EU industry chief dismisses fears strict security rules could delay 5G

By Michel Rose and Douglas Busvine

PARIS/MUNICH (Reuters) – European industrial policy chief Thierry Breton dismissed claims that relying on European companies to build a 5G network would delay its rollout, weighing in on an increasingly tense debate in Germany over the risk posed by China’s Huawei.

In a speech at the DLD conference in Munich on Sunday, Breton, a former French finance minister, warned policy-makers in Germany and elsewhere that the new 5G technology will require more stringent security rules than previous generations.

“Setting up strict security conditions will not create delays in the roll out of 5G in Europe,” Breton said, sticking to the line contained in prepared remarks obtained by Reuters in advance.

“Europe, including Germany of course, is on track. We are not, and won’t be, late in Europe on the deployment of 5G.”

The warning by Breton contrasts with comments by German Interior Minister Horst Seehofer who said earlier this week that if Chinese companies were excluded, the construction of the 5G network would be postponed for at least five to ten years.

German Chancellor Angela Merkel’s conservatives are divided over whether to support a proposal by their Social Democrat junior coalition partners that, if approved, would effectively shut out the Chinese technology giant from the network.

Merkel’s right-left government, like all of Europe, is under pressure from the United States to bar Huawei, whose gear Washington says contains “back doors” that would enable China to spy on other countries.

Breton, who heads the vast ‘Single Market’ portfolio in the new European Commission which includes industrial policy, has said Europe should preserve its “technological sovereignty” by ensuring it has domestic alternatives in strategic areas.

A so-called “toolbox” of security standards that EU member states should apply to their 5G networks would be ready this month, he added: “Everybody is welcome in Europe, but more and more we will issue clear rules – and everybody will have to fulfill all these rules.”

ECHOING MACRON

In his speech, he did not explicitly call for a ban on Huawei, saying: “Any company, European or not, will be welcome provided of course that they abide by our European rules. We will not build a European fortress.”

But the call to favor European providers such as Nokia <NOKIA.HE> and Ericsson <ERICb.ST> and set up more stringent security rules will please opponents of the Chinese company.

The new impetus by the EU executive echoes calls by French President Emmanuel Macron and others to prevent Europe from relying on China and the U.S. for strategic infrastructure that could be used as geopolitical leverage in the future.

Germany’s Seehofer, who is originally from Bavaria, whose car industry is reliant on exports to China, has said he was against banning Chinese telecommunications equipment suppliers such as Huawei from helping build Germany’s 5G network.

“I can’t see how we can set up a 5G network in Germany in the short term without the participation of Huawei,” Seehofer told the Frankfurter Allgemeine Zeitung newspaper.

German operators are all customers of Huawei, the leading telecoms equipment vendor with a global market share of 28%, and have said that banning it would add years of delays and billions of dollars in costs to launching 5G networks.

But these warnings were dismissed by Breton: “Let me say it loud and clear: contrary to what some would like to suggest, Europe is not lagging behind in 5G. Neither in 5G technology nor in its deployment.”

Huawei has denied allegations by the Trump administration.

China’s ambassador to Germany, Ken Wu, indicated last month that Beijing could retaliate if Huawei was excluded, pointing to the millions of cars that German automakers sell in his country.

(Additional reporting by Michael Nienaber in Berlin and Douglas Busvine in Munich; editing by Nick Macfie)