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U.K. Looks at Huawei Install Ban Next Year to Placate Hawks

Kitty Donaldson and Thomas Seal
·3-min read

(Bloomberg) -- The U.K. is considering a ban on the installation of Huawei Technologies Co. 5G equipment as soon as next year to appease hawks pushing for tighter restrictions on the Chinese network equipment maker, according to people familiar with the matter.

Legislators from Prime Minister Boris Johnson’s Conservative Party are demanding the stricter rules as part of the price for backing telecommunications security legislation due in parliament next week.

The draft law will give parliament a chance to force carriers to replace 5G equipment well before a blanket ban is enforced in 2027. Any further installations of Huawei equipment by carriers would carry fines of as much as 10% of sales or 100,000 pounds a day ($133,000).

The government already set limits on telecom companies including BT Group Plc, Vodafone Group Plc and CK Hutchison Holdings Ltd.’s Three UK buying gear from Huawei that are set to kick in after December. However, there are no rules yet barring the companies from using Huawei equipment they already bought but haven’t yet installed.

Carriers have been stockpiling parts made by Huawei while sourcing alternatives. Stopping them using those stockpiled parts could increase their costs as they would be forced to speed up the overhaul of their networks, according to people familiar with phone companies’ plans.

Under the new proposal, that ban could come into force as soon as September next year, the people said, asking for anonymity as the talks are confidential.

A representative for the government’s Department for Digital, Culture, Media and Sport had no immediate comment.

“We will be working through the details of any planned rules restricting procurement or deployment of Huawei equipment,” said a BT spokesman. “We would encourage the Government to continue to take balanced and evidence-based decisions.”

In January, the U.K. granted Huawei a limited role in 5G networks, leading to a parliamentary rebellion. Prime Minister Boris Johnson reversed his position in July, after U.S. sanctions introduced in May affected Huawei’s supply chain. British officials said the change meant they were no longer able to guarantee the security of the Shenzhen company’s products.

The latest proposals may not go far enough for some lawmakers, who are calling for the government to consider forcing carriers to remove Huawei equipment from their 5G networks earlier than the current 2027 plan.

The current draft of the telecommunications bill grants the government broad powers to enforce a moratorium against Huawei, but leaves important details to be nailed down later on and doesn’t mention Huawei by name, angering potential Conservative rebels who want more specific commitments.

Lawmakers are set to debate the bill next week. The draft legislation proposes fines of as much as 10% of sales or 100,000 pounds a day ($133,000) for violations, which will apply to carriers including BT, Vodafone and CK Hutchison Holdings Ltd.’s Three UK.

The U.S. has campaigned for its allies to exclude Huawei on the grounds its proximity to China’s government constitutes an unacceptable security risk, which the company has denied.

Without Huawei, U.K. mobile networks will lean heavily on its Nordic rivals Nokia Oyj and Ericsson AB. The government is due to publish more details about diversifying the U.K. 5G supply chain in the next few weeks.

(Updates with detail in third paragraph)

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