A ban on purchasing telecom equipment from Chinese companies including Huawei would add $62 billion to the expenses associated with Europe’s rollout of 5G networks.
Reuters, citing an industry analysis by GSMA, a lobbying group for the telecom industry, reported the group said the ban would delay the rollout by roughly a year and a half. The increased costs assume a complete ban on purchasing equipment from Huawei and ZTE, the Chinese rival for 5G network rollouts in Europe. Combined, the two Chinese companies have a market share of around 40 percent, the report noted.
“Half of this (additional cost) would be due to European operators being impacted by higher input costs following the significant loss of competition in the mobile equipment market,” the report said. “Additionally, operators would need to replace existing infrastructure before implementing 5G upgrades.”
The White House blacklisted Huawei in May, preventing the Chinese telecom provider from doing business in the U.S., and has pressured European countries to do the same.
Telecom equipment maker Nokia disagreed with the assessment, telling the news outlet it has a product that enables 5G equipment to overlay on top of 4G gear. Spokesman Eric Mangan said it could lower the cost of vendor changes. Nokia told the news service it is in the lead in total 5G orders and that European countries are showing more interests in its products as Huawei deals with the U.S. ban.
As for the delay, GSMA said that would be bad for the European economy because 5G technology is necessary for self-driving cars, in medical applications and for logistics. The research firm said the delays would be due to delivery challenges for rivals outside of China including Ericsson, Nokia and Samsung facing an onslaught of demand. Telecom companies would also have to move from one type of equipment to another which will cause the delay.
“Such a delay would widen the gap in 5G penetration between the EU and the U.S. by more than 15 percentage points by 2025,” according to the report, the news outlet reported.