Out-Law / Your Daily Need-To-Know

‘Opportunities for smaller providers’ in UK telco infrastructure market

Out-Law News | 22 Apr 2021 | 11:45 am | 1 min. read

Smaller-scale manufacturers of telecommunications equipment have an opportunity to “gain a share” of the UK’s telecoms infrastructure market, an expert has said.

Nick Hutton of Pinsent Masons, the law firm behind Out-Law, who specialises in telecoms law and contracts, said the opportunities could arise as a result of the UK government’s push to diversify the UK’s telecoms infrastructure supply chain.

Last year, the UK government published a new Telecommunications (Security) Bill which, once enacted, would give it powers to direct providers of an public electronic communications network or service to take action to address security risks. The government has already outlined its intention to ban the use of new Huawei 5G equipment, and remove all existing Huawei kit from 5G networks by 2027, following advice from the UK’s National Cyber Security Centre. 

In September 2020 the government said it wanted to “bring more players into the market to make networks more secure and deliver higher quality products and services”. It highlighted at the time that the global market for communications network equipment is “dominated” currently by just three companies – Huawei, Ericsson and Nokia. At the time it appointed Lord Ian Livingston, former chief executive of BT, to lead a new telecoms diversification task force which is responsible for providing “independent expert advice” in relation to diversifying the network.

According to the Financial Times (FT), a report prepared by the task force, which has not yet been published, has recommended that the government aim for smaller telecoms equipment manufacturers to make up a quarter of the UK market for the supply of 5G infrastructure by the mid-2020s. The task force has further recommended that the government seek to attract one or two other major suppliers to the UK market to compete, the FT said.

Hutton said: “We are now seeing the knock-on effects of the government’s decision to ban high risk vendors from UK telecommunications infrastructure in the UK, in terms of the re-shaping of the market for network equipment. This includes the emergence of positive proposals to address a lack of diversity in the small pool of equipment vendors.”

“The government has a significant opportunity to support exploration of a disaggregated approach to networking infrastructure, known as an ‘open RAN’ model, which could create a space for smaller equipment manufacturers to gain a share of the infrastructure market,” he said.