- Removing Huawei could cost Europe up to €40 billion, GSMA estimates
- GSMA Expects Reduced Competition to Lead to Significant Increase in Telecommunications Equipment Prices
- Experts disagree on the true financial impact of Huawei’s withdrawal
The European Union’s plan to remove suspected high-risk telecommunications providers such as Huawei and ZTE could cost far more than Brussels currently estimates, new figures show.
Trade body GSMA said direct replacement costs would reach 30 to 40 billion euros, around four times higher than the European Commission’s own estimate of 10 to 13 billion euros in total.
According to the Commission’s own projections, abandoning Chinese equipment would cost between €3.4 billion and €4.3 billion per year over a three-year period – this annual estimate equates to a total cost of around €10 billion to €13 billion once the three-year period is over.
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The drive to remove Huawei and ZTE from European networks dates back to security concerns raised in the early 2010s.
Several EU governments began restricting Chinese suppliers after the United States pressured its allies to exclude them from next-generation 5G infrastructure.
The debate has further intensified as several member states have moved to completely ban Chinese equipment from their national 5G core networks.
The European Commission then proposed a formal ban on high-risk providers as part of a new EU cybersecurity law, currently under active negotiation.
The GSMA figure of 30 to 40 billion euros is a one-off total and breaks down into fixed networks for 5 billion euros and transport networks for 9 to 12 billion euros.
It also predicts additional costs of €8.5 billion between 2027 and 2030 due to reduced competition between equipment manufacturers, a cost which the Commission’s figures do not appear to include.
The GSMA attributes this additional spending to the fact that there are fewer companies competing for contracts once high-risk suppliers are entirely excluded from the market.
The bloc’s telecommunications operators have already started lobbying regulators for financial compensation linked to mandatory equipment replacement.
Experts clash over which numbers are accurate
Some economists dispute the GSMA figures, arguing that the estimates fail to distinguish new costs from spending that would have occurred anyway.
“The GSMA estimates are crude and not incremental,” said Hosuk Lee-Makiyama, director of think tank ECIPE.
He argued that subtracting replacement costs that would have occurred anyway would bring the totals closer to the Commission’s own figures.
Lee-Makiyama’s critique suggests that the true gap between the industry’s estimates and those of the Commission may be smaller. The European Commission did not respond to requests for comment on the dispute.
The GSMA report comes as negotiations on the cybersecurity law continue between EU member states and representatives of the telecommunications industry.
Any potential compensation scheme would likely require agreement among already divided national governments over how quickly Chinese suppliers would be removed.
This is not the first time that the GSMA’s figures contrast sharply with the estimates of the European Commission or certain analysts.
In 2019, the GSMA predicted that replacing Chinese-made telecommunications equipment across Europe could cost a total of up to €55 billion.
Strand Consult, on the other hand, estimates the cost of replacing Huawei or ZTE equipment eligible for 5G upgrades at around $3.5 billion.
The question of whether the final cost this time comes closer to Brussels’ modest estimate or the GSMA’s much higher figure remains truly up in the air for now.
Via Politics
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