UK consumers set to foot bill for Huawei ban

5G networks and fibre rollout affected by government U-turn

The decision to ban Huawei equipment from 5G networks could lead to British consumers picking up the tab for £2 billion of additional costs.

The UK’s decision to ban Huawei equipment from 5G infrastructure – and potentially other networks – could lead to British consumers picking up the tab for £2 billion of additional costs.

Under political pressure from the US in its trade war with the Chinese government, which many believe holds too much sway over Huawei, the UK government confirmed that networks will be barred from buying and installing 5G equipment from January next year.

Existing Huawei equipment will have to be removed by 2027, but the uncertainty faced in sourcing new suppliers, at a higher cost, will hamper the 5G rollout and could increase prices for consumers.

“This will be a major headache for most, if not all, of the telcos,” said Paulo Pescatore, founder of research firm PP Foresight. “While there are other network vendors who could pick up the pieces, it is unclear whether they are up to the task.

“Who will fork out for these additional costs and disruption in service issues that might arise?” he added. “Ultimately any additional costs always get passed onto the user.”

BT estimates additional costs of £500 million for its mobile network alone, due to the extra work and more expensive components. “Compliance with these revised proposals would require additional activity, both in removing and replacing Huawei equipment from BT’s existing mobile network, and in excluding Huawei from the network build,” the company said in a statement.

Wider impact

The situation is further complicated by the fact that Huawei is widely installed in both 3G and 4G mobile networks and plays a major role in fibre broadband provision. It remains unclear whether fibre networks will be dragged into the ban during an ongoing consultation process.

“The wider effect is the impact on fibre-to-the-premises (FTTP) networks, with the consultation lasting a year or two and providers expected to shift away (but not rip out) Huawei kit,” said Andrew Ferguson, network analyst at research company thinkbroadband.com.

“It is possible the consultation might lead to a legal requirement to rip out Huawei from FTTP networks, so swap out of optical network terminals and head-end cabinets in exchanges, so cost here is down to the disruption caused and new kit,” he added.

“Openreach is already installing some Nokia head-ends, but the old Huawei kit is still being used because you normally pair the optical network terminal manufacturer at both ends, because in the real world they are not always interoperable.”

Who will fork out for these additional costs and disruption in service issues that might arise?

Such a move would inflate costs exponentially, but, confusingly, the government sees much less risk with the Huawei kit already installed, despite the main reason for the ban being touted as the risk of Chinese authorities using backdoors.

“The US action [not to work with Huawei] also affects Huawei products used in the UK’s full fibre broadband networks,” the government announcement read. “However, the UK has managed Huawei’s presence in the UK’s fixed access networks since 2005 and we also need to avoid a situation where broadband operators are reliant on a single supplier for their equipment.

“We are advising full-fibre operators to transition away from purchasing new Huawei equipment.”

A changing landscape?

The only silver lining from network providers’ point of view is that the political landscape could change in the autumn depending on US election results. “Of course, there might be a pivot late in 2020 and Huawei considered a reasonable risk by a new US president, but other political issues around human rights and Hong Kong are increasing, so moving forward any rollout using Chinese sourced kit is increasingly risky,” said Ferguson.

The UK’s decision appears to have been driven by Washington, with Donald Trump boasting of his influence over foreign leaders, which follows a US ban on companies working with Huawei.

In a PC Pro survey ( see p25) of 75 readers asking whether they agreed with the ban, opinion remained divided. 43% of respondents felt the action was a “bad move – there’s no proven security threat”, while 45% said the move was sensible and “we can’t ignore the security threat”.

“In the medium to long term, the bellicose action by the US that has forced this move may well prove to be the right decision,” said reader Adam Dunlop. “We are too reliant upon one company, and the shift to other suppliers will be beneficial later, albeit painful now.”

However, there remain many who believe that relying on technology from any overseas company poses a risk, and taking up technologies from Japan, Korea or even the US poses similar problems to the risk attributed to Huawei.

“I’m sure we can manage the risk appropriately,” wrote Robert Schifreen a security researcher and reader. “I’ve had more problems with Cisco and EMC kit trying to call their mothership in the US without authority and insecure protocols.”