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HUAWEI’S 5G RACE IN INDIA: SCHEME OR SCAM?

Updated: Nov 8, 2019


Image by Ylanite Koppens from Pixabay

This piece has been authored by Husain Ratlamwala, a fourth-year student of B.A.LL.B (Hons.) at the Rajiv Gandhi National University of Law, Patiala.

INTRODUCTION


The rise of state of the art technology and modern communication has sparked a revolution of unparalleled proportions, leading to an increased number of users and capabilities, thereby increasing the need for both security and privacy. To keep up with this need, new technology is evolving to provide a secure and protected environment. The path of technological development is majorly impacted by two factors i.e. the legal environment and users' expectations in regards to privacy.[i] In the past few years, the proportion of illicit leaks has increased regarding the security that is provided to the users. In June 2019, more than 3800 data breaches have been recorded that is 54% more than the breaches recorded in mid-2018.[ii] This leads to the question, whether a country like India should welcome cutting-edge technology even if the national security and privacy of its citizens is at the risk of being compromised.


BACKDROP


Huawei, the world’s biggest telecom supplier and second-largest smartphone manufacturer[iii] is the leading provider of next-generation 5G wireless technology. Despite having an enormous network and providing its 5G services to Thailand, Korea, France, Germany etc., it is banned in America, Australia, Japan, and Taiwan.[iv]


Huawei has been banned in the US since May, 2019 due to security concerns. It was accused of intellectual property theft. They were also charged for alleged espionage by backdooring information to China.[v] U.S President Donald Trump has warned several other countries (including India) against including Huawei in its 5G Spectrum allotment. The 5G Spectrum allotment in India is scheduled to be auctioned later this year. However, there is no clarity regarding the government’s stand on Huawei yet.


CONCERNS


India is facing two main concerns, firstly, Ren Zhengfei, the founder of Huawei is a former member of People’s Liberation Army which is rumored to have links with the Chinese Military; secondly, the laws prevailing in China i.e., National Intelligence Law, 2017 and Counter-Espionage Law, 2014, require organizations to give access to any data upon demand.[vi] Furthermore, China has warned India of ‘reverse repercussions’ on Indian firms that are operating out of China in the event of Huawei’s ban from the 5G trials.[vii] Article 7 of China’s National Intelligence Law, 2017 specifically asks for cooperation, assistance, and support from any organization in matters of national intelligence work. The law also emphasizes on the protection from the State towards these organizations in exchange for their cooperation.[viii] On the other hand, Counter-Espionage law states that “when the state security organ investigates and understands the situation of espionage and collects relevant evidence, the relevant organizations and individuals shall provide it truthfully and may not refuse.”[ix]


Huawei has agreed to sign a ‘no backdoor’ agreement with the government and other telecom companies in India as a response to the security concerns prevailing in the country.[x] Under this agreement, the Indian Government can ban Huawei upon finding evidence of security breach and will have the power to test Huawei’s equipment for the alleged breach. This breach can either be tested by the authorities or by a third party.[xi]


Huawei is also backed by the Cellular Operators Association of India (COAI), a premier telecom lobby body, having Reliance Jio, Airtel, and Vodafone-Idea as its core members.[xii] These companies purchase telecom equipment from Huawei on long-term suppliers’ credit and easy payment terms.


Inaugurating 5G technology is linked with severe security repercussions, as 5G greatly enables Artificial Intelligence (AI), which is used by China to asphyxiate dissent, particularly in Xinjiang. China is aiming to become the world’s leading AI Innovation Hub by 2030, and it is pursuing battlefield deployment of fatal autonomous AI structures on multiple domains. A new strategy called ‘intelligentized’ warfare is being developed by the People’s Liberation Army (PLA), which aims at changing the fundamental character of warfare with the help of AI. This will be a transformation from today’s ‘informatized’ warfare into future ‘intelligentized’ warfare.[xiii] The Communist Party of China (CCP) controls the Chinese companies and Huawei had close links to the PLA. ‘Intelligentized Warfare’ by a totalitarian State, enabled by Chinese 5G networks could soon become reality. Exposing India’s telecom networks to Chinese 5G diffusion would result in internal security risks.


Trump’s unrelenting pressure to ban Huawei from the 5G trials can also be analyzed from a different perspective. Huawei holds 56,492 active patents in telecommunications, networking, and other high-tech inventions worldwide.[xiv] It is raising its royalties and licensing fees due to denied access to U.S markets. Huawei and Qualcomm, an American multinational semiconductor and telecommunications equipment company, are the leading players when it comes to 5G technology. After a global ban on Huawei, Qualcomm will become the largest provider of 5G technology and may lead to predatory pricing. Qualcomm has been violating anti-trust laws for a while and was fined €242 million by European Commission for abusing its market dominance in 3G baseband chipsets. Qualcomm was accused of forcing a competitor, Icera, out of the market by selling below cost. This is illegal under EU antitrust rules.[xv]


SUGGESTED SOLUTION


India is going to start its 5G trials from September and companies like Bharti Airtel, Reliance Jio and Vodafone-Idea, are allowed to conduct 5G Spectrum trials. For making Huawei a part of the trials, India can adopt a ‘middle approach’, as adopted by the UK. Under this approach, Theresa May has ordered a ban on Huawei for the supply of ‘core’ parts of Britain’s future 5G network and is restricted only to the supply of ‘non-core’ parts.[xvi] Billing and customer details are stored in the ‘core’ armature whereas, transmission equipment and base stations setup at rooftops and masts are covered under the umbrella of ‘non-core’ infrastructure.[xvii] India can adopt the same approach, however, this will not completely debar the telecom giant from the country.


The Department of Industrial Policy and Promotion (DIPP) has passed an order[xviii] in 2017 that empowers the Indian government to ban the companies from a country that restricts Indian companies from bidding for tenders. Indian companies operating in China are not allowed anywhere near its network, yet, the Department of Telecommunication (DoT) is in a dilemma over banning Huawei in 5G trials.[xix] Despite having potential telecom companies that can develop advanced 5G technology in India like Bharti Airtel, government is keen on promoting external players. Indian companies are unable to scale up their market due to vested interest against domestic manufacturing.


India needs a holistic approach to confront these lobbies and take tangible actions for promoting national security and economy. It can begin by installing indigenous networking devices such as routers, optical equipment, monitoring systems, etc. which are majorly supplied by Huawei to India. Domestic Companies in India should be prioritized and promoted. They should be internalized by every government department and official.

[i] Abraham R. Wagner; Paul Finkelman, Security, Privacy, and Technology Development: The Impact on National Security, 2 TEX. A&M L. REV. 597, 634 (2015).


[ii] James Sanders, Data breaches increased 54% in 2019 so far, Tech Republic (Aug. 15, 2019 7:35 AM), https://www.techrepublic.com/article/data-breaches-increased-54-in-2019-so-far/


[iii] Sean Keane, Huawei ban: Full timeline and why the 5G Mate 30 Pro might not use Android, CNET (Aug. 29, 2019 1:09 PM), https://www.cnet.com/news/huawei-ban-full-timeline-and-why-the-5g-mate-30-pro-might-not-use-android/


[iv] Stefan Nicola, Trump Campaign to Restrict Huawei Runs Into Global Opposition, Bloomberg (Mar. 26, 2019 5:30 GMT), https://www.bloomberg.com/news/articles/2019-03-26/trump-campaign-to-restrict-huawei-runs-into-global-opposition.


[v] Steve Lohr, U.S. Moves to Ban Huawei From Government Contracts, The New York Times, (Aug. 7, 2019), https://www.nytimes.com/2019/08/07/business/huawei-us-ban


[vi] Rahul Satija, India searching for a way to restrict Huawei in 5G, Nikkei Asian Review (Mar. 7, 2019 12:28 AM), https://asia.nikkei.com/Spotlight/5G-networks/India-searching-for-a-way-to-restrict-Huawei-in-5G2


[vii] Sanjeev Manglani & Neha Dasgupta, China warns India of 'reverse sanctions' if Huawei is blocked, Reuters (Aug. 6, 2019 6:40 PM), https://www.reuters.com/article/us-huawei-india-exclusive/exclusive-china-warns-india-of-reverse-sanctions-if-huawei-is-blocked-sources-idUSKCN1UW1FF


[viii] Article 7, National Intelligence Law of the People's Republic, 2017.


[ix] Arjun Kharpal, Huawei says it would never hand data to China’s government. Experts say it wouldn’t have a choice, CNBC (Mar. 4, 2019 8:13 PM), https://www.cnbc.com/2019/03/05/huawei-would-have-to-give-data-to-china-government-if-asked-experts


[x] Surajeet Das Gupta, Huawei offers to sign 'no back door' pact with India to allay spying fears, Business Standard (Jul. 9, 2019 11:11 AM), https://www.business-standard.com/article/companies/huawei-offers-to-sign-no-back-door-pact-with-india-to-allay-spying-fears-119062401409_1


[xi] Ibid.


[xii] Regina Mihindukulasuriya, Many countries have blocked Huawei, but India can’t afford to ban it from its telecom story, The Print (Dec. 27, 2018 6:59 PM), https://theprint.in/economy/many-countries-have-blocked-huawei-but-india-cant-afford-to-ban-it-from-its-telecom-story/169813/


[xiii] Elsa B. Kania, Battlefield Singularity: Artificial Intelligence, Military Revolution, and China’s Future Military Power 13-15 (Centre for a New American Security 2017).


[xiv] Susan Decker, Huawei Has 56,492 Patents and It's Not Afraid to Use Them, Bloomberg (Jun. 14, 2019 3:45 AM), https://www.bloomberg.com/news/articles/2019-06-14/huawei-has-56-492-patents-and-it-s-not-afraid-to-use-them


[xv] Press Release, Antitrust: Commission fines US chipmaker Qualcomm €242 million for engaging in predatory pricing, European Commission (Jul. 18, 2019), https://ec.europa.eu/commission/presscorner/detail/en/ip_19_4350


[xvi] Dan Sabbagh, May to ban Huawei from providing 'core' parts of UK 5G network, The Guardian (Apr. 24, 2019 12:01 AM), https://www.theguardian.com/technology/2019/apr/24/may-to-ban-huawei-from-supplying-core-parts-of-uk-5g-network


[xvii] David Bond et al., Theresa May approves Huawei for UK 5G in snub to US, Financial Times (Apr. 24, 2019), https://www.ft.com/content/fca902a4-6657-11e9-a79d-04f350474d62


[xviii] Public Procurement (Preference to Make in India) Order, 2017, Department of Industrial Policy and Promotion, https://dipp.gov.in/sites/default/files/publicProcurement_MakeinIndia_15June2017.pdf


[xix] Smita Puushottam, Chinese threat to cybersecurity: Why India needs a comprehensive & concrete action plan for national security and economic health, The Financial Express (Oct. 27, 2018 4:02 AM), https://www.financialexpress.com/opinion/chinese-threat-to-cybersecurity-why-india-needs-a-comprehensive-concrete-action-plan-for-national-security-and-economic-health/1363012/

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