Some big tech firms cut employees' access to Huawei, muddying 5G rollout

LG Uplus

10/06/2019 09:50

(Updates with LG Uplus statement)
    By Paresh Dave and Chris Prentice
    NEWPORT BEACH, Calif./NEW YORK, June 9 (Reuters) - Some of
the world's biggest tech companies have told their employees to
stop talking about technology and technical standards with
counterparts at Huawei Technologies Co Ltd  HWT.UL  in response
to the recent U.S. blacklisting of the Chinese tech firm,
according to people familiar with the matter.
    Chipmakers Intel Corp  INTC.O  and Qualcomm Inc  QCOM.O ,
mobile research firm InterDigital Wireless Inc  IDCC.O  and
South Korean carrier LG Uplus  032640.KS  have restricted
employees from informal conversations with Huawei, the world's
largest telecommunications equipment maker, the sources said. 
    Such discussions are a routine part of international
meetings where engineers gather to set technical standards for
communications technologies, including the next generation of
mobile networks known as 5G.
    The U.S. Department of Commerce has not banned contact
between companies and Huawei. On May 16, the agency put Huawei
on a blacklist, barring it from doing business with U.S.
companies without government approval, then a few days later it
authorized U.S. companies to interact with Huawei in standards
bodies through August "as necessary for the development of 5G
standards." The Commerce Department reiterated that position on
Friday in response to a question from Reuters. 
    Nevertheless, at least a handful of major U.S. and overseas
tech companies are telling their employees to limit some forms
of direct interaction, the people said, as they seek to avoid
any potential issues with the U.S. government. 
    Intel and Qualcomm said they have provided compliance
instructions to employees, but declined to comment on them
further. 
    A spokesman for InterDigital said it has provided guidance
to engineers to ensure the company is in compliance with U.S.
regulations. 
    An official with LG Uplus said the company is "voluntarily
refraining from interacting with Huawei workers, other than
meeting for network equipment installation or maintenance
issues."
    LG Uplus issued a statement to Reuters that there was no
formal policy within the firm about limiting conversations with
Huawei.
    Huawei did not provide comment. 
    
    5G SLOWDOWN
    The new restrictions could slow the rollout of 5G, which is
expected to power everything from high-speed video transmissions
to self-driving cars, according to several industry experts.
    At a 5G standards meeting last week in Newport Beach,
California, participants privately expressed alarm to Reuters
that the long-standing cooperation among engineers that is
needed for phones and networks to connect globally could fall
victim to what one participant described as a "tech war" between
the United States and China. 
    A representative of a European company that has instituted
rules against interaction with Huawei described people involved
in 5G development as "shaken". "This could push everyone to
their own corners, and we need cooperation to get to 5G. It
should be a global market," the person said. 
    To be sure, several workers at smaller telecoms firms said
they had not been told to avoid discussions with Huawei at
standards meetings, and many vendors continue to support
existing deals with Huawei. It is unclear how much further
communications with Huawei have been curtailed in the tech
industry, if at all. 
    "There’s been a lot of misunderstanding from what I’m seeing
and hearing from clients and colleagues, as far as what the
(Commerce Department) restrictions actually entail," said Doug
Jacobson, a Washington-based export controls lawyer.
    He said that companies prohibiting their employees
contacting Huawei was "excessive, because the restrictions don’t
preclude communication, only the transfer of technology." 
    Huawei, whose equipment the United States has alleged could
be used by China to spy, has emerged as a central figure in the
trade war between the world's two largest economies. Huawei has
repeatedly denied it is controlled by the Chinese government,
military or intelligence services.
    China, U.S, and European companies have split before on
standards for Wi-Fi, cell networks and other technologies, and
the tit-for-tat over tariffs between Beijing and Washington has
increased fears of another bifurcation.
    Huawei is a top player at various global organizations that
set technical specifications. As one of the world's biggest
manufacturers of devices like smartphones, and the vital parts
of networks such as routers and switches, Huawei will need to be
at the standards-setting table to ensure a seamless customer
experience when 5G networks become prevalent, engineers and
experts said.
    
    NO MORE INFORMAL CHATS
    Engineers and system architects representing their employers
at meetings of the 3rd Generation Partnership Project (3GPP), a
global consortium of industry associations that aims to set 5G
specifications by March 2020, often take formal, general
discussions into smaller, less documented sessions as they try
to find agreement with rivals. 
    But at 3GPP's meeting last week in California, one of the
group's three chairmen, Balazs Bertenyi of Nokia, told attendees
that more of those so-called "offline" conversations than usual
would be documented by the standards body with notes and other
publicly available records.
    It was the "practical implication" of the new U.S. Commerce
Department rules given industry-wide caution despite the
exemption for 5G talks, he said.
    Companies want to limit informal exchanges, in which their
engineers feel more comfortable discussing proprietary
technology with rivals to persuade them why their research or
innovations are more sound, the sources said. 
    A separate standards body, the Institute of Electrical and
Electronics Engineers (IEEE), put restrictions on Huawei
engineers' ability to participate in peer reviews for its
publications, drawing criticism from some in China's industry
and elsewhere. 
    The organization, which declined to comment beyond generic
statements on its website, then backtracked days later after
saying it had received the all-clear from the U.S. Commerce
Department with respect to the peer review issue. It did not
respond to requests for comment on this story. 
    "Huawei isn't just some company. They, by many accounts, are
the leader in 5G technology. Excluding them is very hard to work
around, so it does stand to disrupt the entire project," said
Jorge Contreras, a law professor at the University of Utah and
an IEEE member. 
    "If the idea is to create a non-Chinese 5G, I'm not sure
that’s possible. Even if it is, would it be as good?" 

 (Reporting by Paresh Dave in Newport Beach, California and
Chris Prentice in New York
Additional reporting by Ju-min Park in Seoul
Editing by Chris Sanders and Bill Rigby)
 ((christine.prentice@thomsonreuters.com; +1(646) 223 6136;
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