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Macroeconomic impact of a delayed 5G roll-out in the UK

  • Posted by huawei
  • September 30, 2020 12:06 PM BST
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The UK Government has on various occasions set out its ambition for the UK to be a leader in 5G to help create a world-leading digital economy and has committed significant fundin to help make this happen. As well as improved mobile coverage, the Government’s aims for 5G include increased productivity, efficiency gains, new opportunities for UK business and higher inward investment. 5G is widely expected to bring about significant opportunities and benefits, delivering not only a step-change in mobile connectivity but opening up much wider opportunities and creating new business models across the economy.

After continued pressure from the US over security fears, the UK conducted a Telecoms Supply Chain review which culminated in the January 2020 restriction of high risk vendors (such as Huawei) to no more 35% of the 5G access network. Following further US pressure on Huawei this year, the UK Government’s National Cyber Security Centre conducted a further review, which concluded it could no longer guarantee the security of Huawei equipment in the future. With little room for manoeuvre, the Government decided to ban Huawei from 5G networks, such that no new 5G equipment is to be bought from January 2021, and UK 5G networks must be Huawei free by the end of 2027.

In 2019 Assembly carried out an independent assessment of what a restriction on Huawei in the telecoms supply chain could have on operators’ 5G roll-out plans and subsequently the UK economy. At the time we estimated that a partial restriction on the use of Huawei could result in a delay to 5G roll-out of between 18 and 24 months and a cost to the UK economy of up to £6.8bn. In announcing the further restrictions on Huawei, the Government concluded it would delay rollout by a further year, meaning a cumulative delay to 5G rollout of two to three years and a cost to the industry of £2bn to replace the Huawei equipment.

Huawei asked us to update our estimate of the hidden economic impact, recognising that there was a cost beyond the cost of replacement. There are various estimates of the impact 5G will have on the UK economy, however the Government assumes that if the UK is leading technology development and deployment of 5G, at the current trajectory, the benefit is estimated to be around £164bn by 2030. Taking the Government’s own estimates as a starting point, and applying a similar methodology as used in our 2019 assessment, we calculate the cost to the UK economy of a 3 year delay in 5G roll-out to be as much as £18.2bn. This is a loss across the mobile sector, related industries, and the economy at large.