Excluding China’s Huawei Technologies Co. and ZTE Corp. from the next generation of mobile networks would lumber European phone companies with 55 billion euros ($62 billion) in extra costs, the wireless industry’s main lobby group said.
A global ban advocated by U.S. President Donald Trump would also delay the rollout of the high-speed 5G networks by at least 18 months and deprive the European Union of around 45 billion euros in productivity growth, according to a preliminary report drafted in April by the GSMA trade association and seen by Bloomberg.
“The need to replace network equipment and the capacity constraints on the remaining mobile equipment vendors would disrupt current rollout plans,” the report said. “Such a delay would widen the gap in 5G penetration between the EU and the U.S. by more than 15 percentage points by 2025.”
U.S. efforts to isolate the Chinese vendors amid a trade conflict with Beijing have thrown the global telecom industry’s network upgrade plans into confusion as Huawei is one of the biggest suppliers of the core infrastructure and radio access equipment and the second-largest producer of smartphones behind Samsung Electronics Co.
Some U.S. allies have already followed Washington’s lead in excluding Huawei, heeding warnings that its equipment is vulnerable to hacking and espionage by the Chinese state, which the company denies.
Outright bans on Huawei appear unlikely in Europe, the region it relies on most for growth outside China, after Germany, France and Britain signaled more limited restrictions and tighter oversight of their networks.
“We need to have competition. We need to have strong companies that are able to invest in research and development,” Agnes Pannier-Runacher, a junior economy minister in France’s government, told reporters at a 5G event near Paris on Friday.
The GSMA report was written before President Trump opened a new front against the Shenzhen-based vendor last month by restricting its access to Google’s Android operating system for its 5G smartphones, potentially disrupting their ability to function or access popular apps.
“We continue to stress that it is imperative that the market has the widest possible choice of equipment, technology and partners, to drive, scale innovation and competition,” a GSMA spokeswoman said.