Vodafone CEO: Huawei Ban Equals Two-Year 5G Delay

Nick Read says banning Huawei would be 'hugely disruptive' to European service providers and consumers, holding up the launch of next-generation services.

Iain Morris, International Editor

February 25, 2019

5 Min Read
Vodafone CEO: Huawei Ban Equals Two-Year 5G Delay

BARCELONA -- MWC19 -- Banning Chinese equipment vendors from participating in Europe's 5G markets would result in a two-year delay to the rollout of 5G services, Vodafone CEO Nick Read told reporters here today.

Read said any "massive swap" of equipment triggered by a full Huawei ban would be "hugely disruptive" to consumers and warned of the "inefficiencies" that would result from excluding one of the world's three biggest suppliers of mobile network equipment.

The warning comes as Huawei and smaller Chinese rival ZTE face a backlash outside China fueled by government concern their products may include "backdoors" that Chinese authorities can use to spy on other countries.

On a recent tour of eastern European countries, US Secretary of State Mike Pompeo suggested local authorities would have to choose between Huawei and future partnership opportunities with the US, which has been leading the charge against the Chinese vendors.

Huawei and ZTE have, in effect, been unable to sell products to the main US service providers since 2012, when a government report first identified them as a security risk.

Concerned about possible government moves, Read has already paused Vodafone's deployment of Huawei technologies in the sensitive "core" of its mobile networks. The UK's BT has gone further and started removing Huawei equipment from the mobile core systems it acquired with its purchase of EE in 2016, although BT spokespeople say the move is simply in accordance with a long-standing company policy not to use Chinese products in the network core.

Figure 1: Vodafone is as prominent as ever on the MWC show floor. Vodafone is as prominent as ever on the MWC show floor.

Read's comments will add to concern that Ericsson and Nokia, Huawei's two big European rivals, do not have the resources and technology to replace the Chinese company if it is banned from European markets.

Asked about the impact of a ban, the Vodafone CEO said: "It is less about a unitary cost -- we have negotiated pricing with suppliers -- it is more about doing a massive swap of equipment that is hugely disruptive to consumers … and will delay 5G in Europe by two years. The US doesn't have that problem because they don't have Huawei and so they are less concerned about that implication."

Ericsson and Nokia have rejected claims they could not cope with a Huawei swap-out. "We are preparing the supply to deliver 4G and 5G products at a high pace," said Ericsson CEO Börje Ekholm during a press conference Monday morning, when asked by one analyst if swap-outs in Europe could delay the rollout of 5G services. Ekholm has insisted the real problem in Europe is poor regulation and a lack of access to the spectrum operators would need to provide new 5G services.

However, Read also hinted at the long-term consequences of shutting out a major equipment vendor and leaving Europe's operators with a very limited choice of suppliers.

"Huawei in mobile infrastructure has a 28% share of the market, Ericsson is 27% and Nokia is 23%. It is a nice balance, but they have the vast majority of the market between them," he said. "The market changes a lot when you go down to two players. At the same time, you have to balance resilience at the national level in terms of infrastructure. How do you do that? Suddenly you get inefficiencies injected into that."

You're invited to attend Light Reading’s Big 5G Event! Formerly the Big Communications Event and 5G North America, Big 5G is where telecom's brightest minds deliver the critical insight needed to piece together the 5G puzzle. We'll see you May 6-8 in Denver -- communications service providers get in free!

Despite pausing the rollout of Huawei's core network products, Vodafone is continuing to build a 5G radio access network based on Huawei's technologies "at pace," said Read. "We were pausing on the core because there are many levels of security in the network and we felt that at this point we should get everyone up to speed with a fact-based view," said Read. "We are engaged with all governments at the moment and we want them to arrive at a common set of understandings."

The decision to halt activity in the core but not the radio network suggests Vodafone expects any European moves to be more limited than restrictions in Australia, which has banned Chinese equipment vendors from the entirety of its 5G market.

Discussing interest in a pan-European monitoring center that would assess equipment from all vendors, Read said the priority must be to ensure countries and governments can agree on a common approach.

"We don't want multiple layers, and this should be for all vendors to ensure there is the right security in place," he said. "To have European standards to do this -- to do it at a European level so that everyone is happy at national level [is fine] -- but we don't want duplication. We need to agree on a coordinated seamless process. Do I advocate consistency? Absolutely."

Drawn up by the GSM Association (which organizes the MWC event), plans for a post-development 5G testing regime have already been slammed by Ericsson as impractical and costly.

Ekholm said the scheme does not reflect the realities of an equipment market in which software is being developed and introduced on a continuous basis. Countries that introduce it would risk damaging the competitiveness of local industries that want to make use of 5G technology, he believes.

Related posts:

— Iain Morris, International Editor, Light Reading

Read more about:


About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like