On Monday (30 November 2020), the UK Government published its 5G supply chain diversification strategy (the “Strategy”) (found here), which outlines the Government’s plans to grow and diversify the UK’s telecoms supply chain and make it more secure and resilient to future threats.

The Strategy sets out the Government’s long term vision for the telecoms supply market, whereby:

• network supply chains are disaggregated providing network operators with more choice and flexibility to build their networks;
• open interfaces that promote interoperability to bolsters quality, innovation and resilience;
• the global supply chain for components is distributed across regions creating resilience and flexibility;
• standards are set transparently and independently promoting quality, innovation and security and interoperability; and
• security and resilience is a priority and key consideration in network design and operation.

The Strategy sets out the main reasons for a lack of diversity in the market (see paragraphs 2.12-2.14) such as economies of scale, intense price competition and high barriers-to-entry for new suppliers and why this is important to address through the Strategy and the Telecommunications (Security) Bill, which also had its second reading in the House of Commons on Monday.

As part of the Strategy, and to combat the identified reasons for a lack of diversity in the telecoms market, the Government proposes to adopt three main strands:

• Supporting incumbent suppliers to ensure their resilience and ability to supply the market in the short term, while supporting their transition into the emerging market structure.
• Attracting new suppliers into the UK market to build resilience and competition.
• Accelerating open-interface solutions and deployment so that we are not reliant on any single vendor and create a more open and innovative market.

The Strategy will support incumbent suppliers by:

• Encouraging and enabling suppliers to distribute their operational capabilities across the global supply chain, ensuring that they have the flexibility to meet growing demand.
• Identifying opportunities to diversify component supply chains in order to establish greater resilience against shocks or market disruption.
• Shaping R&D activity, in line with their long term vision to ensure suppliers remain at the cutting edge of the telecoms market, lead innovation and enhance competitiveness.
• Aligning technological roadmaps, in line with long-term market trends such as the increased use of software and network virtualisation, to ensure that as networks evolve both suppliers play a key role in emerging functions.

The Strategy will seek to attract new suppliers to the UK market by:

• Taking forward work to set out a clear roadmap for the long term use and provision of 2G, 3G and 4G network services in the UK – including consideration of options to sunset or streamline provision.
• Work with Ofcom to identify and address spectrum-related barriers, ensuring the efficient use and allocation of spectrum, where this is beneficial to diversification.
• Developing and introducing appropriate regulatory adjustments regarding performance and resilience requirements, that discourage operators from integrating new suppliers into their networks.
• Considering commercial incentives to mobile network operators to support increased costs of transitioning to and integrating new suppliers into their networks.

The Strategy will accelerate open-interface solutions and deployment by:

• Establishing a UK wide R&D ecosystem to accelerate and pull forward the development of interoperable technologies, including a major Open RAN trial in the UK.
• Establishing a UK National Telecoms Lab that will enable operators and suppliers to match their requirements and specifications to assess the technical performance and security of equipment.
• Ensuring regulatory standards are set in a way that enables market growth and diversification.
• Conducting a full assessment of how regulatory requirements could be implemented in order to deliver effective diversification outcomes.

To achieve these three strands, the Government has proposed to provide an initial funding of £250 million. However, there is currently little published guidance on who can specifically access the proposed £250 million funding. The Government has stated that this funding is to “start work to implement priority measures and build momentum” (see the Ministerial Foreword). Consequently, these specific ‘priority measures’ will provide an indication of where such funding will likely be directed and includes the following:

• Establishing a National Telecoms Lab (a R&D facility) to test security, resilience and performance of UK networks and deployment solutions.
• Launching a major Open RAN trial in the UK to speed up the development of OpenRAN and laying the foundations for roll out in UK networks.
• Committing to remove key barriers to diversification e.g. working with Ofcom to identify and address spectrum-related barriers, ensuring efficient use and allocation of spectrum, where this is beneficial to diversification; – setting out a roadmap for the sunsetting of legacy networks – easing the pathway for new suppliers.
• Working with UK standards bodies, UK networks operators and industry and international partners to ensure standards are set in a way that enables market growth and diversification.
• Conducting a full assessment of how regulatory requirements – supported by standards – could be implemented in order to deliver effective diversification outcomes, as part of the long-term delivery of an open, competitive and diverse supply chain.
• Leading a global coalition to take collective action to open up the market and establish a competitive and sustainable supply chain.