The UK’s mobile providers are being banned from buying new Huawei 5G equipment after 31 December, and they must also remove all the Chinese firm’s 5G kit from their networks by 2027.
Digital Secretary Oliver Dowden told the House of Commons of the decision.
It follows sanctions imposed by Washington, which claims the firm poses a national security threat – something Huawei denies.
Mr Dowden said the move would delay the country’s 5G rollout by a year.
He added that the cumulative cost of this, and earlier restrictions announced against Huawei earlier in the year, would be up to £2bn.
“This has not been an easy decision, but it is the right one for the UK telecoms networks, for our national security and our economy, both now and indeed in the long run,” he said.
Because the US sanctions only affect future equipment, the government has been advised there is no security justification for removing 2G, 3G and 4G equipment supplied by Huawei.
However, when swapping out the company’s masts, networks are likely to switch to a different vendor to provide the earlier-generation services.
Huawei said the move was: “Bad news for anyone in the UK with a mobile phone” and threatened to “move Britain into the digital slow lane, push up bills and deepen the digital divide.”
New restrictions are also being applied to use of the company’s broadband kit.
The government has also been advised operators should “transition away” from purchasing new Huawei equipment for use in the full-fibre network, ideally within the next two years.
Mr Dowden said the government would “embark on a short technical consultation” with operators about this.
He explained that the UK needed to avoid becoming dependent on Nokia as the single supplier of some equipment, and he wanted to avoid “unnecessary delays” to the government’s gigabit-for-all by 2025 pledge.
The action, however, does not affect Huawei’s ability to sell its smartphones to consumers or how they will run.
The UK last reviewed Huawei’s role in its telecoms infrastructure in January, whenit was decided to let the firm remain a supplier but introduced a cap on its market share.
But in May the US introduced new sanctions designed to disrupt Huawei’s ability to get its own chips manufactured.
This led security officials to conclude they could no longer assure the security of its products if the company had to start sourcing chips from third-parties for use in its equipment.
The minister cited a review carried out by GCHQ’sNational Cyber Security Centre as being the motivation for the changes.
“Huawei claims to have stockpiles of parts that they can use, but this obviously affects what the NCSC can say about their products going forward,”blogged Dr Ian Levy, the agency’s technical director.
“We think that Huawei products that are adapted to cope with the [sanctions] are likely to suffer more security and reliability problems because of the massive engineering challenge ahead of them, and it will be harder for us to be confident in their use within our mitigation strategy.”
But other political considerations are also likely to have also come into play including the UK’s desire to strike a trade deal with the US, and growing tensions with China over its handling of the coronavirus outbreak and its treatment of Hong Kong.
Some backbench Tory MPs had pressed for a shorter time-span for its removal, in particular there had been calls for the 5G ban to come into effect before the next election in May 2024.
However, Mr Dowden said that “the shorter we make the timetable for removal, the greater the risk of actual disruption to mobile phone networks”.
BT and Vodafone had warned that customerscould face mobile blackouts if they were forcedto remove all of Huawei’s 5G kit in less time.
Hopes on the part of government that this decision may put the Huawei issue to bed may be optimistic.
The reason that we are here again despite a decision in January is because one of the key players – the US – played a new card in the form of sanctions.
And there is still time between now and legislation coming to parliament in Autumn for others to do the same – whether Conservative backbenchers or Beijing.
In the long run, many countries will be watching carefully how China reacts.
Will it feel it needs to punish the UK in order to discourage others from following its lead on 5G? Or will it want to avoid being seen as a bully and prefer to try and influence the decision more subtly? Whatever the case, the Huawei story in the UK is not over yet.
Huawei says it employs about 1,600 people in the UK and claims to be one of Britain’slargest sources of investment from China.
The firm – whose shares are not publicly traded – does not provide a regional breakdown of its earnings. But on Monday, it announced a 13% rise in sales for the first half of 2020 compared to the same period in 2019, totalling 454bn yuan ($64.8bn; £51.3bn).
The UK will have accounted for a fraction of that. The firm’s UK chief recently noted that Huawei had only deployed a total of 20,000 base stations in the UK so far, but by contrast expects to deliver a total of 500,000 globally this year.
Even so, what the firm fears and Washington hopes is that other countries will now follow Westminster’s lead with bans of their own.
Despite there seeming little chance of a U-turn, Huawei said it was still urging UK ministers to reconsider.
“We will conduct a detailed review of what today’s announcement me