Spending Review: We spy a stray £60m – is that all you can spare to help 5G market recover from UK kicking out Huawei?

Among the economic doom and gloom of the UK's Autumn Spending Review, Chancellor of the Exchequer Rishi Sunak inadvertently revealed the sop UK.gov plans to throw to telcos after sacking Huawei from the UK's 5G rollout at the behest of an orange one-term president of the US.

Taxpayers are set to provide £60m to help "diversify" the market away from the Chinese supplier, one of only a handful of firms capable of supporting the 5G infrastructure rollout in the UK.

How far a £60m subsidy will go to changing this dynamic is questionable.

BT has previously said it allocated a £500m budget in early January to replace existing Huawei 5G RAN components. Vodafone, meanwhile, has said it would pay €200m to replace Huawei kit already installed across Europe.

Oliver Dowden MP, the Secretary of State for the Department of Culture, Media and Sport, has said the requirement to strip UK networks of existing Huawei-made kit, would cause a "cumulative delay of two to three" years and potential costs of up to £2bn.

The Spending Review document promises "over £260m for transformative digital infrastructure programmes, including the Shared Rural Network for 4G coverage, Local Full Fibre Networks, and the 5G Diversification and Testbeds and Trials Programmes."

Of this money, the government said it was committing "over £200m UK-wide" to the same list of projects, but omitted the 5G diversification programme, leading The Reg to conclude that £60m will be set aside for the nex generation mobile network kerfuffle.

The programme kicked off in September, and is designed to help diversify the UK's telecoms supply chain and reduce the exposure to so-called "high-risk vendors" such as Huawei. The group leading the strategy is set to be chaired by former BT CEO Lord Ian Livingston and will bring together experts from industry and academia.

In July, the government announced that it would outlaw the purchase of Huawei equipment for buildouts of carriers' 5G networks by the end of this year, and from 2027 the country's mobile networks must altogether eradicate the Chinese vendor's kit from their 5G infrastructure.

The lion's share of the 5G hardware market is held by Ericsson, Nokia, and Huawei, with Samsung, Cisco, and ZTE picking at the leftovers.

The chancellor's statement to the House of Commons was accompanied by the usual fiscal sleight of hand and political point-scoring ping-pong. UK GDP will contract 11.3 per cent this year – the biggest drop in more than 300 years – while borrowing is expected to reach £394bn [PDF] for the current fiscal year.

Broadly speaking...

Elsewhere, broadband ambition had also been watered down. The chancellor's statement included £1.2bn to subsidise the rollout of gigabit-capable broadband to cover the first four years of the government's already-announced £5bn commitment to support rollout to the hardest-to-reach areas of the UK, which had been committed by 2025.

And, where the government had said it would introduce gigabit-speed broadband to every home in Britain, a new infrastructure strategy [PDF] launched alongside the Spending Review now says: "The government is working with industry to target a minimum of 85 per cent gigabit capable coverage by 2025, but will seek to accelerate roll-out further to get as close to 100 per cent as possible."

The strategy doc went on to point out that the "total level of investment required to upgrade the nation's broadband networks to be gigabit-capable speeds is in the region of £30bn; the vast majority of this is expected to come from the private sector."

Andrew Glover, ISPA Chair, said the scaling back of the government's ambitions is a "blow to rural communities".

“This will not stop providers from continuing to press ahead with their commercial rollout plans, but it puts an even greater emphasis on tackling the regulatory and practical barriers that make rollout more difficult than it should be.

"As our experiences over 2020 have proved, our broadband infrastructure is fundamental to propping up the UK’s economy in periods of lockdown, so we urge the Government to ensure that this policy pivot does not lead to longer term digital exclusion of those in harder to reach areas."

In terms of science funding, the chancellor, son-in-law of InfoSys co-founder Nagavara Ramarao Narayana Murthy, also announced a £17m fund for 2021-22 to "establish a new unit and fund that will focus on the last mile of innovation to help ensure that public sector knowledge assets (R&D, intellectual property and other intangible assets) translate into new high-tech jobs, businesses and economic growth."

A drive to "build new science capability" would get £450m in 2021-22 including £350m to UK Research and Innovation, a non-departmental public body. Like a Russian doll within that, the first £50m was announced towards an £800m investment in high-risk, high-payoff research, the much-vaunted ARPA-like pet project of Dominic Cummings, the former Number 10 advisor and architect of Brexit who departed from the government earlier in November. ®