Huawei ban to blow out 5G costs: Oxford Economics

The cost of building ultra-fast 5G network is set to blow out by nearly 30pc because of the decision to ban Chinese telco Huawei.

The cost of building Australia’s ultra-fast 5G network is set to blow out by nearly 30 per cent because of the decision to ban Chinese telco Huawei from building the network, according to a new report from Britain’s Oxford Economics.

The report on the impact of restricting competition in 5G hardware — which was com­mis­sioned by Huawei — concludes that the ban would increase local operators’ costs by up to $300m annually, and that as a consequence the cost of accessing 5G services would be out of reach for 3 million Australians for the next few years.

The report found Australia is in the top three countries for 5G preparedness, along with South Korea and the US, but that delays in the rollout due to banning Huawei would translate to a hit to GDP by up to $8.2bn in 2035.

Both Telstra and Optus have started trialling 5G services.

The report comes as former prime minister Malcolm Turnbull, who made the decision to ban Huawei from Australia’s 5G build due to security concerns, said Britain could jeopardise the Five Eyes intelligence sharing arrangement if it allowed Huawei to build its 5G network.

He said while there was no indication Huawei was acting with “malign intent”, the telco was obligated under Chinese law to aid the country’s intelligence services.

Huawei is heading for a significant win on its push to regain access to supplying 5G equipment to telcos around the world with British Prime Minister Boris Johnson expected to approve the use of Huawei technology in building the nation’s 5G network.

Elsewhere, Germany is also likely to allow Huawei, despite the US warning both governments it “would be madness” to use Huawei technology. Canada, France and Japan are also considering including Huawei.

The US has argued that Huawei is effectively a Trojan horse for the Chinese government, and that its presence in 5G networks would allow it to spy on the West.

Australia under Prime Minister Scott Morrison has also urged other countries to follow its lead and ban Huawei.

Huawei says restricting competition could significantly reduce economic growth over the next 15 years.

“The arrival of 5G will unlock new income streams for businesses in all sectors of the economy, and increase their productivity levels, through enhanced capabilities including higher data speeds, lower latency, and network slicing …. this will allow the development of mission-critical applications,” Oxford Economics associate director Henry Worthington said.

“However, it is broadly agreed that restricting such a significant player from bidding for 5G contracts will lead to higher prices, rollout delays and hence a slower diffusion of associated technological innovation."

Huawei Australia's director of corporate affairs Jeremy Mitchell said the report underlined what the telco had been saying since the Turnbull government excluded Huawei from delivering 5G.

“The decision will only end up hurting ordinary Australians, especially hitting hardest those in regional Australia,” he said.

A spokesman for Communications Minister Paul Fletcher declined to comment.