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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:
- Huawei has made no material progress on addressing the issues identified last year by the NCSC, according to the latest highly critical report from its HCSEC Oversight Board.
- The chair of the Science and Technology Committee has criticised the government’s vague response to concerns about Huawei’s activities in the UK.
- Vodafone’s CTO and general counsel have defended their use of Huawei equipment in their mobile network and challenged its detractors to show them evidence of wrongdoing.
- Huawei has filed a lawsuit accusing Washington of violating the US Constitution by banning it from government contracts.
- US secretary of state Mike Pompeo has reinforced his attacks on Huawei as the firm apparently prepares to sue the US government over its federal-level ban.
February 2019:
- US secretary of state Mike Pompeo has said America may scale back or cut military and diplomatic ties with countries that use Huawei equipment in national 5G networks.
- NCSC CEO uses cyber security conference in Brussels to set out his agency’s position on Brexit, 5G security, Huawei, market incentives and international cooperation on active cyber defence.
- A think tank report has branded the UK government naïve at best, irresponsible at worst, over its use of Chinese networking equipment in critical national infrastructure.
- Huawei CEO Ren Zhengfei has taken a more combative stance in the ongoing row over the firm’s alleged links to the Chinese intelligence services.
- The UK’s National Cyber Security Centre suggests Huawei will be allowed to form core elements of the country’s 5G mobile network infrastructure after all.
- Huawei’s Ryan Ding tells the British government that the company has never, and will never, use its technology to assist the Chinese intelligence services.
- Malaysia has become the latest country to look into the security concerns surrounding Huawei, which has been accused by mostly western powers of conducting corporate espionage.
January 2019:
- Vodafone’s UK CEO has said the operator will “pause” its use of Huawei hardware for the foreseeable future.
- The chair of the cross-bench Science and Technology Committee has written to Huawei seeking answers over its activities in the UK.
- Huawei’s rotating chairman Guo Ping outlines the firm’s priorities to optimise its product portfolio, empower employees and build a more resilient business structure.
December 2018:
- While the number of countries with Huawei bans in place grows and more issue warnings, a German investigation found no evidence of spying to support the fear.
- The Chinese government has called for the release of Huawei chief financial officer Meng Wanzhou, who was detained in Canada at the weekend.
- BT will remove Huawei’s networking equipment from the core of EE’s 4G mobile network.
