Govt's order on telecom vendors for secure networks mirrors global stand

The government’s new directive for a list of ‘trusted sources’ and ‘trusted products’ that can be installed in telecom networks is similar to regulations which have been put in place across the US, UK, and EU to restrict Chinese gear makers.
 

According to global telco industry estimates, countries which account for over 60 per cent of the world’s GDP and where around 30 per cent of the world’s population reside, have imposed restrictions, explicit or implicit, total or partial, against Chinese equipment manufacturers such as Huawei and ZTE.
 

Like the rules in the UK and EU, the Indian decision refrains from naming China or mentioning ‘country of origin’. Instead, terms such as ‘trusted vendors’ and ‘high risk vendors’ have been used.
 

The directive also talks of how the political and legal system of the vendor country will be taken into consideration (a clear reference to China) when deciding whether vendors are ‘high risk’ or ‘trusted’ while rolling out the 5G networks. 
 

Sources involved in the process of working out how the Indian directive will operate say various models are under discussion.

For instance, the UK has a four-pronged strategy for ‘high risk’ vendors. One, prevent them supplying equipment for the core of the network which acts as the hub for all data traffic and all the metadata to give the user service, ensuring it reaches the right place.
 

Two, it recommends a cap of 35 per cent on overall market share for ‘high risk’ vendors providing equipment at the edge or for the access network.
 

Three, the UK excludes their equipment from sensitive locations in much the same way that India did earlier by restricting Chinese equipment on its borders.
 

Finally, the UK excludes these ‘high risk’ vendors from sensitive networks such as those run by the government.
 

The US has gone a step further by enacting the Secure and Trusted Communications Networks Act last year stating that federal subsidies cannot be used for buying equipment from vendors who present a national security risk.

 

In addition, all American telcos have to provide the Federal Communications Council (FCC) with a list of any prohibited equipment which they have bought, leased or rented and their reasons for do ing so. The FCC also offers reimbursement to small telcos (with fewer than two million subscribers) for replacing equipment which has been prohibited under the Act.   
 

The EU also has a toolbox of 5G mitigating guidelines for all its members which includes restrictions on what they can sell on high risk vendors and reducing their dependence on them by diversifying suppliers. The Indian directive, however, has left some space for Chinese telecom gear players here to think that they might escape a blanket ban on all equipment. They argue that, unlike in the case of FDI policy or public procurement rules, the directive does not mention ‘countries bordering India’ nor does it mention them explicitly. They have also welcomed the Indian decision not to make the directive retrospective, unlike the UK which has asked old Chinese vendor-built networks to be swapped for non-Chinese players.
 

“We are happy this has been done as making it retrospective would have forced telcos to make fresh investments at a time when they are financially strapped,” said the executive of a Chinese gear maker. 
 

Interestingly, the largest buyer of Chinese equipment in India is state-owned BSNL. This equipment accounts for 40 per cent of its network. In the case of BSNL, while the move is to keep the Chinese out of the 4G bidding process, the proposed tender under discussion nonetheless allows them to participate, with some restrictions.
 

Both Bharti Airtel and Vodafone India also have networks from the Chinese.
 

However, in an aggressive move from home grown telecom vendors, their industry body, the Telecom Equipment Manufacturers’ Association (TEMA) has demanded that the directive should be implemented retrospectively. TEMA Chairman Ravi Sharma said India should have given a timeline to replace all ‘untrusted equipment’ like the US and UK.