U.K. Law May Fine Carriers 10% of Sales for Breaching Huawei Ban

(Bloomberg) —The U.K. government has proposed a law that will fine phone companies as much as 10% of sales or 100,000 pounds ($133,000) a day if they break new telecom security rules, including the forthcoming ban on Huawei Technologies Co. Ltd.’s equipment for 5G networks.

The Telecommunications Security Bill is meant to oversee 5G mobile and fiber networks and will include electronic equipment and software that handles internet traffic and phone calls, the Department for Digital, Culture, Media and Sport said in a statement Tuesday. Communications regulator Ofcom will be in charge of enforcement.

The bill will give the government the power to implement and enforce the ban on Huawei’s 5G equipment that it announced in July. Carriers have until the end of 2020 to stop buying the gear, after the U.K. deemed the Chinese technology giant a security risk, and the companies must remove existing Huawei equipment from their 5G networks by 2027.

“This will be a significant step to protect the U.K. from hostile cyber activity by state actors or criminals,” the DCMS said in the statement. “Over the past two years the government has attributed a range of cyber-attacks to Russia and China, as well as North Korea and Iranian actors.”

Huawei has denied that its equipment poses a security risk and Vice President Victor Zhang said in an emailed statement that the U.K. decision to ban it from 5G is “politically motivated” and “does not serve anyone’s best interests as it would move Britain into the digital slow lane.”

The fines are designed to remedy a system where Britain’s wireless carriers set their own security standards and often have “little incentive to adopt the best security practices,” the DCMS said.

Lawmakers are set to debate the bill next week. They could face a rebellion from some who want Huawei gear removed more quickly, though without the Chinese company, the U.K.’s mobile networks will lean heavily on its Nordic rivals Nokia Oyj and Ericsson AB.

Contact editor Yang Ge (geyang@caixin.com)

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