Restricting 5G suppliers like Huawei could cost added $1bn

Restricting 5G suppliers like Huawei could cost added $1bn in investment  

13 January 2020 | Natalie Bannerman

Cover

Restricting competition in 5G network equipment and infrastructure has an adverse effect on global economics, according to a report by Oxford Economics.

In the report, commissioned by Chinese network vendor Huawei, there is a direct cost to countries that block or restrict companies like Huawei – one of the three global leaders in network infrastructure alongside Ericsson and Nokia – from participating.

The research conducted examined all eight leading markets: Australia, Canada, France, Germany, India, Japan, the UK, and the US. In addition, Oxford Economics introduced three alternative scenarios in order to reflect the inherent uncertainty in its analysis, these are referred to as; low cost, central cost and high cost.

The three key results from the report were that;

‘Restricting a key supplier of 5G infrastructure from helping to build a country’s network would increase that country’s 5G investment costs by between 8% and 29% over the next decade. In the US, this translates to an average increase in investment costs of almost $1 billion per year over the next decade, under our central cost scenario’.

The next key takeaway was that ‘the increase in investment costs linked to the restriction of 5G competition would also delay 5G access to millions of people over the next decade. Linked to these investment cost increases, the restriction in competition for 5G infrastructure would lead to delays in the network rollout that mean millions fewer people would be covered by the 5G network in 2023’.

And lastly that any delay in the buildout of 5G would ‘result in slower technological innovation and reduced economic growth. In our central cost scenario, this would result in reductions to national GDP in 2035 ranging from $2.8 billion in Australia to $21.9 billion in the US.’

The report follows a tumultuous year for Huawei whose official US ban came into effect in May 2019 on the grounds of on the grounds of security and was added to the Depart of Commerce’s entity list. Since then members of the US House of Representatives said it would take steps to subsidising rural operators to replace Huawei and ZTE equipment in their networks.