The government has signalled it is set to take a tougher line against Chinese telecoms equipment-maker Huawei.
A review is under way into how forthcoming US sanctions would affect the UK’s continued use of its products.
“Given that these sanctions… are extensive, it is likely to have an impact on the viability of Huawei as a provider for the 5G network,” said Digital Secretary Oliver Dowden.
He added he wanted Samsung and NEC to become 5G network kit providers.
They would help make the UK’s mobile networks become less dependent on the other two suppliers: Ericsson and Nokia. Mr Dowden said the current situation represented a “market failure”.
Defence Secretary Ben Wallace added that the sanctions – which are set to come into effect in September – had specifically been designed to force the UK into a rethink.
“It is a better set of sanctions than the earlier set, and it’s specifically clearly designed in a smarter way to put countries that have high-risk vendors – specifically Huawei – under greater pressure.”
The sanctions forbid Huawei and the third parties that manufacture its chips from using “US technology and software to design and manufacture” its products.
One consequence of this is that the company could lose access to software it relies on to design and test its processors as well as being able to put some of its most advanced chips into production.
The US cites national security concerns as the cause for its intervention. American politicians have suggested that Beijing might exploit Huawei to spy on or even sabotage communications.
And this Tuesday, the Federal Communications Commission also designated Huawei a national security risk, blocking local telecom companies from drawing on the agency’s funds to buy the Chinese firm’s equipment.
Huawei denies claims that it would help the Chinese government compromise its clients or otherwise deliberately harm them.
“We are investing billions to make the Prime Minister’s vision of a ‘connected Kingdom’ a reality so that British families and businesses have access to fast, reliable mobile and broadband networks wherever they live,” said the firm’s UK chief Victor Zhang following the hearing.
“We have been in the UK for 20 years and remain focused on working with our customers and the government.”
The two cabinet ministers were giving testimony to the House of Commons Defence sub-committee.
Mr Dowden noted that it was already the government’s ambition to remove Huawei from the UK network “over time”.
However, under plans announced in January, current plans are limited to excluding the company from the most sensitive parts of the network – the so-called core – and capping Huawei’s market share of base stations and other equipment at the “edge” to 35% by 2023.
Mr Dowden said this might now change.
“We won’t hesitate in taking decisions that will impose additional costs on mobile network operators, the primary consideration is national security,” he said.
But he added he was “a little cagey” about providing further detail as final “decisions haven’t been made” and “any changes in policy would be exceedingly market sensitive”.
The Department for Digital, Culture, Media and Sport is still studying what impact excluding Huawei altogether or other new restrictions might have.
The DCMS has also asked GCHQ’s National Cyber Security Centre to advise it on the security implications of the US sanctions.
NCSC has previously raised concerns about the “shoddy quality” of Huawei’s hardware and the potential for vulnerabilities this creates. But it currently manages the risk by carrying out checks on the products.
One concern is that if Huawei were forced to start relying on components sourced from other vendors, NCSC would not longer believe the risks involved to be manageable.
NCSC’s chief Ciaran Martin told MPs that “the bulk of the analysis” was now done, but that further discussions with DCMS were required before a recommendation could be made to the prime minister.
Committee member Labour MP Kevan Jones raised concerns that the government was being “bullied into doing what the Americans want”.
But Mr Wallace responded: “The Americans can do what they like with their own IP [intellectual property]… it’s not an attack on us, it’s just a fact that if Huawei doesn’t work any more because it can’t use a certain type of chip or whatever… we’d have to get something else.”
Conservative MP Mark Francois also noted that the government faces a backbench revolt over its Telecommunications Infrastructure Bill if it does not commit to a ban.
“The bill is already as dead as a dodo unless it effectively excludes Huawei,” the MP said.
“Wouldn’t it just save everybody a lot of time if you came to the House tomorrow and put your hand up?”
Mr Dowden responded that he was “mindful” of the threatened rebellion but added: “You just have to wait and see,” as to what the government’s decision would be.
Ministers made clear the ambition is to not have any “high-risk vendors” like Huawei in the UK’s 5G network.
But the crucial question is whether we are about to see a firm commitment to achieve that “ambition” and within a specific time frame.
The review of the impact of US sanctions looks set to take the UK in that direction.
While there may be technical reasons for the shift, it would also prove politically convenient amid continued pressure from Washington and backbench Conservatives, as well as deteriorating relations with China.
But it still remains to be seen exactly how far and fast the government will move.