Telecommunications (Security) Bill (First sitting)

Lord Beamish Excerpts

Committee stage & Committee Debate: 1st sitting: House of Commons
Thursday 14th January 2021 Public Bill Committees

[The Chair]

Before we begin, I have a few preliminary announcements. Please switch electronic devices to silent. Tea and coffee are not allowed during sittings of this Committee. I would also like to remind Members of the need to observe the rules on physical distancing, both in this room and when entering and leaving via the marked entrance and exit doors. It is important that Members find their seats and leave the room promptly in order to avoid delays for other Members and staff.

Today we will first consider the programme motion on the amendment paper. We will then consider a motion to enable the reporting of written evidence for publication, and then a motion to allow us to deliberate in private about our questions, before the oral evidence session. In view of the time available, I hope, but cannot insist, that we take those matters without debate. I call the Minister to move the programme motion standing in his name, which was discussed on Tuesday by the Programming Sub-Committee for this Bill.

Motion made, and Question proposed,

That—

(1) the Committee shall (in addition to its first meeting at 11.30am on Thursday 14 January) meet—

(a) at 2.00 pm on Thursday 14 January;

(b) at 9.25 am and 2.00 pm on Tuesday 19 January;

(c) at 11.30 am and 2.00 pm on Thursday 21 January;

(d) at 9.25 am and 2.00 pm on Tuesday 26 January;

(e) at 11.30 am and 2.00 pm on Thursday 28 January;

(2) the Committee shall hear oral evidence in accordance with the following table:

[Mr Kevan Jones (North Durham) (Lab)]

I have no problem with the programme motion, because it is sensible, but I want to put it on record that it is frankly nonsense for us to come in today and sit in a room to take evidence from virtual witnesses, as we will do next week as well. There is no reason why evidence sittings, particularly, could not happen remotely. I have attended two meetings this week, including a meeting on Tuesday of the Defence Committee, which took evidence from witnesses virtually.

I understand that things are being done in this way at the insistence of the Leader of the House. I think he is hiding behind the usual channels having sorted it out. I want to put it on the record that that is not true and that objections have been raised by the official Opposition, certainly about evidence sittings being done in this way. If we are to travel long distances, as many of those present have, to get here today and next week, that flies in the face of the advice of not only the Government but Public Health England about moving between areas.

I do not know whether, at this late stage, we could at least consider whether next week’s evidence could be taken virtually, because it is a bit ironic that we are sitting in a room here—I accept your rulings about social distancing and so on, Mr Hollobone—and that the evidence that we shall listen to from the witnesses today and next week will be given virtually.

[The Chair]

Mr Jones, I note your remarks and know that many others will share your view. As the Chair of the Committee I can operate only under the rules that I have been given by the House.

Question put and agreed to.

Resolved,

That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Matt Warman.)

--- Later in debate ---

[The Chair]

We will come on to Kevan Jones. Now I am getting the hang of this now, I do not think it is fair to always ask Patrick to be the first out of the blocks to answer the questions, so I will try to rotate so that everyone has a chance of going first.

[Mr Jones]

Q What is very clear from the first report from the National Cyber Security Centre is that existing Huawei equipment is a manageable risk. The only things that changed the Government’s stance were US sanctions on semiconductors for future equipment  and, added to that, a layer of—I think—lobbying on behalf of certain anti-China parts of the Conservative party to remove the equipment from day one. Personally, I think there is no justification to do that. However, as you said, that leaves you with just two vendors for hardware, and any new entrant would have to meet the conditions in the Bill. What do you think the Government mean by a diversification strategy, and what are the timescales for that?

Having met many of you at a previous Committee and taken evidence from you, it is clear that there is little profit to be made on the hardware side because we all want cheaper phone calls, and you obviously react to customer demand to try to get costs down. What are the realistic prospects of any UK-based company or other vendor coming into the hardware side? On open RAN, I accept that it is for the future, but what timescales are we talking about for that having an impact on how our telecoms networks are organised?

Derek McManus: On timescales for ORAN, I think we are very early in the evolution of that technology. There are trials in the UK, as there are in various markets across the world. In our view, it will be at least a couple of years before you have a viable technical and commercial product, focused initially on rural. To have diversification in a meaningful way, you have to have scale, and scale will take a number of years beyond that—I would say five to eight years to get a real, viable-scale vendor to challenge the two incumbents.

On your previous question about the likelihood of there being UK players in that market, the UK used to have a very healthy telecoms supply industry, which sadly over time has faded away. I think it is more likely that the UK could play in the software part of the future of radio, and particularly ORAN, than in the hardware part. I cannot see today a viable UK hardware provider. Actually, there are not that many UK telecoms suppliers around. But software is a bigger opportunity. Part of the diversification work that is going on with the industry and Government is looking at ways to encourage the inclusion of UK business in that emerging opportunity.

[Mr Jones]

Q So, for the conceivable future, we will be reliant on those two vendors: Nokia and Ericsson.

Derek McManus: Yes, and if you look at the scale of mobile growth, the fact that there are only two remaining viable competitors is an indication of how difficult it is to have competition in today’s marketplace. That is technical and, to meet the economic challenges, that requires scale, too. There are other providers in the marketplace, but only two provide the 2G, 3G, 4G and 5G capability that the current UK markets require.

Andrea Donà: To answer the specific question on timescales, Vodafone UK is pioneering the development of open RAN. We were the first operator to achieve a commercial open RAN solution, in August last year, having delivered the first commercial open RAN unit on the ground radiating and carrying traffic at the Royal Welsh showground. We recently developed and announced plans to deploy open RAN across 2,600 sites. It is a promising innovation, but it is not yet mature enough to match the traditional vendors in terms of functionality and efficiency on an industrial scale.

However, if the UK wants to lead in this field and take advantage of the existing advantage that it has when it comes to design, it should continue putting its weight behind this promising technology and allow partnerships to be formed, where the incumbent vendors are asked to play a role in the architecture of this new technology. That will allow other parts of the technology chain—as Derek said, software, the baseband or the antennas—to attract and welcome new entrants through appropriate policy frameworks and the diversification strategy.

With new entrants, as we open this technology, we fuel innovation. If the UK keeps ahead of that, it will be able to be at the forefront of exciting new innovation. We welcome the steps that were outlined by Government to try to press this technology ahead. You could do that through trials or through incentives for the MNOs to use their technology. We can work together to create local research and development centres to fuel this new technology.

[Mr Jones]

Q In the near term, it is not going to replace the hardware that we need at the moment, which the two vendors are providing. Are you talking specifically about open RAN, or are you talking about diversification or any strategy to develop a UK hardware supplier?

Andrea Donà: There is an opportunity for British companies to play an active role in the open RAN ecosystem. As we open up the interfaces of the technology, it creates a golden opportunity for British companies, with British support and know-how, to come and contribute to the development of this new technology.

Patrick Binchy: My views are broadly aligned with the previous answers. The reality of the situation that we find ourselves in is that there are only two practical vendors for the next couple of years. As both my colleagues have said, beyond that there is opportunity for ORAN.

I am not sure if it came across in the previous answers, but I would stress strongly that the first thing we need is the R&D. We need to understand how we can move this technology forward. As Derek said, trials are primarily operating in rural capacity, but to be a true competitor to the incumbents we have to be able to use it in deep urban areas, under significant loads, which needs a lot of development.

The Government can support trials and help build the ecosystem around them, but the first thing that we need is to get the research and development that will feed the trials. In terms of the Government’s development of opportunities in ORAN, it is key that they look at working with international partners. This has to be scaleable; otherwise, it is never going to be commercially viable.  The UK market will not be big enough to drive that scale and commerciality.

[David Johnston (Wantage) (Con)]

Q It was widely reported that between 2009 and 2011, Vodafone found back-door vulnerabilities in equipment in Italy, and that you were assured by Huawei that they were being removed. You subsequently found that, in fact, they had not been removed. Do you have any concerns about back-door vulnerabilities in the equipment between now and 2027, and can you give us a sense of your management of that risk and what you do to try to make sure that there are not any?

Andrea Donà: Specifically on the incident you are referring to, which was in April 2019, it was a Telnet protocol, which is used by many vendors in the industry to perform diagnostic functions. It is important to note that it would have not been accessible from the internet. Detailed analysis showed that it was simply a failure to remove a function that is used, as I said, for performing diagnostics after it had been developed.

On the broader question of security and our concerns, we have always maintained the very highest level of security policies, security processes and security procurement mechanisms and frameworks. We use a layered approach to our security needs, whereby we secure by design. All our systems and process put in place guarantee the highest security standards, end to end. The UK networks and standards are the highest in the world. We constantly work hand in glove with the NCSC, and abide by all the latest NCSC guidance and policies to keep those minimum standards high every time. We have worked very closely with the NCSC to set up HCSEC, an ad hoc centre where any new Huawei equipment or software goes through rigorous checks, audits and assurances, in line and in close collaboration with NCSC.

Patrick Binchy: I do not have much to add to that. We are similarly aligned in terms of our processes, from procurement to deployment. We have security checks throughout, and separate functions to make sure that we are adhering to those. We work very closely with the NSCS and HCSEC in terms of the technologies that are in the network. Going forward, we will continue to do so. We will be reviewing the software and hardware versions that we have in place and ensuring that those are fully checked and validated. As I said earlier, we also have a full, independent view of the traffic traversing our network, so if something untoward were to start happening, we would immediately have a view of it, and would be able to shut it down independently.

Derek McManus: As I said earlier, we do not have sufficient numbers in the UK. We have fewer than 10 Huawei base stations, so although we perform all the necessary checks, we are not exposed on the scale of others in the market.

--- Later in debate ---

[Miriam Cates]

Q You have said in your written evidence that you fully support the objectives of the Bill, to improve security in the networks, but 20 years ago we could not possibly have anticipated the kind of threats that we face today, so it is safe to assume that we cannot perceive the kind of threats that we will face in the future. Do you think that the Bill is wide-ranging and flexible enough for the Government to be able to respond to future threats and, if not, what could be done to make it more future-proof?

Howard Watson: I actually think the structure of the Bill accommodates that quite well. It allows secondary legislation and guidelines to be upgraded. We note the critical role of the National Cyber Security Centre working with Government in doing that. I think, actually, you have taken care of that well with the way the Bill is structured.

Alex Towers: Yes, I would completely agree with that. I suppose our concern, slightly, at the minute, is to see some of the detail that is going to sit underneath the Bill in terms of a code of practice, in particular, and secondary legislation, because that is where it will become clear exactly what the implications are for operators. The sooner we can see some of that detail and get into the teeth of that, that would be great; but the way the Bill is structured, to allow that sort of detail to be updated on a regular basis as the world changes around us, seems totally sensible.

[Mr Jones]

Q The debate to date has mainly been around hardware, but you raised the issue—the bigger threat, certainly that I see, is from hacking and the vulnerability there. In terms of diversification, to be honest, we will have two vendors for the next considerable time, so when we talk about the diversification strategy and getting new vendors into the market, what timescales are we looking at? Are we actually putting all our eggs into the open RAN basket? I agree that there is the possibility of advancing that sector in the UK. Realistically, we will have those two, one of which, we know, is financially vulnerable. What difference would having just one vendor make to you?

Howard Watson: Let me work through that. First, from our perspective, given that we do have quite a large amount of BT in our mobile network, which is with the high-risk vendor, we have a large swap-out programme already under way. Effectively, we already use Nokia to extend their reach, but also to introduce Ericsson. That essentially means that I will be replacing a significant amount of my network over the next seven years.

It is quite difficult for me to start introducing new opportunities and new options into that, certainly in the early part of that. For my network, I see the opportunities in the latter part of this decade, not the early part. That does not mean that there will not be opportunities to try open RAN in some of the rural areas or to conduct some trials with the other vendors that we have talked about. It is very much an industry approach that we are taking here. Some of my colleagues may be able to move a bit earlier. It is important that we collaborate and work as a UK set of operators with the Government to make sure that we have the right rich set of solutions.

We would not want to come down to just one vendor. That would certainly be a worry for many reasons, so we need to continue to ensure that, in the short term, we absolutely have the choice of two.

Alex Towers: Given the timeframes that Howard has described, it is a five to seven-year cycle of replacement for the vendor. That is why it makes sense, we think, to go big now on large-scale trials of things like open RAN. The important investment in R&D and the £250 million is a good step towards that, but we will probably need some more, because we need to be ready for the next cycle if it is going to be a workable solution in future.

[Chi Onwurah]

Q Thanks very much for joining us. We have heard that open RAN will not be mature for another eight years. Do you agree with that assessment? In that case, as you have outlined, we have two vendors and potential financial concerns about one. Can you say categorically whether it is possible to have network security with only one full-scale vendor to choose from and whether it is possible to have that with two?

Secondly, we heard from Sir Richard Dearlove, the previous head of MI5, that when Huawei was first used as a vendor or equipment supplier by BT, it was not considered worth informing Ministers of that fact, despite what he considered to be evident security concerns. Can you say what in the Bill changes that so that the Government of the day will be better aware of ongoing and future security concerns?

Thirdly, on behalf of Catherine West, on international collaboration, what presence do you have on standards bodies? Can you say what your budget is for research and development so that we can see how that compares with the £250 million on offer?



Alex Towers: I will defer to Howard on the questions about standards and technical details. On your point about the relationship with Government, I do not think that any of us were around in 2005, but I know that there is some sort of contested story about exactly who was told what about the introduction of Huawei. You would—[Inaudible.] We have moved a long way on that. We have a very close working relationship with the NCSC and with other parts of Government, and we would be very confident that we are constantly in contact with them about exactly the mix of suppliers that we are using. The introduction through the Bill of TSRs will take that even further, so we would be very confident that we have got a good enough structure there to ensure that any concerns that any part of Government had would be captured and dealt with, and Ofcom is also now in a position to regulate.

The question about relying on just the one supplier is less a concern about security and more one about the commercial resilience of that position. Howard can probably say a little bit more about the standards and the technical questions around that.