Daily Management Review

EU Telecom Body Warns Of A Hit Of $62bn To Industry By Ban Of Chinese Firms In 5G


EU Telecom Body Warns Of A Hit Of $62bn To Industry By Ban Of Chinese Firms In 5G
According to reports quoting information and analysis by the telecommunication industry’s main lobby group in Europe, phone connectivity companies in the continent would have to shell out an additional € 55 billion ($62 billion in extra costs in if the regulators in the economic block decide on keeping Chinese telecom equipment and 5G technology manufacturer companies – Huawei Technologies Co and ZTE Corp, out of the construction of the next generation 5G mobile technology.
According to a preliminary report drafted in April by the GSMA trade association and is claimed to have been accessed by some media such as Bloomberg and Reuters, if Europe follows the footstep of United States president Donald Trump of banning the Chinese companies, there would be a delay of at least 18 months than otherwise in the completion of the roll out of the 5G telecom networks in Europe as well as result in a loss of about €45 billion in productivity growth for the European Union.
The report said that the current roll out plans would be severely disrupted because of the requirement for replacement of network equipment as well as the capacity constraints on the remaining mobile equipment vendors. In such a scenario, the difference in the rates of penetration of the 5G technology between the EU and the US would reach about 15 per cent by the years 2025 in case the Chinese telecom companies were banned in EU as well.
Chinese firm Huawei is the largest manufacturer of telecommunication equipment and a forerunner in the next generation 5G technology. It is also one of the few players that are able to supply the core infrastructure and radio access equipment needed for 5G networks. It is also the second largest smartphone maker of the world after South Korea’s Samsung.
Amidst an acrimonious and escalating trade war between the US and China, the Trump administration has been attempting to cut off access of Huawei and other similar Chinese companies to the global market and global supply chain by blacklisting them and preventing any American companies from doing business or sharing technology with the companies and their affiliate companies all across the world. Further, the US has also been urging its conventional western allies to ban Huawei from being included in the roll out of the next generation 5G networks for mobile phones.
The US has managed to convince some of its allies to follow its lead in keeping Huawei away from their 5G networks over concerns that the equipment supplied by it and used in the telecom network could be used by Chinese agencies to spy on western countries. 
However analysts say that it is unlikely that the European countries would put an outright ban on Huawei. EU is also the largest market for Huawei outside of its home market of China. In recent months, there have been clear indications from countries such as Germany, France and Britain that limited role would be allowed to be played by Hiawei in the roil out of the 5G technology in these countries amidst increased oversight of their networks.
“We continue to stress that it is imperative that the market has the widest possible choice of equipment, technology and partners, to drive, scale innovation and competition,” a GSMA spokeswoman told the media about the report.