In a U-turn from January’s 35% cap on Huawei equipment, the Government has decided recent US sanctions mean it must go altogether.
No new Huawei for 5G and the removal of existing kit: Ministers have decided there will be a ban on the purchase of new Huawei kit for 5G from 31 December 2020 and it must be completely removed from 5G networks by the end of 2027. For full fibre a technical consultation will determine the transition timetable, but it’s expected this period will last no longer than two years.
A delayed 5G rollout and economic implications: For the first time, the Government acknowledged that removing Huawei would have an impact on operator's rollout plans (of between 24 and 36 months), and have an associated cost (in this scenario £2bn). Most of the debate has focused on the cost to the operators of replacing the equipment, but there is also a cost to the economy. The DCMS have put strong emphasis on early leadership when it comes to 5G and the associated economic benefit. Taking this into account, we estimate that a delay of 24 months would mean £6.8bn of economic benefit wiped out. The possibility of a delay in 5G rollout by as much as 36 months would obviously mean an even higher cost.
A glum acceptance by the industry: The industry had been bracing itself for this worst case outcome for a number of weeks as it became clear politicians were leaning towards this outcome. They will now wait while the government will seek to legislate at the earliest opportunity with a new Telecoms Security Bill to put in place the powers necessary to implement this new telecoms security framework.
Samsung and OpenRAN touted as the most likely replacements: Responding to the announcement, Vodafone said it would work with the government to address the implications of this decision, including the cost and the need to increase vendor diversity through OpenRAN. A number of backbench MPs also raised the attractiveness of OpenRAN and Samsung during the debate that followed the statement.
