Get your free copy of Strand Consult’s new study “The Market for 5G RAN in 2024: Share of Chinese and Non-Chinese Vendors in Europe”
Now you can get the third edition of Strand Consult’s new study “The Market for 5G RAN in 2024: Share of Chinese and Non-Chinese Vendors in Europe”. This study is a part of a signature series that Strand Consult prepares on mobile networks, cybersecurity, and China. The study offers a summary and detailed breakdown of type, location, and share of installed 4G and 5G Chinese equipment in European networks from 2019 to 2424. The study offers both granular and big picture views on the issue.
This study follows Strand Consult’s earlier report “Understanding the Market for 4G RAN in Europe: Share of Chinese and Non-Chinese Vendors in 102 Mobile Networks” published in 2020. The report ”The Market for 5G RAN in Europe: Share of Chinese and Non-Chinese Vendors in 31 European Countries” was published in December 2022.
5G is at last underway in Europe. This study provides an update on next generation mobile network rollouts (installed equipment) in Europe and whether and to what degree mobile operators have replaced equipment from Chinese vendors when they upgrade to 5G. Policymakers want to know whether security efforts are working to reduce risk in networks. This study provides information at country level so that individual nations and operators can be assessed, along with color coding to denote the direction of the rollout. A series of European maps offer comprehensive views of key performance indicators.
Five Important facts
The discussion of “rip and replace” of Chinese equipment is misunderstood. No European country has done rip and replace as such. Rather, countries (or specifically operators) stop new investment in Chinese equipment and phase out or replacement of the installed base. In a technology shift, replacing old RAN equipment with new RAN equipment is process.
While equipment vendor’s market share of RAN sales indicates a trend in changing relative revenue vendor positions, it is the installed base market share method that is more correct to characterize end user risk exposure to Chinese suppliers. The installed base method is an exposure risk indicator for end users and nations given to measure the actual share of total installed equipment by Chinese suppliers in all mobile networks.
Strand Consult’s study covers 5G RAN market share as a function of the installed equipment at the point of time measured. In other words, it assesses the total exposure to Chinese suppliers in the 5G RAN. This method is different from for instance Dell’Oro’s approach to measure the share of equipment vendors’ estimated RAN sales during a given period (e.g. this quarter, this year). While the equipment vendor’ market share of RAN sales indicates an overall trend, it is the installed base method that is the more correct method. The installed base method assesses current risk exposure for end users given the actual installed equipment in the network.
Importantly, there is a time lapse for rip and replace efforts. For example, it takes time from the point a government implements guidelines for networks to the point at which an operator upgrades and replaces equipment. This means that there can be a lag from one period to another if an equipment vendor is changed. Exposure in the installed base is impacted by rules on phasing out equipment from certain vendors. In most cases the time frame is 3-5 years; in others, 6-7 years. The prolonged phase out periods allow risk exposure for end users to prevail longer.
Moreover, equipment vendor market share varies by size of country and operator. For example, Germany is so large that its networks account for 20% of the total RAN market in Europe. So, while small countries may switch vendors quickly, Germany’s slow rate of change under a China-friendly policy means that Europe overall is weighted toward Huawei’s equipment.
Eight risks for the 5G supply chain from suppliers under the influence of adversarial countries like China
The world changes rapidly. China is not the country we knew from 10 years ago. Today China considers Russia, and North Korea as its friends. These countries want to undermine free world democracies. China helps Russia wage war on Ukraine. Chinese mobile network suppliers have delivered 4G networks to Crimea after Russia’s invasion in 2014. Thousands of North Korean soldiers fight on the Russia’s side in the war against Ukraine. This war is waged on European soil with tacit approval from the Chinese government. Recent news reports describe how Chinese hackers target critical infrastructure like telecommunications and energy and well as governmental departments and public officials. A Chinese ship is implicated in sabotage of a subsea cable near Taiwan. These are but two examples in China’s increasingly sophisticated campaign of electronic warfare. Strand Consult presaged this development with its 2019 research note “Telecoms operators’ next big challenge is the 100,000 Chinese hackers attacking their corporate customers every day.”
Strand Consult identifies 8 risks for the 5G supply chain from suppliers under undue influence of adversarial countries China See more information in our note from December 2024. Risk assessment is related to the issue of vendor trust. However, understanding risk with Huawei can be colored by persistent media myths promoted Chinese vendors. These vendors don’t want to lose the customers they have outside China. However, non-Chinese suppliers are blocked from ever doing business in China.
Australia was the first country to restrict Chinese equipment formally with a new law, notably for 4G in 2012. See the article describing Social Democratic Prime Minister Julia Gillard ban on Chinese mobile network equipment. The USA had existing laws which it they applied in 2011, and other countries have followed.
The European Commission, European Union Agency for Cybersecurity (ENISA) and the Body of European Regulators for Electronic Communication (BEREC) developed an EU-wide coordinated risk assessment. Based upon a set of identified risks, the EU 5G Toolbox was developed and agreed to include strategic (non-technical) and technical mitigating measures. In sum, the European Commission and the EU member states implement key measures in two areas; strategic (non-technical) and technical security measures, both assessments and mitigation measures must be satisfied to deem 5G equipment suppliers as secure and trusted.
The EU 5G Toolbox was developed by EU member states. In the 2nd Progress report of the EU 5G toolbox (June 2023) all 27 EU Member States pledged to fully implement the EU´s 5G Toolbox. As of June 2023, 24 Member States have adopted the toolbox or were in the process to do so, for example by preparing legislative measures which vest the local authority to perform security assessments. By June 2023, only 11 Member States had taken measures to implement high risk vendor restrictions. As all EU countries support the 5G Toolbox, its implementation moves toward the de facto removal of Huawei and ZTE from European mobile networks.
Transparency, background, and context
This study, the third in a series about the RAN Market for 5G RAN in Europe: Share of Chinese and Non-Chinese Vendors in Europe, offers more than transparency about the contents of Europe’s mobile networks. It offers helpful background and context to understand the predicament and how it came about. Each European country and mobile operator has a story and strategy. Through Strand Consult’s detailed breakdown, readers obtain important information about the choice of equipment and the rationale for the choice. The study and Strand Consult’s previous reports are illustrated with case studies and anecdotes to illustrate mobile operators’ 5G equipment purchases.
Europe has a competitive process for vendors in which firms compete to fulfill the bid of specifications of the mobile operator. The 5G Toolbox is used to help the mobile operator manage elements like risk and security, which are not necessarily captured in prices.
Procurement is different in China where the Chinese government sets a pre-determined limit of how much equipment and/or market share of each particular vendor is allowed. For more information about the differences in policy and practices between the regions, see Strand Consult’s report You’re Not Welcome An Analysis of Thousands Foreign Technology Companies Blocked by China Since 1996.
This is not a study about China and its geopolitics, however many stories about the behavior or Huawei toward European governments have been published in recent years. Strand Consult references those in its research.
Strand Consult’s study delivers detailed information about Chinese and non-Chinese installed network equipment in Europe by the end of 2024. The study highlights of the importance of the EU’s 5G toolbox and provides recommendations to improve its implementation. The toolbox applies to most of Europe’s 102 mobile operators across 31 countries serving some 673 million mobile customers. Strand Consult’s previous reports provide valuable economic context to understand the market for RAN equipment.
The focus on 5G and 4G RAN reflects the shift of the security debate. There is consensus across most countries outside China that equipment provided by vendors owned and affiliated with the Chinese government and military poses unacceptable risk for the security and integrity of the network, both its core and edges. The policy discussion has evolved to whether and to what degree should such vendors be allowed to supply RAN.
The 4G RANs studied in the 2020 report were purchased in the 12-year period of 2008-2020. Most of the RANs were delivered and installed during 2009-2016 when operators upgraded their 2G and 3G networks to 4G. Most 5G RAN was purchased, delivered, and installed after 2020.
When performing a financial analysis of the cost of restricting Huawei, one must consider that network upgrades will happen regardless of vendor. All networks have sunk costs from each generation to the next. The difference from one vendor is calculated on price, performance, and service. Strand Consult finds the market price competitive based upon the explicit factors. However, mobile operators must also plan and budget for risk. If one vendor or another presents a vulnerability, then the equipment is worth less even if the sticker price is the same.
For those operators after 2020 which opted not to follow security recommendations and instead bought 5G equipment from Huawei and ZTE, there will be a one-time cost to be paid by shareholders. Objectively speaking, these operators have made a commercial decision, and it has not turned to be one of their better gambits. In the same way that other bad decisions can cost shareholders money, the choice of using 5G equipment from Huawei and ZTE will cost shareholders.
The reward for choosing Huawei was predatorily-priced goods that previously beat rival technologies from non-Chinese vendors on various performance criteria, by their own admission. The risk, said critics, was that China’s military could use software installed in those products to spy on Europe or even switch off critical infrastructure. Huawei has long denied it is any kind of Chinese government stooge, pointing out that no evidence of software “backdoors” has ever been revealed, even though its products have been subject to more rigorous inspection than anything has from a competitor.
Choosing 5G equipment from Huawei and ZTE, against the recommendations of authorities and security experts, is likely to result in increased risk, the cost of which is reflected through higher insurance premiums, reduced reputation, and indirectly reduced shareholder value. The risk in using Chinese network equipment has been public information for at least a decade. There is no excuse of ignorance of this knowledge at this point, and operators which buy this equipment do so knowing the risk.
For 28 years Strand Consult has worked to create transparency in the telecommunications world. Strand Consult’s telecom operator customers buy its knowledge to navigate a complex, challenging world. Executive, board members, and other industry leaders buy knowledge from Strand Consult to understand the impact of policy on business and shareholder value. In the post Covid era, telecom networks play an increasingly critical role in society and the economy, hence network security has greater importance than before.
The study “The Market for 5G RAN in 2024: Share of Chinese and Non-Chinese Vendors in Europe” is valuable for mobile operators and their shareholders, policymakers, security and defense analysts, network engineers, and other professionals.
