Huawei ban could delay 5G networks and raise prices in Australia and Europe

The launch of next-generation smartphone networks in Australia are under a cloud amid fears they can’t be built without being connected to the controversial Chinese firm Huawei.

The launch of next-generation smartphone networks are under a cloud after experts questioned whether they could be built without being connected to outlawed technology from controversial Chinese firm Huawei.

The country’s second largest telco, Optus, is set to reveal dates, locations and prices for high-speed, low-delay 5G services on Thursday, but experts have questioned whether the technology could be launched without touching parts of its 4G network that use Huawei equipment banned by the Federal Government last year.

The ban could also raise the price of accessing faster mobile downloads, they warned.

Controversial Chinese firm Huawei is in the firing line.

The news comes just one day after TPG abandoned its plans to roll out a competing phone network in Australia and executive chairman David Teoh warned operators could not legally connect “even a piece of wire” from a Huawei-equipped 4G network “to any 5G network”.

Prime Minister Scott Morrison banned equipment from Chinese firms Huawei and ZTE from Australia’s 5G phone networks in August last year by outlawing equipment from companies “likely subject to extrajudicial directions from a foreign government”.

But Huawei had already provided 60 per cent of the base stations and antennas used in Optus’ 3G and 4G networks, and experts have questioned whether the company could create a 5G network without connecting to any of that infrastructure.

Telecommunications analyst Paul Budde said new 5G networks would have to reuse some equipment from existing 4G networks, potentially creating a legally messy and expensive problem.

“You’ve got the 4G network which, in a lot of situations, will have Huawei equipment,” he said. “If you follow the line, China can infiltrate if they want.

“Try to unscramble that egg – it just becomes such an exercise. It would cost billions and billions of dollars. Who’s going to pay for that?”

Richard Yu, the CEO of Huawei, speaks at last week’s launch of new 5G Huawei products in Beijing. Picture: AFP

Mr Budde, who advocated for a collaborative approach with China rather than an outright ban, said the situation could not only cause legal questions but delays in Australia receiving 5G innovations.

A leaked internal assessment by Europe’s largest telco, Deutsche Telekom AG, yesterday revealed similar international concerns.

Unnamed company officials warned a man on Huawei equipment would delay the rollout of next-generation phone networks by as much as two years, as 5G networks would need to be built over the top of existing networks which used Huawei products extensively.

The international stoush is also likely to raise the price of new technology for consumers.

Telsyte managing director Foad Fadaghi said telcos were keen to start selling 5G smartphones and plans to consumers, but warned that the new-generation technology would come with a higher price.

Installing a 5G network without using discounted Huawei equipment, he said, would also reduce price competition from “low-cost 5G carriers” but “the Government’s intentions are clear”.

“It will end the massive price competition that we’ve seen over the past couple of years,” Mr Fadaghi said.

“Consumers should expect to pay more.”

Optus chief executive Allen Lew will reveal its plans for 5G in Canberra today (Thursday), with further announcements for other Australia carriers expected at Mobile World Congress in Barcelona next month.