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Weak investment climate main 5G risk, not for safety reasons: Ericsson

BARCELONA (Reuters) – Europe risks falling behind other regions in the roll-out of 5G mobile services because of the onerous regulation and weak investment rather than a concern about the safety of Chinese equipment, Ericsson CEO Borje Ekholm said on Monday.

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

High spectrum costs, legal uncertainty and a lack of investment, were more urgent problems, Ekholm said, referring to calls by the United States to prohibit Chinese suppliers of network on national security grounds.

“The discussion here is often: it is the lack of technology for entrepreneurs, that is what delayed in Europe. And that is not the case,” Ekholm said in an interview on the sidelines of the Mobile World Congress, the telecommunications industry is the most important annual meeting.

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

Ericsson has predicted that 5G subscriber numbers could reach 1.5 billion worldwide by 2024, as consumers and businesses move to the next generation networks are planned to super-fast connections for everything from computer gaming to medical surgery.

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

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

He said that Europe is more than 200 operators to contend with, as opposed to only a handful in China and the United States, and pointed to 5G spectrum auctions in Italy last year increased from € 6.5 billion ($7.38 billion) in a fierce bidding war

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

“It is a very highly regulated sector, so the total investment of the climate and I think that’s the main reason why we are slow,” he said.

Safety WARNINGS

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

But the debate raging in Europe about whether the observance of the US-led alerts, even if the large telecom operators say that such a step would be able to back the deployment of 5G per year.

Huawei has repeatedly denied the allegations of state-espionage, 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 roll-out of 5G in Europe, point instead, delay in the issue of the spectrum-operators and high auction costs as the main obstacles.

Asked whether he agrees with his competitor assessment, Ekholm said that he was not willing to speculate it was for individual countries to decide how they managed their national security policy.

Ekholm said Ericsson was the preparation for any eventuality by investing in product development and having a supply chain that can scale up to 5G if needed. He stresses that his company’s announcement on Monday that it is buying the antenna and filter operations of the German Kathrein.

“Let’s look at it when it comes. We must remember that the operators … a piece of gear in the network, they are under financial pressure, especially in Europe,” he said.

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

($1 = 0.8804 euros)

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

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