ROME (Reuters) - Italy has bowed to pressure from Chinese telecoms equipment makers Huawei Technologies and ZTE and will drop emergency legislation strengthening state powers to intervene in the development of 5G services, lawmakers said on Wednesday.
Rome approved a decree to beef up its powers in the private sector last week, partly due to concerns over the potential involvement of the two Chinese companies in the next generation of telecoms networks, a government source said.
A decree enters into force immediately and must be approved by parliament within 60 days or it expires.
Cabinet undersecretary Vincenzo Santangelo on Wednesday told the Senate's Finance committee that the government would not push to approve the decree to strengthen its so-called "golden power".
The ruling coalition, made up of the anti-establishment 5-Star Movement and the far-right League, will instead present a draft bill in parliament, which could take months to become law, Santangelo told Reuters later in the day.
Laura Bottici, a 5-Star lawmaker, said that the government wanted more time to consult with Huawei and ZTE, both of which have voiced their dissatisfaction over the government's new powers, which would only apply to non-EU companies.
"This is what the draft bill will allow us to do," Bottici told Reuters.
Luigi De Vecchis, chairman of Huawei Italia, said the changes discriminated against the company.
"Huawei risks discrimination among competitors," De Vecchis said in a parliamentary hearing on Wednesday.
He said that discrimination would arise because the government would have to be notified several times of any deal involving a non-EU company, something which would take time and could encourage telecoms operators to use a different provider.
ZTE said the Italian government's new powers could further delay the rollout of 5G mobile services in the country.
"The recent decree of golden power creates more and bigger uncertainty for the industry players," ZTE Italy Chief Executive Hu Kun told Reuters in an e-mailed response to questions.
Uncertainty is not good for investment business and would definitely further delay 5G deployment."
The United States has lobbied Italy and other European allies to avoid using Huawei equipment and to closely scrutinise ZTE, alleging the vendors could pose a security risk. Both companies have strongly denied any such risk.
(Writing by Giselda Vagnoni; Editing by Crispian Balmer and Kirsten Donovan)
