The EU is falling behind in the global 5G race. This could be aggravated through the announced de facto ban of Huawei.
Germany and the EU are falling behind in the global race for the development of 5G networks and are risking additional losses by banning Huawei. EU Commission statements and a brief analysis from corporate circles confirm that the Union is not only failing to achieve its own 5G goals, but is also losing ground vis-à-vis its competitors. Until recently, eight 5G base stations per million capita were deployed in the EU, in the USA, 63, in China, 86, in South Korea, nearly 1,500. The Corona crisis as well as the Chinese Huawei group’s de facto ban from the development of the German 5G networks, reportedly agreed on by the German government, could cause additional setbacks. According to the agreement, companies that produce 5G components have to prove their “trustworthiness.” The assessment will be decided on the basis of intelligence information. Huawei’s ban could easily delay the 5G deployment by 18 months, resulting in a backlog in 5G implementation and billions in losses.
The EU Commission recently conceded that it failed to achieve its own goals in the development of 5G networks. In September 2016, the Commission had announced that 5G services would be available in “at least one larger city” in all member countries “by the end of 2020, at the latest” and uninterrupted 5G coverage in urban areas and along main transport paths would be achieved by 2025. 5G deployment must also be “coordinated” to avoid interruptions within the Union. Realization of these plans is nowhere in sight. On September 18, Commission Vice-President for Digital Margrethe Vestager and the Internal Market Commissioner Thierry Breton openly admitted that the Covid-19 pandemic has significantly set back the EU’s 5G plan. “We’ve got about a four-month delay,” Breton said. Moreover, there is also the danger of a fragmented 5G network. EU member states “have to continue moving forward as quickly as possible,” Breton, the former head of the French IT group Atos demanded.
A brief analysis published by the European Round Table for Industry (ERT) shows that in the case of 5G, the EU is not only lagging behind in its planning, but above all, behind its global competitors. The ERT, a lobbying association, is comprised of more than 50 of the largest companies in Europe – including the German companies, Siemens, Daimler, BASF and the Deutsche Telekom. According to the brief analysis, the US launched its 5G commercial services in April 2019; the first commercial services were only available in Europe three months later, and still today, only 13 of the 27 EU member states have launched 5G commercial services. Whereas the EU has deployed 8 5G base stations per million capita, the USA has more than 63, China, more than 86, South Korea, more than 1,491; the USA has upgraded 7 percent of its 4G base stations to 5G, South Korea, an unprecedented 98 percent, however the EU, a mere 1 percent. Europe’s 5G upgrade is hampered by the fact that the EU was lagging behind the competition already with 4G, explains the analysis. For example, the share of those in Europe who updated to 4G from 3G is around 70% – in the US, China and South Korea, it reaches around 90%, which facilitates the upgrade to 5G.
China, World Market Leader
Germany and the EU’s deficit are made clear in information pertaining to the status of 5G development in China, where more than 500,000 5G base stations have already been installed. By the end of 2020 they will number 600,000. In Germany, by comparison, market leader Deutsche Telekom, is seeking to install 40,000 5G antennas in the same period. More than 46,000 base stations have been installed in the southern Chinese metropolis Shenzhen, alone, where Huawei is headquartered. Shenzhen is China’s first city to achieve full-scale 5G deployment. At the end of August, already more than 100 million 5G mobile appliances were being operated by more than 60 million users. The number of 5G-capable smartphones, delivered in China in 2020, have been estimated at 140 million. Thus China accounts for 72 percent of the global revenue generated by sales of 5G capable smartphones. According to prognoses, in five years 28 percent of all mobile communications connections in the People’s Republic of China will probably be 5G connections, which would amount to a third of all 5G connections in the world. Meanwhile, in some places in China, autonomous vehicles are navigated on streets and rail, autonomous construction equipment is being operated and operations are carried out with the help of telemedicine over 5G networks. The leap to the comprehensive implementation in daily life and industry has long since begun.
The Intelligence Service Decides
Germany will presumably widen its backlog – because, as was reported yesterday – the German government has agreed to a de facto ban of China’s Huawei Company from participation in the development of its 5G network. The report has it that the approval for 5G components will not only be based on a technical certification, but also on the verification of the “trustworthiness” of the manufacturer. The latter, the report continues, will be decided on the basis of intelligence service information, which gives the BND final say in the decision in the Huawei case. On various occasions, the BND has declared that it is opposed to the use of Huawei technology in German 5G networks. In the industry, this is not only expected to mean billions in additional costs, but also a serious delay. More optimistic prognoses assume a delay of 18 months, resulting from not only a delay in developing the 5G network itself, but removing the currently installed Huawei 5G components, as well as expecting delays in supplies of 5G components from Nokia and Ericsson.
Billions in Losses
The delays weigh heavily. The technological lead that China has obtained, will probably be reflected also in a lead in 5G applications, whose resulting profits will be lost by German companies, in so far as they are not producing in the People’s Republic of China. A study recently published by Assembly Research, a London-based company, provided an indication of the magnitude of the losses. They estimated the losses that the United Kingdom would have to expect, due to a ban of Huawei. The study assumes that with 5G and 5G appliances Great Britain can expect an estimated UK £173 billion of incremental GDP between 2020 and 2030 alone – given the new mobile standards are quickly and efficiently installed. However, if this is not the case, one can expect losses. According to Assembly Research, it could cost the UK economy £18.2 billion. The report was commissioned by Huawei, but is based on the UK government’s calculations. Even if this cannot be applied 1-to-1 to Germany: if the gap widens, particularly in relationship to China, which the ERT is already complaining of, Germany will also face heavy losses.
 5G for Europe Action Plan. ec.europa.eu.
 Samuel Stolton: Commission concedes delay in 5G deployment across EU. euractiv.com 18.09.2020.
 ERT: Assessment of 5G Deployment Status in Europe. Brussels, September 2020.
 Juan Pedro Tomás: Chinese telcos have already deployed 480,000 5G base stations. rcrwireless.com 08.09.2020.
 China wird 2020 mehr als 140 Millionen 5G-Smartphones verkaufen. german.china.org.cn 29.09.2020.
,  Till Hoppe, Moritz Koch: Hohe Hürden für Huawei – “Das Verfahren kommt einem Ausschluss gleich”. handelsblatt.com 29.09.2020.
 Nick Ismail: Huawei ban could cost UK economy £18.2 billion due to 5G roll-out delay. information-age.com 09.09.2020.