The U.K. and other European nations are considering whether to impose restrictions on Chinese telecommunications giant Huawei, but the issue is complicated because it could delay the region’s adoption of 5G networks, according to a report by Bloomberg.
The Trump administration has been telling allies to restrict Huawei based on worries that the company could be used by the Chinese government to spy. The company has denied these claims.
“The risk is that it puts Europe further behind the curve,” said Neil Campling, an analyst at Mirabaud Securities in London.
The U.K. has been trying to decide whether it will block Huawei outright or have tighter oversight on the company. It seems to be leaning toward the latter, as the U.K.’s cybersecurity watchdog organization has decided it can manage the risks.
Europe is already behind the curve when it comes to 5G adoption, and some telecom executives in the region are shy about investing because they’re worried the spending won’t pay off in the short term.
Europe needs to do some costly upgrades and carriers are generally less profitable there. Regulators have also blocked the types of mergers that would allow a bunch of operators to prepare for the technology. Getting ready for 5G is expected to cost billions of euros.
Further complicating things is the fact that Huawei is deeply involved in European networks. The United States has avoided this problem by not doing business with the company and China is well positioned to move forward with the new tech.
Some countries have proposed options for dealing with Huawei. Germany said more oversight is necessary, and that the state should have full access to the source code of technology suppliers.
However, if Huawei is banned, some companies are predicting as much as a two-year delay in adopting the technology. With that possible consequence, some aren’t quite ready to abandon Huawei just yet, but there are contingency plans, which could include a stronger reliance on other suppliers.