The new proposal from EU governments, as seen by Reuters, comes in response to complaints from the sector about the costs involved with removing and replacing the equipment. Stakeholders stated that replacement costs could total up to €40 billion (US$45 billion).
Notably, an open letter from Deutsche Telekom’s chief executive and 16 industry associates said that the costs would mean lost capital for fibre, 5G, and 6G investments.
The pushback began when a European Commission proposal in January determined that components and equipment from “high risk” suppliers needed to be phased out of critical sectors to reinforce security.
This move came as part of its overhaul of the EU Cybersecurity Act, which Reuters expects will primarily impact Chinese technology companies and giants such as Huawei. Cyber and ransomware attacks have prompted concerns around foreign espionage, causing countries and bodies to scrutinise Chinese technology more closely – the EU is no exception.
The original phase-out period for mobile operators was set at 36 months – a hard deadline the sector pushed back against. The EU government document seen by Reuters, dated 22 September, has removed this timeline from the proposal.
The Commission has instead said that the phase-out timeline would vary on a case-by-case basis, assessing identifiable risk levels, product and infrastructure lifecycles, equipment replacement cycles, interoperability requirements, and whether suitable alternatives are available.
The proposal must now be agreed upon by EU countries before the Cybersecurity Act can become law. To do this, member states will negotiate with the Commission and EU lawmakers on the proposal and any amendments.
Regarding the impact of the EU’s phase-out plan, Reuters quoted a research note from Strand Consult. The research consultant states that Germany, Italy, and Spain will most likely see the largest share of replaced equipment over the next five years.
It will impact companies like Deutsche Telekom and Vodafone, who are reliant on Huawei equipment across some of their markets. Huawei itself has rebuked accusations that its technology poses any security risks.
Taking a more nuanced approach to phasing out “high risk” equipment will still see the EU’s desired result and will make sector leaders more comfortable. However, assessing projects on a case-by-case basis will both increase the timeline for completion and make it inconsistent.
It will also provide opportunities to investigate technologies and suppliers more closely for security risks over a longer period, rather than ripping out and discarding the equipment to meet the deadline.
Related stories