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Telecommunication

UK asks Japan for help with 5G as alternative to Huawei

NEC and Fujitsu to benefit but face competitors Ericsson and Nokia

Pedestrians walk past an advertisement promoting Britain's 5G data network at a mobile phone shop in London on Jan. 28. The U.K. has asked Japan for help in creating the network after it decided to exclude Chinese tech giant Huawei from it.   © Reuters

TOKYO -- The British government has asked Japan for help in creating its 5G, or fifth-generation, wireless networks, Nikkei has learned.

The request came after the U.K. on Tuesday decided to ban Chinese tech giant Huawei Technologies from supplying equipment to the networks starting the end of this year as well as remove all the company's devices from them by 2027.

British officials told their counterparts in Tokyo that Japanese technology companies NEC and Fujitsu may replace Huawei as suppliers and have asked for the Japanese side's support to enhance the network's technology and cost-efficiency.

The U.K. is aiming to have Japanese companies compete with other telecoms companies such as Sweden's Ericsson and Finland's Nokia to promote the development of low-cost products suitable for British telecom companies to adopt.

Washington has been leading a campaign to ban Huawei from networks around the world, citing national security concerns. Huawei has denied that it is a threat to any country's security.

Shortly after the ban was announced, British government officials on Thursday met representatives from Japanese government bodies, including the National Security Secretariat as well as the National Center of Incident Readiness and Strategy for Cybersecurity, to seek cooperation. The Japanese side also acknowledges the need to collaborate with British companies in developing 5G technology. 

Three companies -- Huawei, Ericsson, and Nokia -- control nearly 80% of the global 5G base station market. NEC and Fujitsu control less than 1%. Although Ericsson and Nokia are dominant in Britain at present, Japanese companies may be able to expand their market share in the country if they can meet its quality demands and offer low-cost products.

A source from NEC told Nikkei that the company is already "in discussions" with the British side, while a source from Fujitsu said it is seeking opportunities to sell its products in Europe.

The Japanese government has already decided to invest 70 billion yen ($654 million) to support companies such as NEC to develop base station equipment and backbone networks. The funds come from the New Energy and Industrial Technology Development Organization, an independent administrative agency.

The U.K.'s outreach comes as Japan is aiming to promote the domestic development of safe networks while also promoting network exports in cooperation with friendly countries. Whether Japanese companies can export their products to the U.K. will be the touchstone of the strategy.

It is expected that 5G networks can be built with products from multiple base station manufacturers, so Japanese companies have hopes for finally expanding their share in the global market.

In the past, telecommunication companies used to contract with one single supplier and purchase equipment exclusively from it. It was also a substantial financial burden for telecom companies to switch to different suppliers as doing so required specification changes.

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