Brazil’s new rules on 5G auction appear to put China’s Huawei back in the running
Brazil’s federal government will require winners of an upcoming 5G spectrum auction to build a high security wireless network for its exclusive use, according to an order published late on Friday.
The requirement is one of the new guidelines for the auction the government is planning for 2021.
While the decision does not mention Huawei Technologies Co, it erases the likelihood of banning any company from the auction, which had been a possibility for the Chinese tech giant, a person familiar with the communication ministry’s decision making said.
The move comes as Brazil needs to access large amounts of Chinese supplies for vaccines to combat Covid-19. Brazil has the world’s second-highest tally of fatalities, after the United States.
Brazil’s President Jair Bolsonaro told reporters on Saturday that the 5G auction would not be used as a bargaining chip in global negotiations, O Globo newspaper reported. He said no decision had been made, adding that Communications Minister Fabio Faria would visit countries interested in the matter next week.
Companies seeking to build the network for the government’s exclusive use must have equipment suppliers with “transparency and compliance patterns in line with those required by Brazil’s stock market”, according to a statement on the communications ministry website.
The main purpose of the network, which would be managed by state-owned Telebras, would be handling government data, the person said.
“We are talking about data that concerns public security and the defence of our country,” Faria said in the statement.
The government’s decision includes other requirements for the auction winners, such as the installation of a mobile internet coverage on federal highways, and fibre optics in lightly populated areas, primarily in the nation’s north and northeast.
Huawei declined to comment on the new guidelines for the auction. O Globo reported that the Chinese firm had hired Brazil’s former president Michel Temer this month to help its lobbying efforts.
The idea of making a private network for the federal government was a preliminary step towards drafting broader rules on the 5G network in Brazil and appeared to be good news for Huawei, a person close to the Chinese company said.
The Trump administration urged Brazil and other allies to block Huawei components in their 5G networks, saying they facilitated intellectual property theft and spying by Beijing. But the government faced resistance from Brazil’s main wireless companies, which already use Huawei equipment. The carriers argue that a ban on the Chinese company would push their costs higher. Months ago, China said Brazil’s business reputation was at stake on the 5G auction decision.
Ties between Brazil and China were strained by Bolsonaro’s criticism of Beijing while on the campaign trail in 2018. While he later warmed up to Chinese President Xi Jinping during a trip to Asia, tensions have flared again amid anti-China rhetoric adopted by Bolsonaro’s allies, including his son and Lower House Representative Eduardo Bolsonaro, and Foreign Minister Ernesto Araujo.
China overtook the US as Brazil’s top trading partner a decade ago as Beijing’s appetite for Brazilian commodity exports like soybeans soared.