Huawei warns restrictions on 5G competition could slow post-COVID recovery

Global telecommunications giant Huawei Technologies is warning that for countries about to build a 5G network, banning a key supplier of that equipment will increase costs over the next 10 years by at least 8 per cent — and could increase them by as much as 29 per cent.

Vice-president and economics adviser at Huawei Technologies, Andrew Williamson says 5G wireless will underpin tomorrow's digital economy, supporting everything from smart factories to driverless cars.

He argues that restricting significant players from bidding for 5G contracts will lead to higher equipment costs, delays in network roll-out, and less 5G-related innovation.

According to Williamson, governments should take note that less competition produces many negative results, including rising inequality, weaker business investment, fewer skilled workers, and lower productivity growth.

He added that there are few countervailing benefits, other than fat profits for a few privileged firms and their owners.

“Those rising costs will trigger a destructive domino effect. Network roll-outs will be delayed, reducing 5G coverage for millions of people in each country. Delayed roll-out, in turn, slow down technological innovation and retard economic growth, while shrinking the odds that a country will acquire any sort of first-mover advantage in key economic sectors of the future,” said Williamson.

“This dynamic is especially pronounced for telecom network infrastructure. COVID-19 is already battering the global economy. Prospects for a swift recovery will depend heavily on whether countries adopt new technology and embrace competition,” added Williamson.

The Huawei executive noted that until recently, there wasn't much information quantifying the ways in which restricting competition in the 5G equipment supply might harm national economies.

He said an Oxford Economics study, commissioned by Huawei, calculated the economic cost of restricting competition in 5G network gear in Australia, Canada, France, Germany, India, Japan, United Kingdom, and United States, that will consequently affect other countries that count on their service such as Jamaica.

“Using techniques developed with Dr Martin Pesendorfer of the London School of Economics, Oxford Economics estimated the increase in mobile network operators' investment costs when a major infrastructure provider was kept out of the market. That increased cost was then translated into delays in 5G roll-out to show what percentage of households and businesses would no longer get 5G coverage.

“Moreover, the increased costs and delays in implementation were translated into estimates of lower productivity growth. Using various academic and industry sources, the study calculated the impacts on a range of macroeconomic indicators, including GDP [gross domestic product] and household consumer spending. All this helped put a price tag on restricting competition,” said Williamson.

“While the next few years will not be easy, the road to recovery will be much smoother if it is not impeded by measures that restrict competition in one of the key technologies of the future,” declared Williamson.

Last month India became the latest in a growing list of countries, including the United States, United Kingdom and Australia, which have prevented Huawei from deploying 5G equipment in their wireless networks because of security issues.

Huawei has repeatedly denied that is poses a security risk for countries.