When Huawei leaves, the UK doesn't lead in 5G, says new report commissioned by... er... Huawei

Telcos wary of new tech spend anyway, say analysts


New research from analyst house Assembly suggests the UK faces a £18.2bn hit to its economy as a result of the decision to ban Huawei from the nation’s network. It’s a stark figure, vastly surpassing the one provided by the British govenrment, which estimated the cost to carriers at the £2bn mark.

In a report commissioned by the Chinese vendor itself, Assembly argued that the main economic costs come from the delayed rollout, which the government has admitted will add three years to the previous timetable.

These delays will, in turn, cause the UK to miss out on around £10bn of productivity benefits, Assembly claimed. It also estimated the mobile sector would lose out on £4.7bn in potential revenues, with adjacent industries missing out on a further £2bn. In addition, they argued, the wider economy will lose out on £1.5bn of growth.

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These estimates are fundamentally based on UK carriers having a deadline of 2027 to strip existing Huawei equipment from their 5G networks. Assembly notes that should that deadline become tighter, the impact to carriers and the wider economy would increase.

Of course, the report casting aspersions on the decision to ban Huawei was commissioned by Huawei.

Assembly insisted Huawei has “not had any input with regards to the economic impact assessment.” It also noted that the study was based on a previous exercises performed “on behalf of the UK mobile operators.”

World leading 5G in the UK

The analyst also reckoned the UK could temporarily cease to be a world-leader in the 5G sector, losing competitiveness due to the aforementioned three-year delay. In its model, Assembly said the UK will reap the benefits of 5G until mid-2021, followed by a three-year milieu where it becomes less competitive, only to regain footing by 2024.

This inevitably raises the question: was the UK actually a “leader?”. We don’t discount the rapid growth of 5G technology, bolstered by capex spending by telcos, but the UK doesn’t stand out in any major milestones.

Britain wasn’t the first country to get 5G: South Korea pipped it by several months. Nor did Britain break any European milestones. The first European nation to get 5G was Switzerland. Other nations have surpassed the UK in overall coverage, and it is dependent on foreign-made tech for its core and RAN networks.

So, where does the UK lead? In the number of vandalized antennas?

Paolo Pescatore, telecoms analyst at PP Foresight, isn’t nearly as cynical. “The telcos have done a superb job of launching 5G, resulting in the UK being of the first countries to have all carriers offering services within a short period of time,” he said.

This is even more remarkable when you consider the relatively fractured rollout of 4G, Pescatore added.

Is the demand even there?

There’s also a parallel story to Huawei’s woes. Right now, demand for 5G is relatively weak. The vaunted enterprise elements, like network slicing, are still a faint dot on the horizon. Many consumers are deferring device upgrades due to the economic uncertainty caused by the global Coronavirus pandemic.

“Ultimately, a 5G reality check is needed. While numerous players including Huawei and Qualcomm have done a superb job of driving the ecosystem and overcoming numerous challenges, demand for 5G is still limited,” Pescatore said.

“Telcos are wary given the need to balance investment; more so at a time when margins are already squeezed and all players are seeing the negative economic impact from the pandemic.”

This economic malaise could be another factor that delays the 5G rollout, thus impacting on growth and productivity.

Economic arguments aside, there’s something to be said for a slow-and-steady approach – or, at the very least, a perspective that regards 5G as still at its infancy. “Being first grabs all the headlines, but that doesn’t mean the best,” Pescatore said, hinting towards mmWave and 5G Standalone (SA). ®

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