| The U.S. is pressuring LG Uplus to switch from Huawei to a more 'trusted' vendor to supply its 5G equipment. / Yonhap |
By Kim Hyun-bin
LG Uplus has fallen victim to the escalating U.S.―China trade war with Washington increasing its pressure on the Korean telecom company to break its ties with Huawei.
Currently, LG Uplus is using a substantial amount of Huawei equipment for its fifth-generation network and any changes in the vendor will be a costly blow to Korea's third-largest carrier.
LG Uplus is the only major telecom company in the country using Huawei equipment for its 5G network.
The United States has been urging LG to switch to more “trusted vendors.”
"We consider this a severe security issue and we would urge companies like LG Plus to migrate away from untrusted vendors to trusted vendors," said Robert Strayer, deputy assistant secretary of state for cyber and international communications and information policy during a videoconference with reporters Tuesday.
Strayer emphasized the next-generation technology which is being implemented in smart manufacturing, autonomous vehicles and telemedicine cannot be “disrupted by an authoritarian state,” claiming the Chinese government could utilize Huawei network equipment for espionage activities.
"And that's funnily the issue when one is deploying Huawei technology, is the ability for the Chinese Communist Party to make the decision that they would want to undermine that technology by disrupting it or using it as a surveillance tool," he said, backing U.S. allegations that Beijing could use Huawei equipment for espionage.
Strayer says switching out equipment would cost less than 10 percent of the telecom operator's overall operating budget, emphasizing it was in its best interest to switch to a trusted vendor.
"So it's actually in their financial interest probably to move as quickly as possible to trusted vendors," he said.
It will be difficult for LG to switch its vendor with the company scheduled to invest trillions of won in expanding its 5G infrastructure nationwide in the coming years, and amid the COVID-19 pandemic.
In addition, the U.S. has made it clear it will not provide any sort of financial incentives when switching to a different vendor, claiming the decision would be for the telecom company's own good.
Some industry watchers believe LG Uplus should have thought about the consequences when choosing Huawei as its main 5G equipment supplier.
“LG Uplus was well aware of the issues surrounding Huawei when choosing it as a 5G equipment supplier. Huawei always had risks, even when LG was discussing the possibility of selecting it as a vendor. They should have been more cautious in choosing it,” an official familiar with the matter said. “Telecom companies provide services to diverse unspecified individuals, and it is important to provide seamless coverage without being embroiled in these controversies.”
The other two major carriers, SK Telecom and KT, have been praised by U.S. Secretary of State Mike Pompeo as “clean carriers” that have not used Huawei products for their 5G networks.
The three major telecom companies were the world's first to commercialize 5G networks in April 2019.
Although SKT and KT do not utilize Huawei's equipment for their 5G networks, the two companies have adopted the Chinese technology giant's equipment for their landlines.
“It is not meaningful equipment just a repeater which is a cable transmission device. It is irrelevant to the U.S. sanctions on wireless 5G equipment from Huawei,” a telecom official said.