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[Exclusive] SKT CEO calls Huawei cause of concern in choosing 5G partners

Telecom chief says he is at crossroads in selecting the best supplier

Ahead of selecting suppliers of equipment for its fifth-generation network in June, South Korean mobile carrier SK Telecom’s chief is unsure about whether to consider China’s Huawei over security issues. 

“Huawei is a concern,” SKT CEO Park Jung-ho told The Korea Herald last week during the Mobile World Congress 2018 held in Barcelona, Spain. 

“We are at a crossroads when it comes to the decision, whether (to make it from the standpoint of) the government or customers.”

Huawei's booth at Mobile World Congress 2018 (Song Su-hyun/The Korea Herald)
Huawei's booth at Mobile World Congress 2018 (Song Su-hyun/The Korea Herald)

Park’s remarks shows a dilemma of whether to introduce Huawei’s network equipment, which appeals to operators like SKT in terms of cost competitiveness, but raises security concerns about spying. 

“If we do it (introduce Huawei equipment), it would be the same as Korea as a country was adopting it,” Park said of the pending decision.

Indeed, for SKT, having Huawei as a vendor is no simple choice.

In order to provide high-quality affordable 5G services for customers, it is imperative for the mobile carrier to secure efficient equipment whose initial costs are low like that of Huawei compared to other vendors such Samsung Electronics and Nokia. 

But installing the Chinese network equipment across all regions of South Korea may reignite a national security controversy raised by the US government and its forces on the Korean Peninsula. 

When LG Uplus first introduced Long Term Evolution 4G equipment made by Huawei in 2013, the US Congress strongly suggested it could leave US forces in Korea vulnerable to eavesdropping. 

LG Uplus brought in Huawei, but on the condition that it would not establish Chinese equipment near any US army bases. 

Despite such concerns, SKT and Huawei have been building close ties in recent years. 

SKT CEO Park visited Huawei’s booth at the MWC 2018 and held a closed-door meeting with executives from Shenzhen. 

In early February, top officials of SKT made a visit to the Huawei headquarters for 5G discussion, according to a source. 

SK Telecom CEO Park Jung-ho speaks to reporters at Mobile World Congress 2018. (SKT)
SK Telecom CEO Park Jung-ho speaks to reporters at Mobile World Congress 2018. (SKT)

Korea’s other leading mobile carrier, KT, is in a similar position, and is reportedly watching how its rival will come to decide.

“KT is definitely watching SKT. … If SKT does choose Huawei, it would mean it would also be possible for KT to do so,” said an industry official who attended the MWC last week.

The Korean mobile carriers will have to select multiple equipment vendors to establish new 5G network stations in June according to international standards that are scheduled to be announced by then by 3GPP. 

Considering that SKT currently provides 4G LTE services with Nokia, Ericsson and Samsung, it is less likely that the mobile carrier will use a sole supplier. Two or three vendors are expected to be chosen, according to the industry. 

SKT sent out its second request for proposals to global network equipment manufacturers in January. The RFP contains detailed technological requirements of a 5G network system SKT wants to establish. 

Due to a determination to be the world’s first 5G network provider, SKT has started considering 5G equipment as the first among three Korean mobile carriers, having sent the first RFP last July. 

According to a Huawei official, the company’s 5G equipment runs based on cloud software that most closely meets technological standards and is the only equipment that has passed a pretest yet. 

If Huawei teams up with one of the Korean operators for 5G, the domestic competition for network equipment is likely to intensify. 

Currently, Samsung occupies 45 to 45 percent of the Korean network market, with Nokia taking 30 to 32 percent, Ericsson 17 percent and Huawei 5 to 10 percent, according to the industry. 

SKT and KT are partnering with Samsung, Nokia and Ericsson to provide 4G services, while LG Uplus is partnering with the three and Huawei.

By Song Su-hyun (song@heraldcorp.com)
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