Huawei ban could cost €700m, business lobby group claims

Telecoms groups have warned the Government of higher broadband costs and the potential loss of up €700 million if it proceeds with a national security ban on equipment from companies such as Huawei of China.

The intervention from industry lobby Digital Business Ireland was set out in a letter to Minister of State for Communications Ossian Smyth after he tabled amendments to draft communications laws that empower the Government to ban equipment from “high-risk vendors” on Ireland’s telecoms infrastructure.

Such measures don’t name any organisation but Huawei and Eir, which uses its equipment, believe Huawei is the target of the legislation. The Biden administration banned Huawei and four other Chinese groups from the US last weekend on national security grounds.

The Government has insisted the power to ban certain groups is neither company-specific nor country-specific, saying the Minister will assess the risk profile of vendors and that no assessment has taken place yet.

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But Digital Business Ireland said the proposed measures were “problematic”, before going on to warn of higher broadband costs and delayed connections in regional and remote areas.

“The Government amendments provide sweeping powers to the Minister to make significant changes to the internet infrastructure in Ireland,” Lorraine Higgins, the former Labour senator who leads the group, told Mr Smyth in a November 23rd letter.

National security

The group was one of two business lobbies to write to the Minister of State about the new measures, which will allow the Government to keep the reasons for any ban secret if it cites national security.

“Minister Smyth’s response mirrors the position of the department, which is that there has been extensive engagement and that the Government is adopting a moderate approach to the issue, as is being pursued across Europe,” said a Department of Communications spokeswoman in response to questions about the correspondence.

In an October 28th letter three days after Mr Smyth presented the amendments to a Dáil committee, Ibec group Telecoms Industry Ireland sought 90 days’ notice before the measures took force.

Mr Smyth wrote back to Telecoms Industry Ireland on November 14th promising engagement but saying it was “not proposed that there would be any delay in commencement” of the measures. He suspected the security provisions were “causing most concern to industry”.

Business ‘competitiveness’

According to Digital Business Ireland, the estimated cost of restricting competition for all operators in the telecoms sector was “at least” €600 million to €700 million.

“If an intervention is undertaken this may result in businesses having to rebuild their digital platform from scratch which would increase costs and reduce the competitiveness of Irish businesses,” Ms Higgins wrote.

Her letter was copied to Tánaiste Leo Varadkar who, as Minister for Enterprise, Trade and Employment, has political responsibility for business affairs.

“DBI is concerned that the powers provided to the Minister through these amendments may inadvertently result in an increase in the cost of broadband for businesses and further delay the rollout of broadband in rural areas, compounded by a lack of competition in the market,” the letter said.

“If such consequential changes are to be made, DBI believes that the legislation must include a robust set of concrete risk assessments and measures (based upon technical criteria from industry best practice) to be used when evaluating all telecommunication devices and services. This would help mitigate the unintended knock-on effects of any such intervention.”

Once the measures take force, it will be an offence with a prison term of up to five years for any company to breach an order to keep a ban confidential.