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Huawei 5G Controversy: India’s Telecom Service Providers Vs Equipment Manufacturers

Telecom Service Providers argue that any ban on Huawei would inflate capital costs, considering the Chinese company’s track record in the country.

Image Courtesy: Money Control

The global controversy around “banning” Chinese telecom equipment company Huawei, particularly for 5G networks, has now spread to India, though “national interest” continues to be a point of contention. Amid these developments, Cellular Operators Association of India (COAI) on December 17 urged Indian government not to take any “arbitrary” action against Huawei, citing benefits of the company.

Meanwhile, Huawei India has insisted that the concerns against the company have no basis, and is expected to conduct 5G trail runs from January next year in the country, as per the earlier directions of the Department of Telecom (DoT), Government of India.

Considering the fact that around 30 per cent of the 4G market in the country is occupied by Chinese companies, Indian telecom equipment manufacturers are on the forefront, demanding their ban.

In a recent letter to National Security Advisor Ajit Doval, Telecom Equipment and Services Export Promotion Council (TEPC) urged to “Ban the procurement of any Chinese telecom equipment in any government telecom network (centre or state), including power, rail, defence and other Public Sector Units”.

TEPC has argued, “While it is common knowledge that telecom equipment from China poses severe security threat, recent decisive actions by technologically savvy countries have confirmed this.” The TEPC wants the government to review the policy of procuring telecom, and information technology equipment from Chinese companies “in the national interest”. 

This is in reference to the recent developments – imposition of ban or restrictions by countries such as the US, the UK, Japan, Germany, Australia and New Zealand, particularly on the use of Huawei’s 5G telecom equipment – the common fear cited is that the Chinese government might force its companies to spy and organise cyber attacks.

However, COAI, which represents telecom services providers, has told DoT that the TEPC allegations against Chinese equipment companies are posed “without any proof”. “They (Huawei) are suitably equipped to prepare operators and industry to build 5G capabilities in operations, in organisation and most importantly in the ecosystem and to ensure they are fully compliant with all government requirements," COAI head Rajna Mathews wrote to DoT.

There are certain obvious reasons for the country’s telecom service providers for backing Huawei. Reportedly, Chinese companies offer equipment 30 per cent cheaper than European companies, and one of the important reasons is their ability to make equipment to different specifications. COAI pointed that any ban on Chinese equipment would increase capital costs in the sector. On the other side, market experts argue that the European companies cannot solely meet the demand for telecom equipment, as the demand is huge.

Huawei and China Mobile were the companies to launch the world’s first service-oriented prototype for 5G core networks. Huawei has already conducted 5G trial runs in 10 different cities across the world, as per the company’s annual report.

Jay Chen, CEO of Huawei India told Business Standard that the rollout of 5G will require a global supply chain in which all equipment and software, irrespective of origin, will have to incorporate in-built securities based on standards laid down by the special group - Third Generation Partnership Project (3GPP), set up for this purpose.

While the onus to decide on the Telecom market and security concerns lies with the government, it is to be seen how the government would deal with this emerging conundrum.

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