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1、DECEMBER 2019 JUNE 2020 AN ECONOMIC IMPACT STUDY RESTRICTING COMPETITION IN 5G NETWORK EQUIPMENT THROUGHOUT EUROPE 1 Restricting competition in 5G network equipment throughout Europe Executive summary 2 1. The 5G opportunity 6 1.1 5G rollout in Europe 7 1.2 The impact of coronavirus on 5G rollout 8
2、1.3 The economic benefi ts of 5G 9 2. How the 5G infrastructure market works 11 2.1 Who are the key players in the European market? 11 3. How we assess the impact of restricting 5G competition 13 3.1 What happens if Huawei is restricted from competing? 13 3.2 Our three-stage modelling approach 14 3.
3、3 Transmission mechanism of competition restrictions 15 3.4 Accounting for uncertainty 16 4. The economic impact of restricting 5G infrastructure competition in Europe 18 4.1 Total impact of restricting competition acrossEurope 18 4.2 Impact of restricting competition in each country 19 County-by-co
4、untry analysis 2080 Appendix 1: Glossary of terms 82 Appendix 2: Modelling approach and methodology 84 Appendix 3: The Global Economic Model 93 Appendix 4: Full results 96 TABLE OF CONTENTS 2 Restricting competition in 5G network equipment throughout Europe EXECUTIVE SUMMARY The next generation of m
5、obile technology, 5G, ofers enormous opportunities for countries who facilitate its widespread provision. During the global coronavirus crisis, telecoms networks have kept vital health, education and emergency services online, helped many businesses to smoothly shift to remote-working patterns and a
6、llowed friends and family to stay connected. As social distancing has become the norm (in the short run, at least), digital infrastructure has played an ever-more important role in keeping the wheels of the economy turning. Furthermore, the faster connection speeds achieved using the 5G network, and
7、 the potential new-use cases for this technology, will be crucial in boosting productivity levels as countries seek to bounce back from fi nancial collapse. Moreover, the act of 5G infrastructure building can provide a stimulus for recovery in the short term. However, the recession associated with t
8、he coronavirus pandemic is set to delay its rollout, endangering the extent to which these opportunities can be realised. Slower economic growth and heightened uncertainty has led telecommunications operators to pullback on investmentan action that will inevitably slow the rollout of 5G. RESTRICTING
9、 COMPETITION IN THE 5G MARKET In Europe as well as globally, the telecommunications network infrastructure market is dominated by three players: Ericsson, Huawei, and Nokia. Thesecompanies were largely responsible for the rollout of 4G networks viathe deployment of mobile base stations which facilit
10、ate connections to mobile user devices. However, the participation of one of these organisationsHuaweiin the rollout of 5G is likely to be constrained by a series of political decisions. The US and Australia have sought to restrict competition for further 5G infrastructure contracts. In several othe
11、r markets, respective governments have indicated that they are either considering exclusion or have imposed partial restrictions. In May 2020, the UK initiated a fresh review of Huaweis participation in the UK telecoms market.1 The European Commission (EC) regulatory guidance on the issue does not m
12、ake any direct references to Huawei but recommends that member countries should make their own decisions by balancing security implications against other economic and industrial priorities. Economic theory suggests that restricting competition leads to higher pricesas such, it can be expected that r
13、estricting a large player from competing in the 5G network will lead to higher investment costs, delaying the speed of rollout. This, in turn, will result in slower technological growth and innovation, lower incomes for households, and slower recovery from the recession across the economy. 1 The Fin
14、ancial Times. 2020. “UK draws up plans to restrict Chinese inward investment”. The Financial Times, 24 May 3 billion Estimated additional annual cost of building 5G infrastructure across 31 European countries if competition is restricted, in our central cost scenario. 3 Restricting competition in 5G
15、 network equipment throughout Europe ECONOMIC IMPACTS OF RESTRICTING 5G COMPETITION 2 In this study, we cover the following 31 countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuan
16、ia, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland and the United Kingdom. In a previous report published in December 2019, we had covered France, Germany and the United Kingdom using the same methodology. The results for these three
17、 countries presented in this report difer from those presented in the previous study due to diferences in 5G rollout forecasts and macroeconomic projections (particularly in light of coronavirus). In this context, Huawei commissioned Oxford Economics to assess the economic costs of restricting compe
18、tition in 31 European countries.2 To refl ect the uncertainty inherent in such a process, we modelled three alternative scenarios termed “low cost”, “central cost”, and “high cost”. All give results relative to our (post-coronavirus) baseline scenario, in which no competition restrictions are impose
19、d on the 5G infrastructure market. Under the central cost scenario, our modelling suggests that restricting a key supplier of 5G infrastructure in our 31 European countries would increase total 5G investment costs by almost 3billion per year on average over the next decade, in 2020 prices. This repr
20、esents an annual cost increase of 19%, which translates to 3 million per year in Iceland but as much as 479 million per year in Germany. The associated restriction in competition for 5G infrastructure would lead to delays in the network rollout. Under the central cost scenario, we estimate that arou
21、nd 56 million fewer people across Europe would be covered by the 5G network in 2023. A delay in the rollout of 5G would also result in slower technological innovation and reduced economic growth. In our central cost scenario, this would result inreductions to national GDP in 2035 ranging from 13 mil
22、lion in Iceland to 7.3 billion in France. The total GDP in 2035 lost in the 31 countries in our study is estimated to be 40 billion in 2020 prices. When interpreting these results, it is important to note that we have not made allowance for costs that network operators would face if they were to nee
23、d to replace existing equipment built by the restricted provider. Such additional costs would further delay rollout and technological innovation resulting in higher productivity losses. Fig. 1: Total Europe-wide impacts of restricting a major participant in 5G network provision, under our three mode
24、lling scenarios Low cost scenario Central cost scenario High cost scenario Increase in average annual investment costs for 5G infrastructure over the next decade 1.4 billion (9%) 3.0 billion (19%) 4.5 billion (29%) Absolute number of people who will have delayed access to 5G by2023 29 million (6%) 5
25、6 million (11%) 78 million (15%) Estimated permanent loss in Gross Domestic Product (GDP) due to delay in 5G rollout in 2035 12 billion40 billion85 billion 40 billion Estimated reduction in Europes annual GDP in 2035 if competition is restricted (central scenario, 2020 prices). Restricting competiti
26、on in 5G network equipment throughout Europe THE IMPACTS OF 5G INFRASTRUCTURE RESTRICTION* 73mn (19%) 1.1mn (12%) 1.1bnAT 65mn (19%) 1.7mn (14%) 1.1bnBE 29mn (19%) 800,000 (13%) 600mnDK 447mn (19%) 4.0mn (6%) 7.3bnFR 479mn (19%) 11.9mn (14%) 6.9bnDE 3mn (19%) 20,000 (6%) 13mnIS 27mn (19%) 345,000 (7
27、%) 700mnIE 282mn (19%) 6.9mn (12%) 4.7bnIT 5mn (19%) 50,000 (7%) 130mnLU 52mn (19%) 2.1mn (12%) 1.6bnNL 4mn (19%) 20,000 (4%) 40mnMT 98mn (19%) 600,000 (11%) 1.1bnNO 120mn (19%) 3.3mn (9%) 1.0bnPL 63mn (19%) 1.0mn (10%) 500mnPT 292mn (19%) 5.0mn (11%) 3.7bnES 374mn (19%) 7.3mn (11%) 4.4bnUK 94mn (19
28、%) 800,000 (9%) 1.7bnCE Restricting competition in 5G network equipment throughout Europe THE IMPACTS OF 5G INFRASTRUCTURE RESTRICTION* * Results for each country show the central cost 5G impact scenarios 20mn (19%) 700,000 (10%) 100mnBG 23mn (19%) 200,000 (6%) 80mnHR 7mn (19%) 38,000 (4%) 40mnCY 57
29、mn (19%) 1.2mn (11%) 400mnCZ 10mn (19%) 130,000 (10%) 60mnEE 79mn (19%) 600,000 (11%) 400mnFI 37mn (19%) 800,000 (8%) 600mnGR 55mn (19%) 500,000 (5%) 300mnHU 8mn (19%) 180,000 (10%) 70mnLV 8mn (19%) 200,000 (9%) 60mnLT 59mn (19%) 2.4mn (13%) 80mnRO 31mn (19%) 200,000 (4%) 200mnSK 15mn (19%) 120,000
30、(6%) 150mnSI 64mn (19%) 1.4mn (13%) 1.1bnSE Absolute number of people that will have delayed access to 5G by 2023; number of people (% of population) Estimated permanent loss in Gross Domestic Product (GDP) due to delay in 5G rollout in 2035; Increase in average annual investment costs for 5G infras
31、tructure over the next decade; millions (%) 2.4bn (19%) 46.9mn (11%) 32.4bn EU27 3.0bn (19%) 56mn (11%) 40bn TOTAL for all 31 countries 6 Restricting competition in 5G network equipment throughout Europe 1. THE 5G OPPORTUNITY As the next generation of mobile wireless network technology, 5G will prov
32、ide a better consumer experience and improve business performance through faster data transmission and more reliable connectivity. 5G will reduce the cost of mobile internet use, with prices expected to drop 10-fold per gigabyte of data, compared with current 4G mobile networks. 5G will also unlock
33、new income streams for businesses in all sectors of the economy, and increase their productivity levels, through enhanced capabilities including higher data speeds, lower latency3, and network slicing4 (seeFig.2). 3 Latency is the amount of time between a command and its corresponding action over th
34、e internet. 4 Network slicing allows the physical infrastructure to be split into several virtual networks that can be tailored to diferent end-users, thereby facilitating dedicated disruption-free networks for critical users such as health and transport services that are free from disruption from o
35、ther consumer and business uses. 5 The multiplier efect comes about because the money paid to suppliers and employees will be create demand for other goods and services in the wider economy, which in turn will stimulate further rounds of spending. The eventual fi nal efect on employment and output c
36、ould be bigger than the initial spending on infrastructure. As European economies emerge from the Coronavirus pandemic, the building of digital infrastructure, especially 5G networks, is expected to play a signifi cant role in recovery from the recession. The construction of 5G networks will support
37、 jobs, and this spending on suppliers and employees is expected to have signifi cant multiplier efects5 across the wider economy. Should remote working become more common in the long run after restrictions are lifted, the connectivity provided by 5G networks will help boost productivity levels beyon
38、d the new-use cases that 5G is likely to enable, and which are discussed below and in Fig. 3. Businesses are preparing for millions of new wireless devicesfrom smartwatches and other wearable items to sensors embedded in industrial productsto be connected to the next generation of 5G mobile networks
39、. These devices, which together constitute the Internet of Things (IoT), will not use a lot of data (a sensor built into a highway, for example, will need to send only small amounts of digital information across the network every couple of hours). But when combined, these hundreds of millionspotenti
40、ally billions ofnew sensors will require almost universal connectivity, forcing operators to extend their networks to practically every corner of a country. Fig. 3 gives an indication of how 5G and the IoT will afect people and businesses across a wide range of activities. Fig. 2: Summary of 5Gs key
41、 benefi ts to businesses and consumers Faster connection speeds 5G, characterised as Enhanced Mobile Broadband (eMBB), is expected to improve mobile internet use with higher speeds and seamless user experience in dense or high-mobility environments. It will support high-bandwidth services such as Au
42、gmentedReality (AR) and Virtual Reality (VR) apps. Greater bandwidth for more devices 5G will enable Massive Machine-type Communications (mMTC). Put simply, it will enable the connection of a very large number of connected devices, which together comprise the Internet of Things. Quicker response tim
43、es 5G will also provide Ultra-reliable and Low Latency Communications (URLLC). Low latency means the response times for 5G will be much quicker than for previous generations of mobile technology, and that access to 5G will be far more reliable. This will allow the development of “mission critical” a
44、pplicationsfor example, in transport (vehicle-to-vehicle communications), healthcare (remote monitoring), and logistics (drone delivery). Source: Ofcom, Oxford Economics 7 Restricting competition in 5G network equipment throughout Europe Fig. 3: Examples of 5G and IoT applications by sector SectorEx
45、amples of applications Health and social care IoT enables remote health monitoring, creating timely alerts for patients, nurses, or carers. AutomotiveConnected smart cars for tracking mechanical diagnostics, autonomous vehicles (e.g., driverless cars), locations, and media streaming. Smart citiesOpt
46、imisation of street lighting, monitoring of parking, rubbish collection timing, and environmental monitoring. UtilitiesSmart meters and smart thermostats allowing for more accurate billing and better control of energy consumption. ManufacturingDigitisation and automation of production lines, and rem
47、ote control of industrial processes. LogisticsConnected containers to record and share the items location and temperature to streamline production and reduce the risk of damage to temperature- sensitive produce. Source: Ofcom, Oxford Economics 1.1 5G ROLLOUT IN EUROPE Amid hype and high expectations
48、, the 5G rollout has begun. Before the onset of coronavirus, GSMA6 had forecast that there would be 1.2 billion 5G mobile users globally by 2025, with network coverage extending to roughly a third of the planets population.7 Due to the restrictions in response to the pandemic, the rollout of 5G serv
49、ices is expected to be delayed in the short run. GSMA expects that 5G connections in 2020 will be 25% lower than the levels planned before the onset of the coronavirus.8 6 The GSM Association (commonly referred to as the GSMA or Global System for Mobile Communications, originally Groupe Spcial Mobile) is an industry organisation that represents the interests of the mobile network operators worldwide. 7 GSMA. 2018. The Mobile Economy 2018 8 Mobile World Live. Intelligence Brief: How will Covid-19 impact 5G? Fig. 4: 5G rollout in Europe as of May 2020 Single