MCMC, telcos get ready for potential upsets from Huawei ban

The regulator is awaiting the US authorities’ final decision on Huawei equipment, which could affect Malaysia’s 5G plans

by NG MIN SHEN / pic by BLOOMBERG

The Malaysian Communications and Multimedia Commission (MCMC) will be working with local telecommunications companies (telcos) to manage any possible challenges arising from the US’ latest sanctions on Huawei Technologies Co Ltd, its chief said.

MCMC chairman Al-Ishsal Ishak said the regulator will be making preparations together with industry players, while awaiting the US authorities’ final decision on the use of Huawei Technologies Co Ltd’s equipment, which could affect Malaysia’s 5G rollout plans. The announcement of the ban has already affected chipmakers worldwide amid concerns of its impact on the global supply chain.

“In light of the recently issued executive order on securing the information and communications technology and services supply chain by the US government, the MCMC as the regulator of the communications and multimedia industry will work together with domestic telecommunications service providers to determine the appropriate measures that will minimise potential risks and disruptions to services,” Al-Ishsal told The Malaysian Reserve (TMR).

The Trump administration on May 17 placed Huawei on a trade blacklist, prohibiting China’s largest technology firm from procuring the US-made software and components required to manufacture its products.

On May 20, the US provided some leeway in the form of a 90-day delay on the ban, while allowing Huawei to purchase American-made goods for the purposes of maintaining existing networks and providing software updates to existing Huawei handsets, although the company is still banned from buying US parts and components to make new products without licence approvals.

The potential measures, to be undertaken by Malaysian telcos alongside the MCMC, have yet to be decided, Al-Ishsal said, as the regulator first needs to “identify and recognise what the risks are”.

“At this point, it’s still not definitive as it’s unclear what the order will do, how much will be executed and so on. Preserving the sustainability and reliability of our nation’s telecommunications networks, as well as protecting consumers’ interest, remain our primary focus,” Al-Ishsal added.

The ban on Huawei is the latest in a series of sanctions against the Shenzhen-based firm, rooted in allegations that its products and technologies could be used in Beijing’s cyber espionage activities.

Alongside the US, several major economies including Australia, Germany and France have moved to stop the company from participating in domestic 5G infrastructure.

While Huawei’s primary business is in smartphones, it is also a global leader in telecoms infrastructure and was one of the pioneers of 5G, the next generation of mobile Internet connectivity that is projected to underpin many revolutionary technologies such as robotics and autonomous driving.

In January this year, Al-Ishsal told TMR that the National Cyber Security Agency (NACSA) had initiated a probe into the alleged cyber spy threats surrounding Huawei. The study is expected to be completed by the end of this year.

NACSA is leading the engagements with its counterparts in countries that have taken a stand against Huawei, while the MCMC and CyberSecurity Malaysia are consulted on specific topics.

In the meantime, Huawei is continuing its work with domestic telcos including Maxis Bhd, Celcom Axiata Bhd and Digi.Com Bhd to accelerate the rollout of 5G in Malaysia.

In a statement last week, Huawei said it will continue to provide security updates and after-sales services to all existing Huawei and Honor smartphone and tablet products, covering those that have been sold or are still in stock globally.

“We will continue to build a safe and sustainable software ecosystem, in order to provide the best experience for all users globally,” it said.

While the US’ increasingly extreme actions against Huawei appear to be in the name of defending national security, US President Donald Trump told a press conference at the White House last Thursday that he “could imagine Huawei possibly being included in some form of or some part of a trade deal”, suggesting that blacklisting Huawei could be a negotiation move amid the never-ending US-China trade tensions, rather than a genuine national security response.

Following the US’ export curbs, Huawei co-founder and CEO Ren Zhengfei said in an interview with Bloomberg Television released yesterday that while the move will impact the company, the technology giant may turn to its own chips that it has been designing for years and are now used in the company’s own smartphones.

However, the 74-year-old billionaire did not say how quickly Huawei would be able to ramp up its internal replacement efforts.

As for whether China might retaliate by banning American firms from Chinese markets, Ren said he would “be the first to protest” against such a move.

Analysts estimate Apple Inc, which was the world’s second-largest smartphone maker until it was overtaken by Huawei last year, could lose almost a third of its earnings if barred from China.

“Apple is my teacher, it’s in the lead. As a student, why go against my teacher? Never,” Ren said.

According to research firm International Data Corp, Huawei saw its smartphone shipments jump 50.3% year-on-year (YoY) to 59.1 million units in the first quarter of 2019 (1Q19), allowing it to overtake Apple with a market share of 19%.

Apple’s smartphone shipments fell 30.2% YoY in 1Q19, narrowing its market share to 11.7%, while Samsung Electronics Co Ltd remained the biggest smartphone maker globally with a 23.1% share despite posting an 8.1% fall in shipments.