The impact of replacing Chinese gear in Europe’s networks is overstated – study

A new report claims the cost of replacing Huawei and ZTE equipment in Europe’s networks is considerably lower than generally assumed.

Soon to be published by Strand Consult, the report is titled ‘The real cost to rip and replace of Chinese equipment in telecom networks’. It seems to have been written, at least in part, in response to analysis produced by the GSMA, which estimates a ban on Chinese gear would add $62 billion to the cost of European 5G networks and set them back by a year and a half.

The Strand report claims that cost is far lower, putting the cost of replacing Huawei equipment at just $3.5 billion, or around seven bucks per subscriber. The reason for this massive discrepancy is two-fold. Firstly Strand says around half of the GSMA figure is an extrapolation of the broader cost of delaying 5G and secondly it insists that 70-80% of existing RAN equipment is due to be replaced anyway, so should be discounted from the calculations.

So in terms of equipment that would have to be replaced only because of any ban, the report says that only applies Chinese gear bought since 2016, which is where the $3.5 billion figure comes from.  It seems to entirely discount the 18 month delay by insisting the speed of Europe’s 5G rollout will be determined by regulatory policy and investors’ appetite rather than the choice of RAN provider.

It also questions negative assumptions about the reduction in competition, pointing to the US where prices haven’t gone up in spite of the absence of Chinese vendors, and claims the GSMA number failed to attribute any overhead to the supposed security risk posed by Chinese vendors. In conclusion the report asserts that the downside of excluding Chinese vendors is overstated by the GSMA and others, while the upside is understated.