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Huawei ban will cost UK plc £6.8bn, delay 5G

If the UK government decides to impose tighter restrictions, or an outright ban on the use of Huawei in national 5G networks, the country faces severe consequences, according to a report

A partial or full restriction on the use of Huawei equipment or software in the UK’s telecoms supply chain could delay the national 5G mobile network roll-out by 18 months to two years, costing the UK between £4.5bn and £6.8bn in the process, according to a report.

The report The impact on the UK of a restriction on Huawei in the telecoms supply chain was produced by Assembly Research, but was commissioned by Mobile UK, a trade association set up to represent the interests of the UK’s four MNOs, EE, O2, Three and Vodafone.

Besides the measurable financial impact, which was based on the government’s own estimates of the benefits of 5G technology to the British economy, a ban would also cause pain for the UK in terms of lower inward investment and lost productivity gains through stagnation of digital infrastructure, and put the government’s Industrial Strategy goals at risk.

The report added that many of the benefits associated with 5G leadership could be lost for good, not simply delayed, in the event of a ban.

“The UK is currently well-placed to possibly be the first country to launch 5G at scale in the western world, with any delays resulting in the UK missing the opportunity to be the host of pioneering experimentation,” wrote the report’s authors.

R&D [research and development] in the car manufacturing industry would be lost, to the advantage of countries such as Germany and South Korea.

“5G is a critical enabler of digital transformation for companies and public services. A slowing down in the roll-out of 5G therefore risks hampering the country’s level of competitiveness.”

Other impacts of a delay would likely include added strain on the NHS, 5G is predicted to be a key enabler for digital and telehealth services, for example by cutting unnecessary GP visits; and on household budgets, smart city services supported by 5G could save households up to £450 through, for example, energy efficiency, lower council tax bills and so on, but again, this saving would be lost.

Impact for operators

A restriction or ban of Huawei would be problematic for the UK’s mobile network operators (MNOs) for two reasons, said the report, partly because the first 5G roll-outs will be largely upgrades to 4G, and partly because there is very little interoperability between suppliers.

This is problematic because it means it would be harder for MNOs to deploy other supplier’s 5G kit alongside Huawei’s 4G kit.

Effectively, a ban means MNOs will have to swap out vast quantities of equipment in their 4G networks before deploying 5G, which will cost millions – the report projects network equipment costs could rise by up to a quarter in the event of a ban. Thanks to the scale of Huawei’s R&D operation, they might also have to wait for its competitors such as Ericsson and Nokia to catch up.

A ban will also damage competition in the supply chain that up to now has been beneficial to wider innovation in networking technology, and the aforementioned loss in benefit for consumer and business customers will ultimately result in lost revenue streams for the MNOs.

Further guidance, or possibly even a final decision, on the use of Huawei products in critical national networks is expected to be contained in the government’s Telecoms Supply Chain Review, which is likely to be released in the next few weeks.

Read more about the Huawei affair

April 2019:

  • Huawei has become one of the world’s largest technology companies by revenue, suggesting the accusations over its ties to the Chinese government are failing to have much impact.

March 2019:

February 2019:

January 2019:

December 2018:

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