The government has hinted strongly that it will allow the Chinese firm Huawei some role in the UK’s 5G mobile network, despite warnings from the US that doing so could compromise security.
A Downing Street source said while no decision had yet been made, it was not viable for the US to seek to exclude Huawei from the UK given the lack of alternative suppliers for the British market.
“The market conditions are not the same in the US and UK,” the source said. “You could call it a market failure, but we are where we are.”
Britain believes that Huawei’s 5G technology is both further advanced and cheaper than that of its principal rivals, Ericsson of Sweden and Nokia of Finland, and that for all the US lobbying there is no viable alternative. “The US have no plan B,” officials have warned.
The official briefing is the strongest signal yet that Boris Johnson intends to defy Donald Trump and allow Huawei to supply “non-core” parts of the UK phone network. A final decision is expected next week.
At the beginning of last week, senior US officials flew over to Britain in a last-ditch attempt to persuade Johnson’s government to change its mind, arguing that it would be “nothing short of madness” to use Huawei given the security risk.
Since then, there has been a string of leaks, indicating that Britain did not agree. The US had maintained it had fresh information about Huawei but UK sources said last week: “We’d already anticipated the kind of threat.”
Downing Street’s remarks came shortly after Reuters had reported that British security officials had agreed to recommend to senior members of the cabinet that Huawei be allowed a limited role in 5G.
The UK will see how the Trump reacts in the next few days, with post-Brexit trade talks due to begin next month. The chancellor, Sajid Javid, and the US Treasury secretary, Steven Mnuchin, clashed over trade in Davos at a time when the UK is also considering a special tax on big tech companies.
Britain’s biggest phone companies, Vodafone and BT, have also been lobbying to use Huawei in 5G, saying that a total ban could set back rollout of the fast internet technology by a couple of years.
But some experts say that because 5G generates greater speeds by having the network’s intelligence in base stations, rather than at the heart of the network, there can be no real distinction between core and non-core. Any supplier would have the ability to take control of the network if it so wished.
Britain’s spy agencies have long believed that any risk that Huawei technology could be compromised by the Chinese state to undertake surveillance can be contained, but US officials have said intelligence-sharing with the UK could be halted or reduced as a result.
The briefing also follows similar comments by the business secretary, Andrea Leadsom, who told Sky News earlier on Tuesday that not using Huawei would cause problems.
“There are other providers but they are limited,” she said. “Ideally there would be more providers of infrastructure similar to the work that Huawei does, but the UK is looking very carefully at this issue and we will be making a final decision soon.
“It is an ongoing process and there are all sorts of factors to take into consideration, like the availability of other providers, like the work that Huawei has already done in the United Kingdom, so these discussions are ongoing.”
A No 10 spokesman said the issue had not yet been finalised: “The work on the issue of high-risk vendors in the 5G network remains ongoing, and when it’s completed it will be announced to parliament.”