Britain’s embrace of Huawei is about Brexit

British Prime Minister Theresa May’s decision not to ban Huawei Technologies Co. outright was the easier choice. That doesn’t mean it was the right one.
The US has been vociferously pushing for countries to exclude telecommunications equipment made by the Chinese firm, saying it’s vulnerable to hacking by state-sponsored actors from its home nation. But Huawei also has some of the most advanced gear for next-generation 5G networks. It’s a conundrum.
May had a case for ignoring considerable pressure from President Donald Trump. First, her own intelligence advisers – the National Cyber Security Centre – have stopped short of publicly advocating a ban.
Second, Britain’s telecoms industry, whose most prominent firms are BT Group Plc and Vodafone Group Plc, is adamant that forbidding the use of Huawei’s 5G equipment will slow down the rollout of new networks.
Third, the UK wants to maintain a strong trading relationship with Bejing. That would be more difficult were Britain to outlaw products from one of China’s most prominent companies. It also wants to remain a hub for technology investment after its split from the European Union, and a lack of 5G networks could hinder that.
There are, nevertheless, grounds for skepticism regarding the last two points.
Vodafone Chief Executive Officer Nick Read is among those who have said publicly that there is little immediate demand for 5G networks. This somewhat undermines the urgency of retaining access to Huawei gear. For telecoms operators, Huawei’s importance is likely as much to do with providing competition to the supplier’s European rivals Ericsson AB and Nokia Oyj as it is with the pace of 5G rollout. More competition means carriers pay lower prices for the equipment.
And if developing next-generation networks really isn’t of immediate importance, a lack of them shouldn’t make a huge difference to technology investment in Britain.

—Bloomberg