The decision by the Australian government to ban Huawei and ZTE from participating in the nation's 5G rollouts over national security concerns contributes to the risk of a protectionist battle in 5G infrastructure, analyst firm CCS Insight has warned.
In a research note, CCS Insight said that the ban came shortly after the recent order from the Trump administration in the US banning US government agencies and contractors from using most components supplied by Chinese vendors including Huawei and ZTE.
In addition, the independent body Huawei established in the UK to monitor the integrity of their equipment and assuage concerns that networks using Huawei's equipment could be used to facilitate spying by the Chinese government recently downgraded its assessment.
A report from the body found that “shortcomings in Huawei’s engineering processes have exposed new risks in the UK telecommunication networks and long-term challenges in mitigation and management.”
“Despite these setbacks, Chinese companies have become very important to the global telecom market. Huawei has challenged Ericsson and Nokia to become the largest maker of infrastructure equipment,” CCS Insight said.
“Although opposition in Australia, the US and potentially other countries will slow their ascent in the telecom world, Chinese companies are still investing heavily in 5G research and development and standardization efforts.”
With China expected to become the largest 5G market by connections as early as 2020, Huawei and ZTE will have considerable advantage in the race to 5G dominance despite the Australia ban, the research firm said.
“However, the immediate concern is that this development could escalate, with China adopting its own protectionist stance on 5G infrastructure at the cost of international suppliers such as Ericsson and Nokia.”