BT Phone Home: British Telecom signs deal with Ericsson

November 8, 2020

2 min read

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What's going on here?

Telecom company BT has signed a deal with Ericsson to use their 5G equipment to upgrade its EE mobile network, in a move to ditch reliance on Huawei.

What does this mean?

The implementation of 5G in the UK has really felt some heat over the past year (ignoring the fact early this year people set fire to the 5G masts, so they literally felt the heat!) The debate over which company would provide the telecoms equipment has been fierce. So, before we dive into the details of BT’s deal with Ericsson a quick history may be in order.

About 4.5bn years ago the earth formed, and up until March 2020 little had happened in the UK’s 5G history books.  In March 2020,  Boris Johnson controversially approved the use of Huawei in the UK’s 5G network, despite fears of Chinese state surveillance via their equipment (see our article here). Glossing over a global pandemic things were relatively uneventful until July. Then the government kicked off its summer programme of U-turns on just about everything. This included announcing a ban on telecoms firms purchasing any kit from Huawei and a deadline of 2027 to remove such equipment from their networks (see our article here).

Consequently, BT found itself in the position of having to choose some new 5G providers for its EE mobile network; one of these selected providers is the Swedish company, Ericsson.

What's the big picture effect?

BT’s deal with Ericsson will allow the company to eliminate its dependence on Huawei. Ericsson is slated to manage about 50% of BT’s 5G network while Nokia will supply the other half of the network. The idea behind having two vendors for the same equipment allows a telecoms company to continue to maintain its service if an issue develops in one provider’s system.  There are other companies which also operate in this sector, like Samsung, but it would have been more challenging to integrate their equipment.

However, there is concern among some industry leaders that the ban on Huawei will reduce competition, meaning the 5G upgrade could become more expensive. The current cost of removing Huawei equipment is about £500m but there are other financial repercussions to account for as well. Experts argue that a small choice of vendors could slow innovation as there would be no competition to spur development. Huawei commissioned a study which claimed the delay in rolling out 5G would mean £108bn in lost economic benefits in regions outside London. A statistic, if taken to be fact, that does not bode well for a government dedicated to “levelling up.”

Finally, one development in this field on which to keep an eye is whether hardware equipment manufacturers switch to OpenRan. Ran stands for radio access network, and this connects your mobile device to the core network. OpenRan plans to standardise hardware. This would allow companies like BT to switch suppliers via software. For example, it would avoid the expensive process of tearing out Huawei’s expensive customised hardware and replacing it with equally expensive hardware. In October 2020, Ericsson announced it will begin a phased-move towards OpenRan. So, maybe ditching Huawei might actually turn out to be cheaper in the long run?

Report written by Michael Johnson

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