Japanese firms prefer to use 5G networks of domestic carriers

By Tetsushi Kajimoto

TOKYO, May 23 (Reuters) - An overwhelming majority of Japanese firms have no plans to use 5G mobile networks by China's Huawei or other foreign firms, preferring instead to rely on domestic telecom carriers due to security concerns, a Reuters poll showed.

The Corporate Survey results come amid Washington's concerns that the Chinese telecom giant's equipment could be used for spying. Japanese carriers are set to launch high-speed wireless services next year.

The United States has warned countries against using Chinese technology, saying Huawei HWT.UL could be used by Beijing to spy on the West. China and Huawei have strongly rejected the allegations.

In written comments, no Japanese company singled out Huawei or any other foreign firms by name, but they expressed concerns about security issues when using the equipment of foreign firms.

"It is utterly impossible to adopt products and services of a company that cannot dispel concerns about national security," a wholesale company manager wrote on condition of anonymity.

"In terms of 5G-related patents, Chinese firms hold an overwhelmingly dominant position. But it will be difficult to adopt them given the possibility of a leakage of information," a machinery maker manager wrote in the May 8-17 survey.

The Corporate Survey found 88% of Japanese firms said they are likely to pick domestic telecom carriers when utilising 5G, 2% chose Chinese firms including Huawei, 1% named Qualcomm Inc QCOM.O and 11% opted for "others".

About four out of five firms had no specific business plans to use high-speed wireless technology, the survey showed. It underlined the fact that Japan is lagging other countries such as South Korea and the United States that have already begun rolling out 5G services.

Roughly nine out of 10 firms have not secured enough engineers who can deal with cutting-edge technologies such as artificial intelligence (AI) and Internet of Things (IoT).

The survey, conducted monthly for Reuters by Nikkei Research, polled 477 large- and medium-sized firms with managers responding on condition of anonymity. Around 200-220 answered the questions on 5G and technology issues.

Japan's telcos including the three big carriers - NTT Docomo 9437.T, KDDI 9433.T and SoftBank Corp 9434.T - were formally allocated 5G spectrum by regulators last month, a major milestone ahead of the launch of high-speed wireless services.

The technology, which can provide data speeds at least 20 times faster than 4G, is seen as essential for emerging technologies from self-driving cars and smart cities to AI and augmented reality.

If underlying technology is vulnerable, it could allow hackers to exploit such products to spy or disrupt them.

(Editing by Jacqueline Wong)

((tetsushi.kajimoto@thomsonreuters.com; +81-3-6441-1829; Reuters Messaging: tetsushi.kajimoto.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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