Telecommunications (Security) Bill (First sitting)

Miriam Cates Excerpts

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

[The Chair]

Thank you. We will come to Miriam Cates next. Then, after Miriam, the order will be Kevan Jones, David Johnston, Christian Matheson, Dean Russell and James Wild.

[Miriam Cates (Penistone and Stocksbridge) (Con)]

Q May I, too, pass on my thanks to the witnesses for appearing before us today? You have all referred to the significant financial costs to your organisations of removing the equipment from the high-risk vendors, but obviously, given the potential security implications, some are calling for the 2027 deadline to be brought forward. What would be the financial and logistical impacts of bringing forward the deadline on your organisations and your ability to operate? Would that be just too impossible—too difficult?

Patrick Binchy: In line with the previous answer, I cannot go through the specific commercials—they are commercially and competitively sensitive. But I would be happy to take such questions offline if you want to follow up on that.

Regarding the 2027 deadline, I think there is a balance here between UK connectivity and UK security. First and foremost, I would say that we have a security regime in place today. We use the Huawei cyber-security evaluation centre to check all of the technology that comes through Huawei and goes into UK networks, and we work closely with the security authorities to make sure that we are protecting the UK public today. We also have full visibility of any traffic that is transiting our network, either incoming or outgoing, so we are confident that we have the security in place today that is necessary.

In terms of achieving the 2027 timeline, that is a challenge. It is not going to be easy, because we need to balance that national connectivity against security and do it in a way that ensures that we continue to provide good-quality connectivity to the public.

There are a number of timelines within the legislation. We do not think the timeline for 2021 in terms of using equipment is a major issue. The 2023 35% cap and the 2027 are challenging, but we have plans in place. We have put our second vendor in place. They are already rolling our 5G network out in Manchester, Glasgow and Reading, and we are confident that we can meet those timelines and supply good-quality connectivity to the UK public.

Derek McManus: I think everybody, particularly in this environment, understands the immediate value of connectivity in the situation that we as UK society face. In terms of the opportunity for that connectivity to be part of economic growth as we evolve 5G and help build the economy, those are two of the competing challenges that we have to balance, while also removing HRVs and delivering diversification.

Yes, it is a matter of balancing costs in terms of investment, but we also have to recognise the customer disruption caused by removal of equipment. It is important that we maintain those other two key criteria—that important connectivity and that support to economic growth. By working together and taking the right balance, the Bill’s timescales are appropriate. I cannot, obviously, talk about the plans of individual businesses to meet the deadlines, but as an industry, I think it is appropriate.

Andrea Donà: At Vodafone, we believe that the Government’s decision to set a timeframe of 2027 truly reflects the complexity of what we have been asked to do. It is important that the deadline of 2027 does not change further. We need certainty and a fixed time plan so that we can plan for the future. Any further changes will disrupt our investment plans and will also cause undesired further disruption, as we attempt to accelerate a swap out that is, in itself, very complex, and will deliver inevitable disruption to our customers—the businesses and the public services. We are actively working with all the involved parties—the Government, Ofcom, NCSC and DCMS—to ensure that we minimise disruption. It is a complicated and difficult effort from a technology perspective, but also from the perspective of the practical implementation on the ground.

If the Government truly share our ambition to be a leader in digital infrastructure, we need to ensure that we give the high-risk vendor enough time to carry out the plans, under a very well-defined timescale and, as I said earlier, in parallel, allow the diversification agenda to grow, as well as the stability, to allow new entrants to come in and be a viable alternative to the incumbent high-risk vendor that we are swapping out.

[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.

--- Later in debate ---

[Dean Russell]

Q Thank you, Chair. I would like to understand more how the diversification strategy that accompanies this Bill will benefit you as an organisation and the public.

Alex Towers: I think we see long term that diversification of vendors would be good for the operators in the marketplace if we can get to that point. It is important to say, I suppose, as the other operators were doing earlier on, that we are not at that point right now, so we are having to manage a situation where with the market as it stands we have a small number of very large-scale, important vendors and suppliers and we are having to remove one of them, clearly, from the 5G marketplace. That creates a degree of complexity and engineering difficulty that we need to just work our way through; so there is a lot of work to do just to manage within the current market framework to replace Huawei and to bring Nokia and Ericsson to the point we want. While we are doing that, if we can at the same time create the prospects of, in the longer term, a more open marketplace with a wider range of vendors—with other-scale vendors that do not quite work at the minute in the UK market, and Howard could probably explain exactly why that is, as well as with the potential for open RAN and other types of technology and software-based models to be developed—that is good for the whole industry and could be good for UK jobs and potential UK companies and therefore also for the citizen.

Howard Watson: I certainly welcome the Government’s supply chain diversification initiative here. It is concerning that we are moving from, essentially, three suppliers in the mobile supply chain down to only two. Our network going forward will use both of those. So widening that choice over time, for all the operators in the UK, is I think a critical opportunity. Please bear in mind that most operators quite like to have a primary source and a second source. It is unlikely that we will all start deploying equipment from four or five different vendors, because the operational challenge of the person in the van maintaining that tends to limit you to a choice of two; but being able to choose two from six is a lot better than choosing two from two, of course.

We welcome the three initiatives, which I will summarise. The first is whether we can we encourage Samsung, NEC and other large vendors who build mobile networks elsewhere to enter the UK market. The second is open RAN and it really just creates through more open standards the ability to have more players in that end-to-end solution. The third area really is to have a thriving research agenda for the UK. We really welcome the £250 million allocated in the recent spending review. We already have a thriving research capability in the UK and I think continuing to focus that on antenna design, optoelectronics and semiconductors will have a role to play in diversification going forward.

[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.