China's Huawei faces new setbacks in Europe's telecom market

The US dispute with China over a ban on tech giant Huawei is spilling over to Europe, the company's biggest foreign market, where some countries are also starting to shun its network systems over data security concerns.

Some European governments and telecom companies are following the US's lead in questioning whether using Huawei for vital infrastructure for mobile networks could leave them exposed to snooping by the Chinese government.

Bans in Europe could significantly increase the financial pressures on Huawei.

They would also cost Europe tens of billions of dollars as the region looks to build up "5G" networks, which are meant to support a vast expansion in internet-connected things, from self-driving cars to factory robots and remote surgery.

"Europe is still divided over Huawei, but the trendline is moving in a fairly clear direction" as the US exerts pressure on allies to block it, said Thorsten Benner, director of the Berlin-based Global Public Policy Institute think tank.

Geopolitical tensions over Huawei intensified after its chief financial officer, who is also the daughter of founder Ren Zhengfei, was arrested December 1 in Canada in connection with US accusations that the company violated restrictions on sales of American technology to Iran.

Huawei has been blocked in the US since 2012, when a House Intelligence Committee report found it was a security risk and recommended that the government and private companies stop buying its network equipment.

Germany's Deutsche Telekom said last week it "takes the global discussion about the security of network elements from Chinese manufacturers very seriously." The company said it uses multiple companies to build its network, including Ericsson, Nokia and Cisco.

"Nevertheless, we are currently reevaluating our procurement strategy," the company said.

The statement is significant because until recently it had been one of Huawei's "biggest cheerleaders" based on its cheap and reliable equipment, said Benner.

It came shortly after Alex Younger, the director of Britain's Secret Intelligence Service, or MI6, said in a speech that Britain needs "to decide the extent to which we are going to be comfortable with Chinese ownership of these technologies," according to local media reports.

At about the same time, mobile provider British Telecom said it was removing Huawei equipment from key parts of its current 3G and 4G networks as part of an internal policy not to use it for core infrastructure, which will also apply to 5G networks.

The British government-run center that tests the company's equipment and software this summer identified "shortcomings in Huawei's engineering processes that have exposed new risks" in UK networks. Huawei said it's working on fixing those issues.

Norway's telecom ministry said it was considering clarifying requirements from network operators, without being more specific.

Belgium's cybersecurity agency is reportedly considering a ban on Huawei. And the Czech Republic's prime minister ordered his government office on Tuesday to stop using Huawei mobile phones, after the national cybersecurity agency warned that products by Huawei and another Chinese telecom company, ZTE, pose "a security threat."
"We think the answer lies in global cooperation and collaboration to ensure that networks are as secure as possible."