February 25, 2019 / 7:43 AM / 7 months ago

Weak investment climate main 5G risk, not security fears: Ericsson

BARCELONA (Reuters) - Europe risks falling behind other regions in rolling out 5G mobile services because of onerous regulation and weak investment rather than any security concerns about Chinese equipment, Ericsson CEO Borje Ekholm said on Monday.

FILE PHOTO: Ericsson Chief Executive Officer Borje Ekholm holds a news conference during the Mobile World Congress in Barcelona, Spain, February 26, 2018. REUTERS/Yves Herman

High spectrum fees, regulatory uncertainty and a lack of investment were more pressing concerns, Ekholm said, alluding to calls by the United States to ban Chinese network vendors on national security grounds.

“The debate here often becomes: it’s the lack of technology for operators, that’s what slowed down Europe. And that’s not the case,” Ekholm said in an interview on the sidelines of the Mobile World Congress, the telecoms industry’s main annual gathering.

“The reality is that less than half of the countries in Europe have actually given out spectrum for 5G. It’s a big uncertainty how much it’s going to cost.”

Ericsson has forecast that 5G subscriber numbers could reach 1.5 billion worldwide by 2024 as consumers and businesses move to next-generation networks slated to bring super-fast connections for everything from computer gaming through to medical surgery.

North America and northeast Asia will adopt the new technology fastest, the company said in a report last year, but 5G is also expected to account for about 30 percent of mobile subscriptions in Western Europe.

Ericsson has signed 10 contracts for 5G with operators in countries including the United States, Britain, Australia and Switzerland, Ekholm said, but still faces challenges in Europe around the large number of operators and high spectrum fees.

He said Europe had more than 200 operators to contend with, against only a handful in China and the United States, and pointed to 5G spectrum auctions in Italy last year which raised 6.5 billion euros ($7.38 billion) in a ferocious bidding war

The prices in Italy, he said, were equivalent to almost two years’ capital expenditure for some operators.

“It’s a very heavily regulated sector, so overall the investment climate I think is the key reason why we have been slow,” he said.

SECURITY WARNINGS

Ekholm took no position on calls by the United States for Western countries to bar China’s Huawei from their networks over allegations the company and its equipment could be used by Beijing for spying.

But debate is raging in Europe over whether to heed the U.S.-led warnings, even as big telecoms operators say that such a move could set back the deployment of 5G by years.

Huawei has repeatedly denied the accusations of state-spying and no evidence has been publicly produced.

Nokia CEO Rajeev Suri told Reuters on Sunday any future decision to bar Huawei would not delay the rollout of 5G in Europe, pointing instead to delays in issuing spectrum to operators and high auction costs as the main obstacles.

Asked if he agreed with his competitor’s assessment, Ekholm said he was not willing to speculate and it was for individual countries to decide how they managed their national security policy.

Ekholm said Ericsson was preparing for any eventuality by investing in product development and having a supply chain which can ramp up 5G demand if needed. He highlighted his company’s announcement on Monday that it was buying the antennas and filter operations of Germany’s Kathrein.

“Let’s look at it when it comes down. We have to remember the operators ... have a lot of gear in the network, they are financially under a lot of pressure, in Europe especially,” he said.

“They’re under a lot of pressure here, so how they are going to act if something happens or doesn’t happen I think is very hard to speculate.”

($1 = 0.8804 euros)

Reporting by Jack Stubbs and Douglas Busvine; Editing by David Goodman and Jane Merriman

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