An aspiration for 25% of equipment coming from new suppliers by the mid 2020s is a stretch
The restrictions placed on Huawei have created a supply chain problem: In July 2020, the UK Government decided to phase out Huawei from 5G networks by 2027. To avoid becoming too reliant on the other two vendors currently supplying UK networks (Nokia and Ericsson), the Government adopted a 5G Supply Chain Diversification Strategy and set up Telecoms Diversification Taskforce to provide independent expert advice on the strategy. The Taskforce has now published its final report.
The solution is a mix of ‘scale vendors’ and OpenRAN: Among the key recommendations made by the Taskforce, one of the most significant is the need for the UK to coordinate with other countries, in order to identify solutions that can succeed on an international scale. The size of the UK market means that there is no national solution to diversification. This is also important in light of the leadership China is seeking to obtain with its China Standards 2035 plan. At the same time, the UK should create the conditions to attract one or two additional ‘scale’ vendors (e.g Samsung or NEC) to reduce its dependence on Nokia and Ericsson, while also setting an ambitious target for alternative suppliers (including OpenRAN solutions) to be deployed meaningfully. The Taskforce suggests that 25% of equipment by the mid-2020s should come from these alternatives. Although as we’ve seen previously with full fibre and gigabit capable targets, these ambitions tend to be more stretch goals than realistic expectations.
The Government should consider its role in preventing fragmentation of spectrum holdings: As part of the strategy to enable diversification, the report also suggests a role for Government in avoiding fragmented allocation of spectrum lots, which would increase costs of network deployment (because vendors would have to tweak kit for the UK market). This would start with the ongoing award of the 3.6–3.8GHz band. Should operators fail to negotiate a reallocation across the wider 3.4–3.8GHz band that ensures contiguous spectrum holdings, the Government should consider playing a role in facilitating that outcome. It is also time to make plans for 2G/3G switch-off to reduce complexity, especially for new vendors which may not be able to support obsolete technologies. The report recommends considering this proposal as soon as Q3 2021.
