German 5G construction set to progress slowly, cost more by blocking Huawei

Robot "Pepper" welcomes guests arriving for the opening of the Vodafone 5G Lab in Duesseldorf, western Germany, on May 9, 2018. (Photo: VCG)

Germany is likely to build out its fifth-generation (5G) network with higher costs and slower speed if it insists on blocking Chinese firms like Huawei from participating in the market, said industry analyst.

Xiang Ligang, chief executive of Chinese telecoms industry news website cctime.com, told the Global Times Wednesday that the reported proposal of some German officials to block Huawei, to some extent, reflects that Chinese companies have become strong enough to raise alarms among Western countries.

"It is natural [for Germany] to have such pressure and concerns, but meanwhile we cannot exclude the possibility that some officials are intentionally igniting nationalism and protectionism in the name of national security," said Xiang.

Xiang said that some other officials, as well as German mobile operators, will oppose such moves to block Huawei. Without Huawei or other Chinese companies participating in the 5G build-out, costs will be higher and speed will be prolonged.

The comment came after a Reuters report on Tuesday claiming that some senior German officials aim to convince the government to consider excluding Chinese companies such as Huawei from taking part in construction of the country's 5G infrastructure, amid national security concerns. Germany is expected to start its 5G auctions in early 2019. 

Outside of the US, Huawei is expected to be a major supplier of 5G radio and core network gear, a report released by British industry intelligence unit Ovum said.

Leading the charge are officials who have held talks with their US and Australian counterparts and share their concerns about the risks of using Chinese suppliers like Huawei, Reuters reported.

Huawei has been blocked from rolling out Australia's 5G network due to security concerns in August.

"There is also a chance that Huawei might invest in Germany as it did in Britain and India to enter those markets," Xiang noted.

In October, Huawei announced a three-year plan in India, where it aims to invest more than $100 million to expand local production and open 1,000 stores starting in 2019, Huawei confirmed to the Global Times.

Huawei also reassured the UK about its localization plans in February by announcing it would spend 3 billion pounds ($3.89 billion) over the next five years on procurement in the UK.