Will US-led offensive against Huawei present dilemma for Korea?

With the world increasingly squeezed between the US-China trade and tech wars, experts here have offered divergent opinions. And Korea has, on its own initiative, long debated whether it is safe to use the Chinese components in major networks.

The Korean government maintains that the decision is up to local telecom companies, which unlike carriers in the US operate their own wireless network systems.

During a meeting with lawmakers in October, the ICT Ministry expressed the view that it was not the government’s place to conduct security inspections or to decide whether the Chinese company’s equipment was fit for the country’s 5G infrastructure.

“I don’t think it is a good idea for the government to take the lead in dealing with such a sensitive issue,” Science and ICT Minister Yoo Young-min said in response to a lawmaker who asked whether the government would inspect Huawei’s facilities if the Chinese company were to extend an invitation.

Meanwhile, the Trump administration is expected to sign an executive order banning Chinese telecom equipment from US 5G network infrastructure -- possibly before a major mobile technology trade event slated for Feb. 25-28 in Barcelona.

LG Uplus’ choice of Huawei 

As Korea’s three telecom giants gear up for the commercial rollout of 5G networks this March, LG Uplus is the only company that is using Huawei equipment to establish its 5G network. LG has also been using Huawei gear for its 4G network since 2013.

According to LG Uplus, the Chinese gear will be incorporated into some of the wireless networks in Seoul and the surrounding metropolitan area.

Since subscriber information is stored exclusively in a cable network manufactured by Samsung Electronics, LG Uplus has said, foreign attackers cannot steal the data.

“The collection and management of subscribers’ information mostly take place within the core network of a wired system,” said an official from LG Uplus. “Data leaks cannot occur because our employees carry out the inspections by themselves.”

While LG Uplus has the smallest number of mobile subscribers, the company has built more extensive 5G infrastructure than its competitors. As of November last year, the company has reportedly built more than 4,000 masts, about five times as many as competitors SK Telecom and KT. 

The company has also conducted education sessions for employees on how to address security concerns in case subscribers ask. According to its guidelines for salespeople, the company has undergone “rigorous” inspection by outside agencies since the company first began using Huawei equipment.

After concerns persisted, last year LG Uplus asked an international agency in Spain, which deals with security standards and verifies compliance with those standards, to verify the security of Huawei’s equipment. The results will come out in the third quarter of this year.

Huawei’s growing presence

While Korean companies using Huawei equipment have not reported any security breaches, experts have expressed concern about the country’s increasing dependence on the Chinese vendor for its network infrastructure.

SK Telecom and KT employ Huawei equipment for some of their cable networks. Last year, KT decided to adopt Huawei gear to establish a network for financial institutions such as Nonghyup. SKT uses Huawei equipment for its wired network.

Huawei has also made a foray into Korea’s efforts to build an ITC infrastructure for its public transit systems. In 2017, two Seoul-based companies -- Hyundai Information Technology and Siszon -- acquired deals to replace the aging ICT system in the city’s subway network with a Huawei system.

Those who oppose the use of Huawei products for local networks allege that there has been an increase in hacking in recent years. According to government statistics released by an opposition lawmaker in October, some 16,000 hacking attempts were suspected to have originated from Beijing since 2014. The city accounts for about 60 percent of total hacking attempts targeting the Ministry of Foreign Affairs, the lawmaker added. 

“It is not desirable that the country’s telecom, finance and traffic infrastructure relies on the technology and equipment provided by Chinese companies,” said James Kim, a research fellow at the Asan Institute for Policy Studies.

Meanwhile, there are experts here who contend that the government needs to take a central role in the growing controversy over the Chinese tech giant. Yet others caution against taking sides in the politically sensitive US-China rivalry.

“The government needs to conduct thorough review and take every caution on whether to adopt Huawei equipment amid global pressure,” said the state-run Institute for Information and Communication Technology Promotion in a report.

“Taking into account negative consequences and possible benefits, the government needs to come up with rational measures depending upon various scenarios,” the research institute said in the weekly report released Friday, urging the government to take an active role.

Given Korea’s deepening economic ties with China, some experts urge a more cautious approach to avert an economic backlash from Beijing.

When Korea installed an advanced missile defense system in partnership with the US in 2017, China protested its deployment with economic retaliation against Korean businesses operating in China, such as cosmetics company Amorepacific and retail giant Lotte Group.

"Since the Chinese companies have already made a foray into the Korean market, we need to figure out how to make the best of the situation, rather than wasting our time (in a clash) with China,” said Chung Tae-myung, a professor of information management at Sungkyunkwan University.

By Yeo Jun-suk (jasonyeo@heraldcorp.com)