Huawei Armageddon: What the ban means for Telekom and consumers

One day 5G should be available on every milk can, this dictum has stuck. Germany is lagging behind when it comes to expanding the new generation of mobile communications – and there could be further delays. The reason for this is that the federal government classifies technology from the Chinese group Huawei as a potential security risk. This also applies to the supplier ZTE, as the Handelsblatt found out. 5G is about 20 times faster than 4G – also called LTE. For example, videos can be downloaded much faster, games run smoother. 5G is even more important for companies, because the networked machines need correspondingly fast Internet. Self-driving cars and trucks, for example, are hardly conceivable without 5G.

But those who are currently building the 5G network will not be able to do without components from Chinese companies. These are the mobile phone providers Telekom, WKN 555750″>Deutsche Telekom Vodafone and Telefónica . So far, the Huawei ban has been a threat looming on the horizon. Now it becomes concrete. The federal government fears that China could use the components to engage in espionage. And in the worst case, China could switch off our cell phone network. However, Huawei’s components are significantly cheaper and better than those of non-Chinese competitors.

The ban threatens Telekom and Co with costs in the billions. Corporation law alone forces companies to sue the government for damages in court. The responsible Federal Ministry of the Interior sees no great danger for the taxpayer here. The Federal Office for Information Security (BSI) does not provide for any compensation in the event that security-related components are prohibited. The EU Commission thinks the same way.

With the ban, Germany would be anything but a pioneer: several states in the EU have already put Chinese network components on the index. For several months, the BSI has been examining all critical parts of Huawei and ZTE that are already installed. At the end of August there should be a comprehensive report on the basis of which the responsible ministries will decide which components may be used – and which not. The EU has already decided that the Chinese companies are not trustworthy because they are also legally obliged to cooperate with the state organs of the People’s Republic: “I can only emphasize how important it is to take decisions about the replacement of high-risk providers from 5G networks,” said EU Internal Market Commissioner Thierry Breton in June.

Impact on Customers

An important question is how tough the demands on Telekom, Vodafone and Co are. This is especially true for the deadline, how quickly they have to replace the components. Apparently, Germany will concede a comparatively long time here. The mobile phone companies are prepared for the ban, at Deutsche Telekom there is an internal document in which the scenario known as “Armageddon” is played out.

If components from Huawei and TZE have to be replaced, the expansion of the 5G network will be significantly delayed. The Ministry of Economics expects “significant effects on the operation of mobile networks and the fulfillment of coverage requirements”, as stated in a report by the Ministry for the Economic Committee in the Bundestag. From the point of view of data protectionists, a delay would be acceptable.

For customers, this means: 5G will come later, but will then be more secure. 5G is already available in some regions, but the mobile phone providers charge high fees for the high-speed network, sometimes three times as much. This could change soon. The Federal Network Agency will boost competition by 2024 at the latest by introducing a so-called service provider obligation (DAV). Then not only Telekom, the Telefónica brand O2 and Vodafone 5G will be able to offer 5G, but also fiber optic providers and companies from outside the industry such as Amazon . This should lower prices. Service providers should have “fair and non-discriminatory access” to the networks.

The Federal Ministry for Digital and Transport (BMDV) of Volker Wissing (FDP) is pushing the project, but the Federal Network Agency decides on it independently. The protests of the established mobile phone providers are naturally high. Timotheus Höttges, head of Deutsche Telekom, called DAV “completely superfluous” and that competition in Germany was high enough. Providers like Freenet complain, however: “If the Federal Network Agency does not act, we will basically remain locked out of 5G,” says Freenet boss Christoph Vilanek. Telekom and Vodafone in particular see themselves treated unfairly because their billions in investments in the expansion of the 5G network have been devalued They also openly threatened not to rush the expansion – when the DAV comes – which means for customers: the later 5G comes nationwide, the cheaper and more secure it could be, so it’s worth waiting.