Replacing Huawei, ZTE ‘would cost European operators $3.5bn
Replacing Huawei and ZTE ‘would cost European operators $3.5bn’, says report
23 September 2019 | Alan Burkitt-Gray
A Danish consultancy company says it will cost operators in Europe $3.5 billion to replace Huawei and ZTE equipment with non-Chinese equipment.
Strand Consult, based in Copenhagen, said that the cost is less than others have quoted. The CEO, John Strand, told Capacity that the cost difference is is around $7 per person in Europe.
Operators “have to do this upgrade to 5G anyway. The competition in the market is so hard that prices are low.”
The company says: “In practical terms, hardware and software within the network are constantly being upgraded and improved as the standards evolve from 2G to 3G to 4G to 5G, and in many cases, operators may offer a blend of different standards in the same network as they upgrade. In general, European operators are facing an upgrade of 4G networks built between 2012 to 2016.”
The company says its “analysis shows that the concerns about Chinese made network equipment is not limited to national governments and the military intelligence operations”.
It says “it is the small, medium, and large enterprises that use networks which fear that their valuable data will be surveilled, sabotaged, or stolen by actors associated with the Chinese government and military”.
That means that “it is also the clients of telecom operators which push to restrict Chinese-made equipment from networks”, says Strand Consult.
Neither the US nor any other country has charged Huawei with any espionage against its customers or the customers of the telecoms operators that use its network. Security services, including the UK’s, which runs an analysis centre specifically to look for back doors or holes, have found none. However, the US has added Huawei to its entity list, banning US companies and citizens from buying from or selling to it.
Strand Consult says that restricting Huawei and ZTE “from networks has not increased prices or delayed roll-outs of new 5G mobile networks”.
The report says: “Mobile operators must upgrade their equipment for technological reasons, regardless of whether Huawei and ZTE is in the market or not ... Restrictions did not result in price increases in the US or Australia and are unlikely to negatively impact Europe because Huawei and ZTE’s footprint in the Europe is but 6% of the world’s total outlay.”
John Strand was sceptical about assurances that there were no security risks. He said to Capacity: “If there is no risk in buying Chinese equipment, there should be no risk in buying Chinese fighter planes.”
The report concludes: “Restricting Huawei and ZTE in Europe will have a minimal impact on price and competition for network equipment. Huawei’s competitors are global, and the European share of the global market is very small, and European operators have the ability to negotiate global pricing for their equipment. ... European operators must make upgrades anyway if they want to rollout 5G, and the restricting access to Huawei and ZTE will not necessarily raise equipment prices, reduce rollout time, or reduce competition in the market. ...
“When considering the security risk, the cost of restricting Huawei and ZTE is minor to Europe. However, the benefit in reduced risk and increased security and network resilience is tremendously high. Consider the risk calculus for the many European firms using the networks, and with new equipment would significantly reduce cyber risk. Security is worth paying for, but given improving technology, its price becomes more competitive. Upgrades to 5G can be done without sacrificing economy or competition and without Huawei.”
58m | Antony Savvas
2h | Antony Savvas
5h | Alan Burkitt-Gray
6h | Natalie Bannerman