Why worry about cost of banning certain Chinese comms providers? Fire Huawei, says analyst

The cost of banning Huawei from European 5G markets would be minimal, and not significantly slow the deployment of upgraded networks, according to an analyst whose opinion flies in the face of some mobile operators.

Strand Consulting said it believes the cost of ripping and replacing Huawei equipment could be as low as $3.5bn or $7 per subscriber. That figure is based on swapping out all Huawei kit purchased since 2016.

"Most [70 per cent] of Europe's networks are already three to five years old and are ready to be replaced," the report said.

CEO John Strand told The Register: "This is an important debate to have. Companies know that the main threat they face in terms of cyber espionage and hacking comes from China. They also know that the Chinese government controls Chinese equipment makers."

Strand said it is illogical to think the Chinese government has effectively locked down the country's communications networks but allows hacking to carry on. It makes more sense to believe the cyber attacks from China have at least some degree of state support or originate with state-backed hackers, he opined. Strand accepted there may still be security risks in buying equipment from other manufacturers.

He said that the increasing importance of communications networks means we should take more care about their procurement and deployment. He also believes that Huawei mobile handsets carry the same risks as its network equipment.

"Telecoms companies are hearing this from their customers. We speak to the big banks and other companies, they know the threat from Chinese hackers, so they don't want their communications going through Chinese networks."

He also does not believe that ditching Huawei would slow European adoption of 5G.

Strand believes the US has achieved "a leading position in 5G without using Huawei equipment". Strand claimed that costs for radio access networks in the US have fallen despite the Nokia and Alcatel-Lucent tie-up leaving only three players in the market – Ericsson and Samsung being the other two.

It has been a strange year for Huawei, what with US President Trump's sabre rattling and subsequent placement of Huawei on the Entity List, preventing American companies from easily selling goods and services to the Chinese firm. Some onlookers have described it as simply part of his trade war negotiations rather than due to security concerns and criticised the administration for failing to consider the impact on wider supply chains.

The British government still has yet to publicly confirm if it will ban Huawei kit from being included in the building of commercial 5G networks, and mobile operators are desperate for it to make a decision.

O2 is the only UK telco that that will launch 5G services without any kit from Huawei, but for others the elimination of the Chinese company's networking gear may prove costly and be bad for innovation, or so some claim.

Scott Petty, CTO at Vodafone UK, told us in March that some 32 per cent of the company's own 4G base stations are made by Huawei and that banning Huawei would "cost hundreds of millions and slow down deployment of 5G".

He claimed Huawei's tech was "a long way in front" of rival telecommunications vendors Ericsson and Nokia. Vodafone claimed no one had yet ventured evidence of wrongdoing from Huawei.

Three UK has likewise supported the use of Huawei kit, telling El Reg in June of this year that it has the most advanced tech for 5G deployment. CK Hutchison's Three uses Nokia in its core network and Huawei within its radio access network – as per the guidance of the UK's National Cyber Security Centre.

Similarly, the Intelligence and Security Committee (ISC) warned in July that cutting out Huawei would damage resilience and "lower security standards".

Undeterred, Strand disputed claims that using Huawei equipment has helped Europe speed up development of its mobile networks.

The report concludes: "When considering the security risk, the cost of restricting Huawei and ZTE is minor to Europe. However, the benefit in reduced risk and increased security and network resilience is tremendously high... Security is worth paying for, but given improving technology, its price becomes more competitive. Upgrades to 5G can be done without sacrificing economy or competition and without Huawei." ®