Made it to volume 3 before James Gunn! (Marvel reference, win!)
Headline: Huawei 5G kit must be removed from UK by 2027
Main sources: https://www.bbc.co.uk/news/technology-53403793 (dated 14th July 2020); https://www.bbc.co.uk/news/technology-51283059 (Huawei set for limited role in UK 5G networks - article dated 28th January 2020)
Look out:
The UK Government has announced that UK mobile providers are banned from buying Huawei 5G equipment after 31st December 2020, and must remove all the firm's kit from their networks by 2027
This comes 6 months after announcing that the firm would have a "limited role" in the infrastructure project where only 35% of its kit will be permitted, including radio masts, and would not be permitted near military bases and nuclear sites. (1)
The telco firm responded by saying the move was "bad news for anyone in the UK with a mobile phone" and threatened to "move Britain into the digital slow lane, push up bills and deepen the digital divide."
Look in:
The US federal government, by way of an executive order, has blocked US companies from buying "foreign-made telecommunications equipment deemed a national security risk". Though no individual firms are specifically named, it is seen largely as a move against China-based Huawei, which some US lawmakers have deemed a security threat. (2)
The UK government has made the decision for reportedly the same reasons.
"This has not been an easy decision, but it is the right one for the UK telecoms networks, for our national security and our economy, both now and indeed in the long run," (Oliver Dowden, Secretary of State for Digital, Culture, Media and Sport)
The move by the UK government has been seen as conceding to the US and the current administration.
Law firm involvement:
The move will delay the UK's rollout of 5G by a year. This will impact any contracts for goods and services entered into by mobile providers and Huawei and any subsidiary companies to provide equipment for the country's 5G network.
Would parties agree to delay the performance of these contracts, or seek to relieve themselves of the legal obligations due to not being able to fulfil them by the agreed date? A contract would be deemed frustrated and parties would be relieved of their legal obligations if it becomes impossible to perform said contract through no fault of any of the parties involved.
Were there contracts between UK mobile providers and Huawei for 5G equipment in the mobile infrastructure network, or between Huawei and mobile handset manufacturers for supply of parts to connect with the 5G network by a defined date? Following the government's decision above, these contracts won't be able to be fulfilled and would be frustrated. Lawyers who work in corporate departments, including international trade (Huawei being an overseas seller to the UK's mobile network providers) would have been involved in the drafting of these contracts, and would need to be involved should frustration be the case in order to advise parties that they would be relieved of their duties to perform.
Cybersecurity lawyers would likely have been involved when contracts for sale were being negotiated to discuss risk mitigation, incident response and post-incident remediation, regardless of the parties involved and the gossip about the parties involved. Cyber-attacks have been threatening a number of companies and bodies (Vodafone, Nissan, NHS), and law firms are not immune either (the Panama Papers leak was the result of Applebys and Mossack Fonseca being hacked, and DLA Piper was attacked by ransomware in 2017). It is therefore essential that firms protect themselves sufficiently and advise clients on how they can protect themselves.
Further to the above, GDPR regulations are at play. even with the UK leaving the European Union. GDPR will be absorbed into existing domestic data protection laws, thus making the domestic law even more robust. Lawyers familiar with GDPR and how to apply it to an issue will be essential here.
Though Huawei and China have denied that the equipment poses a security risk, the PR campaign and narrative thus far, especially from the US, has planted the seed as far as national security questions being asked. A task for lawyers involves PR for their client - one example could be advising a client, who might be an oil company, of how it would be perceived if they entered into lengthy and costly litigation with a green energy company or an environmental protection group like Greenpeace or Extinction Rebellion.
In order to have a service provided there needs to be infrastructure in place, ie masts, fibre cable etc. A wayleave agreement is an access agreement between a landlord/owner, a network operator, and (optionally) the party in occupation of the destination property/premises at the time. The landlord grants permission for the agents of the network operator to encroach onto the land and install, maintain, use and remove the digital infrastructure apparatus in order for the end user's service provider to actually provide the service. Speaking from experience, this is a task typically carried out by junior professionals or trainees but can also be done by associates and Partners of firms.
Following this, let's do a quick PESTLE analysis.
POLITICAL (.........don't mention Trump, don't mention Trump, don't mention Trump .......)
Donald Trump (.....dammit!) ordered the US federal government to block US companies from buying foreign-made telecoms equipment deemed a national security risk. Whilst not naming Huawei personally, it is seen as a move against China-based firms as part of the ongoing trade war between the two nations leading to higher pressure on Chinese firms doing business in the US and other Western nations. He will likely see this move by the UK government as vindication that his decision was correct.
As a result of Brexit, the UK appears to be vigorously negotiating a trade deal with the US. It could be argued that the move to ban Huawei equipment from UK 5G networks is an appeasement move in order to curry favour with the US administration and Trump?
The move has seen divides in the Conservative party in the UK, and there could be a push for new telecoms legislation. This will inevitably take time to include drafting a Bill, reading, scrutiny in Parliament, voting on each reading, and Royal Assent before it becomes statute.
ECONOMIC
We are not too long removed from the 2008 financial crash, and currently experiencing a further financial crisis as a result of the COVID-19 pandemic.
Competition in the tech industry is intense, despite tech companies becoming seen as industry leaders following 2008. Huawei has adopted a competitive pricing strategy to beat the effects of economic fluctuations in the international market.
The Chinese economy has seen a lot of healthy growth in the last decade, which has proved profitable for Huawei as its profits have grown very fast as a result.
To relate to this story, this decision to ban Huawei parts in the 5G network will mean a delay of up to 3 years and a cost of up to £2b to the economy. (3)
Conversely, BT says the deadline and focus on 5G meant it would not have to increase the estimated £500m cost to its business of complying with the new restrictions around Huawei.
SOCIO-CULTURAL
The main social trend is that, in the eyes of consumers in the UK, Huawei is a security concern due to its involvement with the Chinese military, which has also impacted its position with the UK's allies including the US and Australia in 2018. (4)
This places added pressure on Huawei to prove that their products, such as their smartphones, are safe so as not to harm their brand even further and negatively impact sales.
This is also true with the parts that go into the 5G networks. Because of the trend that the company poses a security concern, Huawei must go out of its way on a positive PR campaign to prove that its products are safe for use in digital infrastructure that UK network operators are going to use to roll out 5G to their consumers.
TECHNOLOGICAL
Huawei is the world's largest manufacturer of telecoms equipment, and one of the top-ranked companies in global smartphone sales amongst the likes of Apple and Samsung.
The demand for smartphones has always been high since 2008. They have permeated our everyday life for things like entertainment, accessing social media, managing money, and many more.
Following the social trend of Huawei being a "national security concern", technological security and cybersecurity are at the forefront of people's minds when we think of the company.
A "backdoor" refers to a method in which unauthorised users can get around normal security measures and gain high-level user access on a computer system, network or software application. (5) Earlier this year, the US accused Huawei of reportedly being able to access networks by using backdoors intended for law enforcement since 2009. Though Huawei denies this. (6)
The ban by the UK does not extend to the older generation (2G, 3G, 4G) equipment supplied by Huawei.
Beyond Huawei, the 4 main providers of equipment to the UK's 5G network are Nokia (Finnish), Ericsson (Swedish), Samsung (South Korean) and ZTE (Chinese and part-owned by the Chinese government). (7)
LEGAL
The move could see new telecommunications legislation be introduced. The current legislation surrounding UK telecommunications is the Communications Act 2003 and the Electronic Communications Code (Sch 3 of the Act).
Given the company deals with the personal data of millions of users, compliance with data protection laws is essential in order to avoid hefty fines and negative PR, thus impacting the value and brand image of the company even further. The value of fines can be astronomical!
Fines for breaching GDPR regulations are measured on a 2-tier system - lower-tier fines are up to €10 million or 2% of the company’s global annual turnover of the previous financial year (whichever is higher), and higher-tier fines are up to €20 million or 4% of the company’s global annual turnover of the previous financial year (whichever is higher). (8)
Will Brexit impact whether GDPR will apply to the UK? No. The UK has long been committed to the creation of robust data protection laws and was one of the principal architects of GDPR. It has been agreed that GDPR will be absorbed into domestic law (Data Protection Act 2018) as part of the European (Withdrawal) Agreement. (9)
International companies across the globe with any EU citizens as customers must be aware of GDPR obligations and comply to avoid fines. (10)
ENVIRONMENTAL
More and more technology brands are investing in sustainability practices in order to reduce their carbon footprint and minimise environmental impact. By reducing waste and using sustainable materials, the company has been able to improve the energy efficiency of its products dramatically. (11)
The company has also been investing in renewable energy such as solar, and working with its suppliers and partners to recycle and reuse E-waste, thus reducing its carbon footprint even further.
Be safe and be well! :)
P
Credit: cover image photo by Rodion Kutsaev on Unsplash