Interior Minister says telcos’ replacement cost arguments don’t fool her
Germany’s Interior Minister Nancy Faeser has upped the ante with mobile operators over “high-risk suppliers”, like Huawei and ZTE, suggesting that equipment would be prohibited “irrespective of the cost risks for the telecommunications companies” if “serious security risks” existed. “Then the network operators have to act and expand the components,” she said. “I don’t let the cost argument fool me either.”
In an interview with Handelsblatt [subscription], Faeser criticised the mobile operators saying that the risks have been known “for a long time.”
“Our security authorities have repeatedly warned against one-sided dependencies,” Faeser told Handelsblatt. “I do think that the providers had enough time to adapt to this.”
In the interview, Faeser also warned of the increasing risks of espionage – above all by Russia and China. It is also important: “that we support each other internationally,” she said. “Especially when China is spying on the economy, very close networking between the security authorities is essential.”
Deutsche Telekom, Vodafone Germany and Telefónica Deutschland (O2) all have Huawei kit to various degrees, but the government has now sent a very clear signal that the potential costs of removing components from Huawei from the nation’s 5G networks will not be a barrier if it is in the best interests of national security.
The government is currently reviewing whether some kit from Huawei and ZTE should be banned from its telecom networks following the EU’s decision to impose security restrictions on the use of 5G equipment from “high-risk suppliers”.
Deutsche Telekom CEO Tim Höttges has previously warned of a wider Beijing backlash should the country follow suit with equipment bans. At the telco’s recent Q2 results, he suggested he did not see the government banning new vendors but rather, any move would target certain sub-systems, like configuration management, which will attract the attention of security authorities.
The government’s latest tough talk may suggest its security apparatus is thinking more broadly. In June, Germany’s Interior Ministry told Handelsblatt that further use of Chinese suppliers Huawei and ZTE in public 5G mobile networks: “could likely affect public order or security in the Federal Republic.”
Geopolitical ramifications leading to EU position
Germany’s hardening stance will no doubt ratchet up tensions in EU-China trade but is more in line with a coordinated approach the EU was reported to be looking to deliver in June when news broke it was considering a mandatory ban on member-states using companies that might pose a security risk in their 5G networks, including Huawei. Brussels was increasingly concerned that some national governments were delaying action.
Denmark for one is aware of unilateral risks according to its Foreign Affairs Minister Lars Løkke Rasmussen. Huawei was exposed by Bloomberg and others as using unfair methods in connection with a $200m 5G contract it was competing against Ericsson for in Denmark in 2019. Huawei somehow found out what frontrunner Ericsson bid and just hours before the final decision, submitted an emergency revision to its bid that was slightly lower than the Swedish vendor.
Huawei denies any wrongdoing stating it complies with applicable laws and regulations while striving for the highest standards of business conduct.
In a recent interview with Borsen, Rasmussen, who was Danish Prime Minister at the time said: “in my experience, TDC made a business decision to choose a supplier that was not Huawei…To the extent that there were some who may have felt under pressure, at least no one gave in to it.”
He points out that during the period when the Danish tender was to be decided, there was also debate about Huawei and 5G technology in a number of other European countries: “It’s definitely easier to be up against the big ones – and I think that’s true whether it’s down in the schoolyard or out in the world – if you have a coordinated approach among the little ones.”