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The real cost to rip and replace Chinese equipment from telecom networks
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This report offers a critical review of the discussion of whether to replace mobile network equipment made by firms owned and / or affiliated by the Chinese government, notably Huawei and ZTE. The need for network security is not a new debate. Since 2005 many intelligence officials, militaries agencies, and security analysts have noted security risks of using such equipment, including theft of intellectual property, surveillance, espionage, and sabotage. Based on these reports, the United States, New Zealand, and Australia have restricted Huawei and ZTE from networks.

Strand Consult´s analysis shows that the concerns about Chinese made network equipment is not limited to national governments and the military intelligence operations. Nor is the concern confined to telecom operators which build and run networks.  It is the small, medium, and large enterprises that use networks which fear that their valuable data will be surveilled, sabotaged, or stolen by actors associated with the Chinese government and military. Consequently, it is also the clients of telecom operators which push to restrict Chinese-made equipment from networks. 

The question for Europe is whether and to what degree its telecom operators can operate their networks without Chinese-made equipment and the impact of replacing the equipment for security reasons.
 
Strand Consult’s new free report The real cost to rip and replace Chinese equipment from telecom networks examines the claims about Huawei and ZTE and the larger questions about restricting Chinese-made equipment in networks:
 
    · What factors drive investment in mobile networks?
    · Would restrictions on Huawei and ZTE increase equipment prices?
    · Would restrictions on Huawei and ZTE reduce competition?
    · Would restrictions on Huawei and ZTE delay the role out of 5G?
    · The historical experience of infrastructure consolidation.
    · The economic and temporal consequences of equipment restrictions.
    · Consequences for the European market with different scenarios.
 
Strand Consult believes that the debate is an important one, and it requires reason and critique to cut through the media pronouncements. Strand Consult have in our new report The real cost to rip and replace Chinese equipment from telecom networks examine the claims for and against actions to restrict Chinese-made equipment. It presents economic, technical and political considerations to evaluate the proposition. of replacing Chinese-made equipment as suggested impact to market competitiveness by reducing Huawei’s presence.
 
Today Huawei and 68 of its affiliates are listed on the Entity List of the United States Department of Commerce, which prohibits US companies from doing business with these firms without first obtaining a license. In practical terms, US firms cannot license 5G patents to Huawei, nor can Huawei sell its goods outside China. Without access to US technology, Huawei has difficulty making 4G and 5G products for the world market. While Huawei may have made statements to the contrary, the US actions have crippled the company.
 
Strand Consult´s new report The real cost to rip and replace Chinese equipment from telecom networks critiques claims in the media and explains how a proper economic analysis must be prepared to examine the impact of restricting Huawei and ZTE. In practical terms, hardware and software within the network are constantly being upgraded and improved as the standards evolve from 2G to 3G to 4G to 5G, and in many cases, operators may offer a blend of different standards in the same network as they upgrade. In general, European operators are facing an upgrade of 4G networks built between 2012 to 2016.
 
Contact Strand Consult to get your free copy of the report The real cost to rip and replace of Chinese equipment in telecom networks.

 
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