LONDON — Wireless carriers have for years said the next generation network, known as 5G, will provide not only hyper-fast mobile phone speeds, but breakthroughs for data-heavy technologies like autonomous vehicles, robotics and artificial intelligence.
So it came as a surprise last month when one of the world’s largest carriers, Britain’s Vodafone, said it was pausing some 5G investments in Europe. The decision stemmed from the roiling debate about the Chinese telecommunications giant Huawei, and uncertainty over whether European countries would ban the company from 5G networks because of national security concerns being raised by the Trump administration.
Vodafone’s decision involved only a small piece of its business in Europe, but shows how questions swirling about Huawei risk a cooling effect on the broader wireless industry. Even Huawei’s competitors have cautioned that the new uncertainty could harm business.
A blanket ban on Huawei, the world’s largest maker of telecommunications equipment, would have a “significant implication” for the wireless industry, and lead to a “significant delay” in the construction of new 5G networks, said Nick Read, Vodafone’s chief executive.
Huawei’s fate will hang over the wireless industry’s largest annual trade conference, MWC Barcelona, previously called Mobile World Congress, which starts on Monday. Typically a celebration of new handsets from Samsung, LG, Sony and other brands, this year’s conference in Spain is being overshadowed by less glamorous policy questions about how to safeguard the behind-the-scenes infrastructure that keeps those devices connected to the internet.
“Many operators are now delaying their 5G investments because there is so much uncertainty related to whether they can work with Huawei or not,” said Mikael Rautanen, an industry analyst with Inderes Oy, a research firm. “That affects the whole telecommunications sector.”
5G networks are considered critical to the future global economy, increasing mobile phone speeds by up to 20 times from the current 4G system, while also creating new applications in medicine, augmented reality and manufacturing. Telecom companies are starting to roll out the new systems this year, with wider adoption coming in 2020.
Huawei makes the antennas, base stations, switches and other gear that make the technology work.
The debate over Huawei is particularly intense in Europe, where network operators that have long relied on the company’s equipment are facing potential new regulations. Britain, Germany, France, Poland and the Czech Republic are among those considering new restrictions against Huawei.
British and German authorities have indicated that a complete ban is unlikely, but the United States-led campaign threatens to slow down construction of the new technology in Europe that governments and businesses believe is needed to stay competitive in a digitized economy. The head of T-Mobile in Poland warned this week that new restrictions could disrupt the introduction of 5G technology.
For a year, Trump administration officials have been working on an executive order that would effectively ban Chinese telecom companies, including Huawei, from American 5G networks. The order would block American companies from purchasing equipment from China and other “adversarial powers,” but would not stop purchases of European-made equipment.
The wireless industry’s global trade group, GSM Association, said a ban of Huawei equipment in Europe would disrupt the overall market and increase costs for consumers.
“The effects would be delay the roll out, delay the technology and very probably higher pricing,” said Boris Nemsic, chairman of Delta Partners, an advisory and investment firm focused on the telecommunications market.
Huawei has become a lightning rod in the broader trade war between the United States and China. The Trump administration argues that Huawei is beholden to the Chinese government, and that allowing its equipment into 5G networks will create a grave national security risk — a charge Huawei has vehemently denied.
The increased scrutiny of Huawei would appear to present an opportunity for rivals such as Ericsson and Nokia, but executives at the companies have said it risks creating a broader slowdown.
“All our customers are trying to work out what this means, and that is causing uncertainty,” Borje Ekholm, the chief executive of Ericsson, told The Financial Times this month.
Ericsson and Nokia, which declined to comment, have fallen behind Huawei in market share over the past decade, struggling to match its rival’s lower prices and large investments in 5G and other emerging technology. Many carriers say the Chinese company’s 5G technology is more advanced than that of its Western rivals.
Despite being blocked by the United States, Huawei is the largest seller of telecommunications equipment, accounting for about 28 percent of the global market, according to the Dell’Oro Group, a market research firm. Companies such as Cisco Systems provide equipment like routers used by carriers in other parts of their networks.
The new 5G networks represent a once-in-a-decade opportunity. In Europe, mobile carriers are expected to spend at least $ 340 billion by 2025 constructing the networks, according to GSMA.
Ericsson and Nokia have been careful not to appear to take advantage of Huawei’s misfortune, perhaps out of concern that China would retaliate against the European companies if new bans against Huawei were introduced.
The two companies each earn around $ 1.5 billion in revenue each year in China, according to an estimate by Pierre Ferragu, an analyst at New Street Research in New York. By contrast, Huawei earns $ 3.5 billion a year in Europe, Mr. Ferragu estimates.
Any company forced to replace Huawei equipment will have to shoulder heavy costs. “It would take time for the existing vendors to scale R&D, operations, sales, services and partner agreements to fill the void,” the Dell’Oro Group said in a recent report.
It may be for that reason wireless carriers that have long depended on Huawei are coming to its defense. Mr. Read of Vodafone urged governments to act carefully before imposing new restrictions, because much of the present debate was not “fact based.”
“The noise level is at an unhealthy level,” he said.