Cost-effectiveness or Security?
The Korean mobile telecommunication industry has been caught in a dilemma over Huawei. As competition began for the commercialization of the world's first 5G mobile telecommunication in March of next year, the Korean mobile telecommunication industry is torn between the price competitiveness of Huawei, one of the global top three telecom equipment makers and security.
According to the Ministry of Science, ICT and related industries, three mobile telecommunication companies -- SK Telecom, KT, and LG Uplus – sent requests for proposals (RFPs) to Korean and foreign equipment markers in orde to introduce based wireless network equipment for the global 5G standard set by the 3GPP. The RFPs included demand for support not only for the NSA (non-standalone interworking with 4G and 5G) approved by the 3GPP in December 2005 as the 5G NR (NewRadio) standard, but also for the SA (Standalone interworking with 5G only) to be announced as the first-phase 5G primary standard in the first half of this year.
The three Korean wireless telecom carriers are working on the selection of partner companies by sending RFPs to medium-sized and small-sized Korean equipment makers developing communication chips and small base stations as well as global communication equipment companies such as Huawei, Ericsson, Nokia, ZTE and Samsung Electronics.
Among the companies, there are the pros and cons of Huawei. This is because Huawei enjoyed the largest share in the global 5G equipment market (28%) as of 2017 and has strong technological power and price competitiveness, but has been steadily giving security concerns to wireless telecom companies. Previously, Park Jung-ho, president of SK Telecom and Kwon Young-soo, vice-chairman of LG Uplus, showed a clearly different viewpoint on Huawei regarding early 5G commercialization.
"Although Huawei is approaching 5G commercialization technology three months faster compared to its competitors such as Samsung Electronics, we do not want to achieve the world's first 5G with Chinese equipments," Park said. By contrast, "Since 2013, we have been using telecommunications equipment made by Huawei, but had no security issues," Kwon said. In addition, it is a majority opinion that the three Korean wireless telecom carriers will not ignore Huawei’s telecommunication equipment as Huawei has advanced 3.5GHz (low-frequency band) technology for the three’s nationwide networks. “Our 5G RFP has also been sent to Huawei and ZTE," said Oh Sung-mok, president of networks at KT. "We are not planning to exclude specific companies in the supply of 5G telecommunication equipment."
Nevertheless, the Korean wireless telecom carriers still have a doubt about Huawei that the Chinese government can influence Huawei any time. "Korea will build a 5G network nationwide with high population density," said an industry official who asked for anonymity. "If Huawei equipment is used in the networks, Huawei will be able to look inside the networks." To mention an instance, in February 2016, compared to Apple, which strongly rejected the US FBI’s demand to unlock a terrorist’s iPhone, Huawei will have no alternative to give in to the Chinese government, the official said.
Currently, Ren Zhengfei, founder of Huawei Huawei, owns a 1.4% stake in Huawei, a privately owned company (unlisted company) and about 80,000 employees share the remaining stake (98.6%). Its chief executive officer (CEO) is selected through a 'circulating CEO system' in which three of the board members take turns after a certain period of time as their terms. Nevertheless, the global IT industry including the US IT industry is regarding Huawei as China's state-run enterprise. Another industry official said, "The reason for the three leading companies to commercialize 5G in the world is to develop not only smart cars, smart factories and smart cities but to export 5G know-how to other countries in the future."
According to the Ministry of Science and ICT, if Huawei satisfies security regulations in the process of the installation of telecommunication facilities such as base stations or equipment certification, there is no reason not to approve it. Previously, the Korean government okayed Huawei equipment on the same basis when LG Uplus built its LTE infrastructure with Huawei equipment. However, when the problem surfaced in the political world, Yoo Young-min, minister of science and ICT, said, "When Huawei equipment is installed in 5G networks, there is a possibility that security problems of various devices connected to the Huawei equipment becomes an issue. We will proceed with 5G while paying attention to this point."