The Government has now announced that telecoms providers cannot install any new 5G equipment after the end of 2020 and need to remove all Huawei equipment from 5G networks by the end of 2027. This seems like a long time away, but with the added requirement to “transition away” from buying new Huawei equipment for use in the full-fibre networks over the next two years, operators have no time to waste. This new announcement goes much further than the original edict to reduce Huawei to 35% of the infrastructure in the 5G network, and will greatly affect most of existing plans and mitigations, as well as introduce more work and complex issues across the UK telecommunications industry.
The cost of replacing the equipment
Most telecoms companies will have more than one equipment supplier, but as they have to remove the mandated Huawei equipment completely from the networks, they will need to replace it fast. To do so, they could buy more from a second supplier, but that would leave them open to a failure in that supplier’s equipment, so it’s more likely they will go through a whole procurement process to pick a third supplier, and then gradually ramp the equipment volume up until they can take Huawei out.
Changing the network will also impact the systems which manage the equipment and enable services to be ordered and faults to be managed; in this case, the systems integration is often much more complex than simply doing a “rewiring” in the network. This exercise is potentially very expensive, with both the costs of bringing in a new supplier and the costs already sunk into the Huawei kit, which carries no resale value in the UK.
Minimising the impact for network operators
It’s essential to understand where Huawei equipment is used in the network.
There are three main areas to think about:
- The core network, used to connect cities and towns across the UK to each other.
- The broadband access network, used to deliver our fixed broadband services, and in the future telephony as well.
- The mobile network, used to deliver the signal to our mobile phones and control how calls are connected and how data flows.
In the core network, the connections are massive. Terabytes of data flow as we surf the internet, watch movies and talk to each other. There are only a handful of suppliers in this space who can take up the slack. The number of connections is small though, in the thousands, so once a procurement decision has been made, the swap-out can take place pretty quickly, probably in about two years.
In the broadband network, there’s a lot more work to do. Every one of BT’s green cabinets may have Huawei kit in, so these all need to be reworked. Each cabinet may serve hundreds of users, so these all need to be disconnected, and then reconnected to equipment from a new supplier. It might leave users without broadband service for hours or even days for a big cabinet. To make life more complex, BT have said they will stop selling new PSTN and ISDN phone lines by 2025, and have already stopped in 118 areas, as they reach 75% Fibre to the Home coverage. This means end users might lose their fixed line as well as their broadband, while the change takes place.
In mobile networks, the UK was divided in terms of 5G network deployments between three major vendors – Ericsson, Huawei and Nokia. Huawei’s share of the Radio Access Network (RAN) part of the 5G network has been estimated to be about 500,000 access points, of which approximately 20,000 have been deployed so far. There is also the issue of using 4G as a “piggyback” for 5G; but, would it still be feasible to use a 4G site, as the host for a new 5G access point?
And what about fibre?
We should also consider the knock-on effect of the ban on Huawei fibre equipment, as 5G will be dependent on full-fibre to achieve the promised performance numbers. The impact on the fibre rollouts will affect plans for all operators using fibre networks where Huawei is involved, but the impact on mobile networks still exists without any fibre complications.
Let’s take a look at what the ban means to the mobile network operators. They are all facing issues across the planning, rollout and backend systems that manage the network and potentially those that provision new users and send out bills:
Three UK decided to use Huawei as a single vendor for the 5G RAN, a decision which now needs to be reversed and will impact their 5G deployment plans. Three’s 4G vendor was Samsung and they had a plan to swap out Samsung for Huawei as a part of the 5G deal. They do have a Nokia mobile core, but a new RAN vendor will now have to be integrated into that core.
EE, the mobile arm of BT, are going to have to replace their Huawei equipment in their RAN as well, but they did make the decision to not use Huawei for their 5G mobile core. This situation is further complicated by the initial 5G roll out using 5G RAN connected to the 4G mobile core, which also contains Huawei. The total bill to remove Huawei is £500M, announced by BT in January when the Huawei limitation of 35% was first announced.
Vodafone has Huawei as a supplier for both the RAN and some core network elements, with the Chinese vendor set to supply the larger share of the RAN for 5G alongside Ericsson. Vodafone recently announced a plan to remove Huawei from all of its mobile core networks, at a projected cost of €200M, but the UK ban will now push that number up to “single figure billions” in the UK, according to their head of networks in the UK. This has also led Vodafone to suggest that Ofcom, the telecommunications industry regulator, should scrap the next round of 5G spectrum auctions, giving the operators a share of the spectrum in exchange for the reserve price. This would undoubtedly reduce the cost of spectrum for the operators, but also the revenue generated for the Treasury, albeit a small level of financial support to offset the costs of removing Huawei from the 5G networks.
Telefonica UK, or O2, are potentially the least affected of the UK’s mobile operators, as they took the decision not to use Huawei as a supplier, relying on Nokia and Ericsson. O2 and Vodafone, who created a joint venture to share sites, have also signed an agreement to share their RAN infrastructures, with O2 responsible for the country’s Eastern half and Vodafone the Western half.
As well as network equipment, Huawei also supplies what is termed as Customer Premises Equipment (CPE) including routers, gateways and set top boxes. There has been no forecasted impact on these devices as they are not reliant on a Huawei connectivity solution. There are also mobile handsets to consider, as Huawei is currently the world’s second biggest smartphone manufacturer but international sales have dropped 40% in recent months and the company has plans to cut production by $30Bn in the next two years. This will affect the supply of 5G handsets and devices at a time when the market needs more devices to stimulate the take up of 5G.
No silver lining
In conclusion, the removal of Huawei from the UK communications network is going to cause a lot of pain for the telecoms providers, who have to divert huge amount of time and effort into making these changes. They are facing unexpected costs in potentially securing alternative suppliers and integrating them into their existing infrastructure ecosystem. This will lead to further costs as a result of delays in their 5G deployment plans. The picture does not look positive for the operators, as there will also be an impact on their customers in terms of the delayed service rollouts, potential blackouts and service disruptions; all of which could add up to higher charges for services. The only one potential bright spot on the horizon is that the UK Government has appeared to have listened to some of the concerns from the industry and has given the mobile operators until 2027 to conform with this ban, which exceeds the 5 year minimum suggested by Vodafone.