Concerns over 5G security slowing down investments: Ericsson chief executive

Ericsson's chief executive Borje Ekholm said customers are delaying making any investment decisions until they have clarity on what is going to happen next.
Ericsson's chief executive Borje Ekholm said customers are delaying making any investment decisions until they have clarity on what is going to happen next.PHOTO: BLOOMBERG

SINGAPORE - Concerns about security in the 5G network have led to more uncertainties and caused a general slowdown in the market, said telecoms equipment supplier Ericsson's chief executive on Thursday (May 2).

Customers are delaying making any investment decisions until they have clarity on what is going to happen next, Mr Borje Ekholm told reporters during a briefing on the Swedish firm's 5G business.

As one of the key 5G players in the fray, observers think it could gain market share due to Western suspicion of its Chinese rival Huawei related to allegations of state spying.

"There aren't that many formal decisions taken yet, except in Australia, New Zealand and America," said Mr Ekholm. These countries have blocked Huawei from supplying equipment for their 5G network.

"The reality is that, so far, it's leading to much more uncertainties in the market."

Mr Ekholm was speaking to the media hours after British defence secretary Gavin Williamson had been sacked. This came soon after sensitive discussions on plans to involve Huawei in building Britain's 5G networkwere leaked to the press.

For now, Mr Ekholm has yet to see any impact on his firm's order books.

 
 
 
 

"It's more on (a slowdown) side than a boom in new investment activities. We see a general slowdown in Europe primarily," he said.

The customers are going to think harder about making investments under the current climate, he noted, as it will be very costly to make changes once they have taken a decision to go with a particular technology vendor.

"So I would say, the European consumers will see a much worse performing (mobile communications) network," he said, adding that such certainties will not help anyone, and no one will emerge a winner.

Ericsson, meanwhile, is continuing to invest in security and in its supply chain, as well as in the integrity of its products.

However, he pointed out that this is an ongoing practice that is not driven by the current geopolitical situation.

"For example, we have a North American supply chain that we took a decision on already at the beginning of last year, way before this was a topic. That was really to make sure that we have a flexible supply chain for our customers," he added.

Mr Fredrik Jejdling, executive vice-president and head of business area networks at the firm, noted that the number of customer queries surrounding security has increased "quite significantly", which also shows that it is an issue of importance to its customers.

Overall, Mr Ekholm thinks developments in the 5G market is going to be a gradual evolution as it is not a switch to a completely new network.

He does not see massive investments pouring into the sector over the short term.

For a start, the telecoms operators will be looking to deal with the growing data traffic, which is predicted to grow five times over the next five years, in a cost-efficient way.

And another more immediate application of the 5G technology will be in providing fixed wireless access in areas that are too expensive to put optical fibre cables in the homes.

Beyond this, Mr Ekholm predicts that the real playing field for 5G technologies will be in the enterprise market, which is going to be a very large market that will grow in importance in the next few years.

"It's important for our customers - the operators - to have offerings that also addresses the enterprises... it's a big potential," Mr Ekholm added.