Home / Mobile / To Rip And Replace Huawei In EU Mobile Networks Costs About $7 Per Subscriber. – Forbes

To Rip And Replace Huawei In EU Mobile Networks Costs About $7 Per Subscriber. – Forbes

Network security concerns have greater seriousness given the shift to 5G and the virtualization of networks. With increasing integration of software in network equipment, backdoors are increasingly difficult to detect, as they can be shipped in subsequent software upgrades or activated after security clearances are concluded. Europe loses some 55 billion annually from cyber espionage, and firms on the receiving end of attacks from China, have advocated tougher EU security. Indeed, the passage of China’s National Intelligence Law in 2017 has prompts taking the threat even more seriously, as the law compels any Chinese subject to conduct espionage on behalf of the government.

Why it has taken European policymakers so long to act? Some claim that Huawei equipment is just priced so cheaply and is of such high quality that mobile operators must use it. However, Huawei in the EU has not helped the region close the gap in network investment, estimated at €150 billion. The region lagged on 4G, just it lags on 5G today. Morever data consumption per European subscriber trails that of the US and South Korea. A Huawei-funded analysis suggests that restricting Huawei from European networks will cost the region $62 billion, delay 5G rollout for 18 months, and reduce competition in the network equipment market. This analysis assumes that there is no security risk to using Huawei equipment.

National security has long been a part of telecom policy and regulation and underscores why countries scrutinize commerce with their adversaries. NATO does not buy fighter planes from China, for example. Since 2005 many intelligence officials, military agencies, and security analysts have noted security risks of using information technology products and services by firms owned and affiliated with the Chinese government, including such firms as Huawei, ZTE, and Lenovo among others. They describe threats of theft of intellectual property, surveillance, espionage, and sabotage. Based on these reports and other information, the United States, New Zealand, Australia, and Japan have restricted Huawei from networks. A new report from Strand Consult examines the issue and explains why restrictions on Huawei will not increase prices for network equipment nor reduce competition nor slow 5G rollout in the EU. 

The network equipment market has experienced major technological shifts allowing significantly greatly throughput at decreasing cost. As operators upgrade their networks, they can increase capacity and deliver service with better cost efficiency. Much of the move to 5G will be achieved with a consolidation in infrastructure (operators sharing a single mast instead of maintaining multiple towers) as well as replacing hardware with software. These innovations are not necessarily delivered by Huawei, and the company does not provide the standards essential patents for 5G. While Huawei has 40 percent of the European market, this amounts to just 6 percent of the world’s total mobile infrastructure install base.

Strand Consult calculated the cost of removing and replacing the relevant radio access network equipment in European networks which can be isolated and attributed to Huawei and ZTE since 2016, an amount equal to $3.5 billion (40 percent of the $8.75 billion spent during the period in question). When compared  against Europe’s 465 million mobile subscribers, the upgrade equals a one-time cost of $7. Operators must upgrade their networks, whether they use Huawei or not, and alternatives are price competitive.

It’s notable that restricting Huawei from US networks since 2012 has not reduced the deployment time of either 4G or 5G. Indeed, the rate of deployment has little or nothing to do with the choice the brand of equipment, but rather is a function of the nation’s infrastructure policy. For example, twenty US states adopted a model code of small cell deployment for 5G. The Federal Communications Commission’s 5G Fast Plan fast-tracks spectrum for commercial licensing, caps the fees that cities can charge for pole attachments, and limits the time a municipality can take for application review. 

The EU has no such a policy to prioritize network investment and deployment. For almost two decades, EU has pursued a corrosive regulatory policy to telecommunications, which has hollowed an industry which once led the world. Europe had six manufactures of mobile phones supplying half the world’s mobile users, now it has none. Its research and development community designed and developed the standards for mobile communications; that expertise has shifted to the US and Asia. Europe once accounted for one-third of the world’s network infrastructure investment; today, even if including Turkey and Russia, it amounts to but 10-15 percent of the world total. Europe invests in networks at less than half of the US and grows at the anemic rate of 0.1 percent. Europe pursued this misguided policy because they believed that low prices for mobile communications are more important than security.

Security is worth paying for. With improving technology, the price for security becomes ever more competitive. Upgrades to 5G can be done without sacrificing economy or competition and without Huawei.


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