the market.
Asked directly if Huawei has been frozen-out of all national critical infrastructure in the UK, including ports, airports, utilities, and manufacturing, where private cellular has found a home, the UK repeated that so-called HRV companies should be kept at arm’s length, in line with recommendations from the UK’s National Cyber Security Centre (NCSC).
The Department for Culture, Media and Sport (DCMS), in charge of the UK’s telecoms supply chain review, responded: “The position on this hasn’t changed. High-risk vendors shouldn’t be used in safety-related or safety-critical networks… The NCSC’s advice relates to stopping procurement of Huawei equipment affected by the US sanctions and the changes to the foreign direct product rules.”
Asked about Huawei’s ability to supply networking gear into commercial buildings, it said that last week’s announcement to ban Huawei from the UK’s 5G infrastructure “was focused on telecoms operators”, only.
The Q&A section on the NCSC website appears to bring some clarity. “Equipment from HRVs should not be used in any manner in sensitive networks, for example those directly relating to the operation of government or any safety-related systems in wider critical national infrastructure,” it states.
The NCSC adds: “This advice applies to all operators of public telecommunications networks and services for the UK… [It] does not apply to private networks, except where these networks are safety-related or safety-critical. Where networks are safety-related or safety-critical, HRVs should be excluded from involvement in the networks… [The] government will continue to monitor the use of HRVs in other critical sectors and will keep this position under review.”
Dean Bubley, founder at Disruptive Analysis, suggested it is only a matter of time before the ruling extends to industrial private networking in the UK, but pointed to a lack of clarity around neutral host networks. “It’s a guideline, but it will be made law as soon as possible. So no, [the ruling does not impact Huawei selling to enterprises] at the moment, unless that enterprise is itself providing a public telecom service. It is a little unclear how that works in scenarios like neutral-host networks,” he said.
But the ruling effectively puts the kibosh on Huawei’s activity in the enterprise space, anyway, noted others. Dimitris Mavrakis, research director at ABI Research, commented. “The decision does not seem to be affecting enterprises, but overall, Huawei’s plan is to sell to enterprises through operators.”
Pablo Tomasi, principal analyst for private networks at Omdia (formerly Ovum), said UK enterprises will be wary of engaging Huawei, and will steer clear. “It will have a massive impact on the UK private network market. While the government announcement was focused on telecoms operators, UK enterprises would be hesitant, to say the least, about buying private networks solutions from Huawei given the clear government stance towards the vendor and the current US sanctions,” he said.
Tomasi also suggested the headache of network change-around for national telecoms operators in the UK, following the decision, will disrupt their competitiveness in the UK enterprise market, leaving the door wider open for the likes of Nokia and Ericsson, already selling directly to enterprises (whatever their stated preferences for operator channels), alongside various new challengers in the networking game.
“They will need to rethink their investments plans for their national 5G networks to support their consumer business and this will affect their ability to dedicate resources and investments for the highly promising but still currently modest private networks opportunity. A slower private networks activity by telecoms operators will result in other parties such as vendors, both niche and global, stepping up to address the enterprise demand,” said Tomasi.
He added: “On a broader scale, this announcement could accelerate the creation of separate regions of activity which would roughly follow geopolitical lines.”
Bubley responded: “I think it’s separate. The general move to 5G and cloud [infrastructure] and the fallout from pandemic and recession will probably have much bigger impacts. Operators will be more focused on macro networks, and also fixed networks, so may de-prioritise private cellular, given the economic pressures on both them and many of the customer groups they were targeting – airports, entertainment venues, and so on. We might see some more action in the industrial, logistics, and healthcare sectors, though.”
What about this grey area of in-building 5G for the commercial real-estate sector. Mavrakis said: “In-building wireless sales in Europe are mostly done in cooperation with operators since distributed antenna or digital radio systems operate on licensed spectrum. So Huawei will not likely sell to buildings directly.”
Bubley repeated that sanctions were closing around Huawei’s engagement in related sectors, as well, even if the current ruling does not make this explicit. “It doesn’t mention in-building systems like DAS… but I’d be wary as it may be a loophole that will get closed, especially where a tower company or neutral host provider is essentially providing a public telecom network,” he said.
Does the analyst community have a sense of how successful Huawei has been around private enterprise networks in Europe, compared with its noisy European-based neighbours, Nokia and Ericsson, which have been rushing out press releases about their private networking wins, particularly since the start of the year.
Mavrakis suggests enterprise cellular deployments are driven by operators in China, where Huawei has made consistent gains outside of its traditional operator partners. “Huawei’s experience may be stronger through the operator channel. Nokia and Ericsson have been much more successful in selling directly to enterprises in Europe. We haven’t come across any major contracts deployed by Huawei with large enterprises in Europe,” he said.
“Limited, I think,” responded Bubley to the same question, highlighting the momentum by other telecoms kit vendors, including the likes of Athonet, Druid Software, IP Access, and Mavenir. “It certainly hasn’t spoken much to me about it at all. My sense is Huaei is more focused on cloud, and even Wi-Fi, especially in Germany and Switzerland.”
