UK told to use new telecoms suppliers after Huawei’s 5G exit

The UK must ensure that smaller telecoms equipment makers become key suppliers of Britain’s 5G mobile phone networks once kit from China’s Huawei is stripped out of the infrastructure, according to a new report.

The report by the vendor diversity task force, which was commissioned by the government and has been seen by the Financial Times, said smaller equipment manufacturers should provide 25 per cent of the kit used in 5G networks.

The task force also said Britain and its western allies should work together to develop standards that underpin mobile technology beyond the 5G era, as China also seeks to secure a leading position in this area.

The UK government last year banned Huawei as a 5G equipment supplier after coming under pressure from former US president Donald Trump to make the move because of Washington’s concerns China could use the company’s kit to spy on western countries.

British mobile phone operators, which have until 2027 to remove existing Huawei equipment from their networks, expressed concern that they would become overly reliant on kit from Ericsson and Nokia, the Chinese company’s main rivals.

These three companies have dominated the provision of mobile networks in the UK for a decade.

The report by the vendor diversity task force, chaired by former BT chief executive Lord Ian Livingston, recommends the government set a stretching target for the market share of 5G equipment provided by smaller suppliers.

“The task force believes 25 per cent by the mid 2020s should be the initial aspiration for mobile operators,” said the report.

This proposal is expected to be welcomed by nascent telecoms equipment makers including US companies Mavenir and Airspan, which have targeted Britain as a growth market because of Huawei’s exit.

Some larger manufacturers, such as Nokia, could make kit that is included in the 25 per cent market share earmarked for smaller suppliers if their so-called radio access networks are compatible with equipment provided by others.

But the task force also recommends the government should attract one or two additional “scale” vendors to compete directly with Ericsson and Nokia, as companies including Samsung and NEC look to expand in the 5G market.

The government’s decision to ban Huawei last year, having previously said it would be a limited supplier, has set back the roll out of 5G in the UK.

The task force, which includes senior executives from the telecoms industry, said it was not necessary for the government to provide direct financial assistance to the sector to cover the estimated £2bn cost of replacing Huawei kit by 2027.

The government should instead explore whether it could provide tax relief for mobile operators that deploy equipment from smaller suppliers and which could stimulate faster network upgrades, added the task force.

A spokesman for the Department for Digital, Culture, Media and Sport said it would publish the taskforce’s final recommendations later this week.

The push in the UK to diversify telecoms equipment suppliers in the wake of Huawei’s exit from 5G is seen by some Conservative MPs as an opportunity for Britain to regain a leading global role in the industry.

The task force report highlighted certain elements of telecoms networks, including software and chip design, where the UK could have a stronger position, alongside a bigger role in the standards that underpin mobile technology.

The report noted how China has become a leading contributor to the international rules that govern mobile standards and has developed an industrial strategy dubbed China Standards 2035 to strengthen its position.

It said: “The China Standards 2035 plan seeks to cement Chinese positions as dominant in international standards work . . . The UK and its allies must look to meet this challenge.”