Tuesday, 04 August 2020

BT: 2027 deadline for Huawei removal won’t increase costs as feared

by Harry Baldock, Total Telecom
Wednesday 15 July 20

UK operators had feared that a Huawei ban would drive up costs dramatically, but the lengthy deadline provided means this is not necessarily true

Back in January, when the UK government first introduced limitations on Huawei’s role in UK 5G networks, BT claimed that lowering their use of Huawei tech to the requisite 35% would cost them £500 million.   With this cost in mind, it would seem natural to expect a full ban on Huawei to cost operators proportionally more. Indeed, prior to yesterdays announcement of the full Huawei phase out by 2027…

Back in January, when the UK government first introduced limitations on Huawei’s role in UK 5G networks, BT claimed that lowering their use of Huawei tech to the requisite 35% would cost them £500 million.

 

With this cost in mind, it would seem natural to expect a full ban on Huawei to cost operators proportionally more. Indeed, prior to yesterdays announcement of the full Huawei phase out by 2027, UK operators, including BT, were adamant that a ban on Huawei would increase these costs dramatically. Vodafone said that costs could rise into the billions of pounds, while BT’s CTO Howard Watson said that a full ban would cost the company around £600 million to rip and replace the equipment.

 

Today, however, it seems that BT has backtracked with regards to the overall costs, now claiming that the complete phase out should not increase their costs from the originally predicted £500 million.

 

At the heart of this revision appears to be the lengthy seven-year deadline for the complete phase out of the Chinese equipment; over such a long period, network equipment would be being replaced anyway, hence swapping out Huawei equipment for an alternative would not have a major impact in additional costs.

 

The lengthy deadline also seems to have swept away the fears of service blackouts that the operators were worried about prior to the government’s announcement. 

 

"We believe the timescales outlined will allow us to make these changes without impacting on the coverage or resilience of our existing networks," said BT CEO Philip Jansen.

 

While this is all good news for BT, Vodafone remains less optimistic about additional costs.

 

“Obviously we are disappointed because this decision – as the government has highlighted today – will add delay to the rollout of 5G in the UK and will result in additional costs for the industry,” the company said in a statement yesterday. 

 

In light of BT’s revised costs, the level of pessimism and claims of costs rising into the billions by Vodafone do not seem to completely add up, since the operator theoretically has less Huawei kit in its network than BT, with around 6,000 sites affected compared to BT’s 12,500. One explanation could be Vodafone’s fears about its other European markets. Huawei kit plays a major role in Vodafone’s networks in both Italy and Germany, so there is immense potential for further disruption to their operations if these European countries decide to take a hardline stance on Huawei and follow the UK’s lead.

 

For O2 and Three, both of whom have little Huawei 5G equipment to worry about in their networks, the move will be minimally disruptive.

 

Also in the news:
Telefonica’s Spanish IoT market grows, invests in Nozomi for security
Deutsche Telekom exploring quantum tech with OPENQKD
“New generation of engineering talent” needed to hit UK’s 2025 broadband target

Since you're here...

...the Telecoms industry is characterised by constant change and evolution. That's why it's crucial for telecoms professionals to keep up-to-date with what is happening. Join 35,000+ of your peers and sign up to our free newsletter service today, to be in the know about what is going on. PLUS, as a member you can submit your own press releases!

See all membership options

Please enable JavaScript to view the comments powered by Disqus.

Newsletter signup

Quickly get on board and up to date with the telecoms industry