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UK pulls Huawei from 5G network, delaying roll out by a year and costing £2bn

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The UK government has announced the removal of Huawei 5G kit from UK networks by 2027.

Telecoms firms will be banned from purchasing new 5G equipment from Huawei from the start of next year, and will also be ordered to shift away from the purchase of Huawei’s equipment for full-fibre broadband networks over a period lasting up to two years.

Digital Secretary Oliver Dowden told the House of Commons of the decision and follows sanctions imposed by Washington, which claims the firm poses a national security threat – something Huawei denies.

Dowden said the move would delay the country’s 5G rollout by a year and added that the cumulative cost of this, and earlier restrictions announced against Huawei earlier in the year, would be up to £2 billion.

“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 told MPs.

Commenting on the move, Guillermo Pedraja, Head of Networks, 5G & IoT Consulting, NTT DATA UK said: “Today’s announcement marks a significant sea change for the UK telco market. Whilst disruptive, businesses will likely welcome the long timeline to remove Huawei equipment from UK networks, avoiding some of the huge costs or outages predicted by industry experts.

“Competition will be vital for the future of the UK 5G market. Huawei products are well-known as innovative and with a lower price point than competitors. Pulling them out of the market risks a drop in quality and increased equipment prices – costs that will likely have to be passed onto consumers,” he says.

Pedraja adds: “We need to, therefore, see coordinated action from governments around the world to support viable, cost-effective alternatives to Huawei, if 5G is to reach its full potential as a transformative technology for businesses. Ultimately, the UK Government needs to build a robust, secure, and high-performance communications infrastructure, independent of the vendor’s technology or nationality. This is about generating the trust needed to move forward with next-generation network technology.”

Arun Bansal, President of Europe and Latin America, at Ericsson – which stands to gain out of the move, as it provides 5G equipment, though no deal has officially been done in the UK – says: “Today’s decision removes the uncertainty that was slowing down investment decisions around the deployment of 5G in the UK. It is now time for the industry to come together and start delivering on the promise of creating a world-leading 5G network for the people, businesses and economy of the UK. Ericsson has the technology, experience and supply chain capacity to help accomplish this, and we stand ready to work with the UK operators to meet their timetable, with no disruption to customers.”

In the last two years Ericsson has swapped-in 5G-capable equipment globally at more than double the total number of radio sites that are currently in the UK and the company ships enough 5G-ready radios to cover the greater London area every single day. The tech provider has also rolled out 5G across 90% of Switzerland in eight months and currently has 97 commercial agreements or contracts with unique operators, with 45 of these now live across 25 countries.

A high price to pay?

Commenting on the costs that the move will incur, Kevin Billings, Director and Communications Industry Principal, Pegasystems says: “A key challenge with 5G is that it is already expensive to deploy due to the nature of the technology and increased density. Even before Mr. Dowden’s announcement today, the Huawei ruling had already made this even more costly – for example, BT’s CEO has talked about an additional £500m cost to reduce the Huawei share by 2023. Today’s ruling to exclude Huawei altogether will bump up the costs even further – not just in replacing Huawei equipment, but also other network components which have been designed to accommodate Huawei. That’s why more than ever, telcos need to manage their capital investments strategically and maximize efficiency in their operational processes, and they need the right system architecture to do that.”

There is also the impact on customer experience to consider, says Billings. “The expectation has already been built around 5G improving the customer experience with better and faster mobile data and access to new services,” he says.

“However, with the rulings around Huawei, BT and Vodafone have already warned about major network outages for customers if they have to replace multiple sites in their network at the same time – such replace mast and infrastructure equipment,” he adds. “Therefore, telcos must take advantage of intelligent automation technologies to improve their deployment and maintenance processes and ultimately the quality of their networks.”

Lastly, believes Billings, with less competition in infrastructure supply, equipment costs are likely to rise – that has two potential impacts. One being the further increase in capital cost for telcos, and secondly, almost certainly increasing prices for consumers.

“Telecoms is a regulated market with a limited number of core network players – and recently rationalised – and in general terms, if costs rise significantly so will end-customer prices,” he says. “Telcos will also need to ensure strong engagement with existing and prospective customers to manage their customer satisfaction, churn and acquisition, as there could be some unhappy people knocking at their door very soon.”

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