Italy decides to exclude Huawei from 5G-core network deployment

It seems that the 2020 nightmare continues for the Chinese telecom giant Huawei. As an inexpensive equipment provider, the company has been accused by the US for cybersecurity issues. The US has been calling its allies to ban Huawei’s involvement in the deployment of 5G networks. On July 9, 2020, Telecom Italia (TIM) has excluded Huawei from a tender for 5G equipment for the core network it is preparing to build in Italy and Brazil, according to The New York Times. The Italian telecom operator has invited suppliers such as Cisco, Ericsson, Nokia, Mavenir, and Affirmed Networks. However, ZTE and Korea’s Samsung were excluded from the list. “The security and development of digital Italy should be based on an approach grounded in facts and not baseless allegations,” commented Huawei on the decision.

For the time being, Huawei will not participate in the existing core network in Italy. However, it has supplied Brazil with 4G equipment, used for the core network – where sensitive data exists – for the Italian group’s local unit. Huawei executive has warned that Brazil could suffer years of delay in 5G deployment if they consider banning the company.

Italy’s decision regarding Huawei came after foreign pressures. On October 2, 2019, US Secretary of State Michael Pompeo warned Italy of China’s “predatory approach” to trade and investment, according to AFP. However, on January 30, 2020 an Italian minister told Reuters that Italy has no plans to ban Chinese companies including Huawei from participation in the deployment of 5G networks. Industry Undersecretary Mirella Liuzzi said that the government should tackle the issue of national safety without being naïve. “They should take the necessary precautions but without keeping anyone out of the doorstep,” she said, according to Reuters.

In 2017, Italy launched a 5G trial to implement infrastructures and services in five cities. Back in September 2017, authorizations were granted for the use of 100 MHz in the 3.6-3.8 GHz band for the rollout. At the end of 2018, the country launched auctions for fifth-generation networks and raised about $7.3 billion.

Oxford Economics published a report entitled “The economic impact of restricting competition in 5G network equipment” in November 2019. The report states that restrictions on Huawei will increase investment costs, slow down rollout, and delay productivity improvements. A lower competition may lead to higher contract prices set by telecom operators for 5G equipment. Italy should take into consideration these impacts while preparing a strategic plan for the post-Huawei phase.