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China’s Race to 5G Raises National Security Implications Between US and China

When standards are created, controlled, and sold by other countries, there is enhanced pressure on the U.S. to adopt those standards, which would have significant economic and national security costs

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FILE - A woman stands at a Huawei booth featuring 5G technology at the PT Expo in Beijing, China, Sept. 28, 2018. VOA

Michael R. Wessel is a commissioner of the U.S.-China Economic and Security Review Commission, a U.S. government organization that investigates the national security implications of trade and economic relationship between the U.S. and China.

He recently discussed with VOA his concerns about China’s race to 5G, the next generation of wireless connectivity being built worldwide. With a 5G network, users will be able to send and receive more data in less time, which could have implications for self-driving cars, smart cities and other technologies.

Q: How much does it matter which country is first to fully functioning 5G?

Wessel:
 It does matter. First mover advantage is crucial in any new technology, but it is particularly important in 5G because it is foundational for cutting-edge innovation and applications including smart cities, network manufacturing, and integrated warfighting capability.

When standards are created, controlled, and sold by other countries, there is enhanced pressure on the U.S. to adopt those standards, which would have significant economic and national security costs.

For example, U.S. 4G leadership contributed to around $125 billion in U.S. company revenue from abroad and more than $40 billion in U.S. application and content developer revenue, and created 2.1 million new jobs from 2011-2014. And, from a national security perspective, the “control” of technologies raises unacceptable risks.

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FILE – A banner of the 5G network is displayed during the Mobile World Congress wireless show, in Barcelona, Spain, Feb. 25, 2019. VOA

Q: How far ahead is Huawei or China on 5G?

Wessel: China’s leadership in 5G depends on how we define competition. Some U.S. companies are already offering 5G devices and are running pilot projects in select cities, so they have beat China to the punch. However, Chinese investment into 5G is vast.

As of early February 2019, Huawei owned 1,529 “standard-essential” 5G patents, the most of any company, according to data-analytics firm IPlytics. By comparison, Qualcomm, a U.S. company, owned 787 standard-essential patents. All Chinese companies together own 36 percent of all 5G standard-essential patents, while U.S. companies (Intel and Qualcomm) own 14 percent.

In terms of 5G network build out, China is also racing ahead: China Tower, a monopoly created by the Chinese government to build the country’s 5G infrastructure, said it would likely cover the country by 2023. One estimate said China Tower built more sites in 3 months than U.S. did in 3 years. In the United States, the process is likely to take much longer, with each company handling its own networks, and will need to negotiate with local governments for tower locations.

Q: The U.S. is urging its allies to not work with Huawei in building their 5G networks out of concern that the Chinese technology giant could give the Chinese government access to the new network for spying. Some countries such as Germany say they won’t rule out working with Huawei. Why is this a problem for the U.S.?

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A staff member stands in front of a Huawei shop in Beijing, China, March 7, 2019. VOA

Wessel: We tend to focus on the economic cost and not consider the national securiy cost of something as significant as a nationwide 5G network rollout.

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Huawei products, services and activities have already raised significant concerns and our allies have to consider how much more investment they are willing to make into their technology.

No amount of risk mitigation or false attempts at transparency are adequate. The problem is Germany and other allies have already incorporated some Huawei equipment into their tech infrastructure. Much like a virus, our allies can choose to inoculate themselves against this danger now, or run the risk of painful and costly treatment later. Unfortunately, this is a great risk to intelligence-sharing among allies and partners. (VOA)

Next Story

Trump: “Race to 5G is a Race that we Must Win”

"We cannot allow any other country to outcompete the United States in this powerful industry of the future," Trump said in the White House

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U.S. President Donald Trump speaks next to Federal Communications Commission Commissioner Ajit Pai during an event on U.S. 5G deployment in the Roosevelt Room of the White House in Washington, April 12, 2019. VOA

In the race to beat China in the fifth generation of wireless technology, known as 5G, U.S. President Donald Trump is announcing the largest-ever auction of radio frequencies and a $20 billion fund to build a rural fiber-optics backbone.

“We cannot allow any other country to outcompete the United States in this powerful industry of the future,” Trump said in the White House Roosevelt Room, flanked by a group of telecommunications tower climbers and farmers. “The race to 5G is a race that we must win.”

Starting Dec. 10, the Federal Communications Commission (FCC) will begin auctioning three chunks of millimeter-wave frequencies (upper 37 GHz, 39 GHz and 47 GHz) for cellphone companies to use.

Some Trump allies had tried to persuade him to effectively nationalize this technology as a matter of national security.

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FILE – People stand next to a 5G logo during the Mobile World Congress wireless show, in Barcelona, Spain, Feb. 28, 2018. VOA

Trump acknowledged that he considered such a plan — opposed by the FCC and others — but ultimately backed away from it.

“We don’t want to do that. It wouldn’t be nearly as good, nearly as fast,” Trump said.

“The idea of state-designed and -operated 5G networks in the U.S. makes no sense on its own terms. A competitive, lightly regulated market is the hallmark of the U.S. system. This has delivered success in 4G and will encourage investment and innovation in 5G,” London-based Gabriel Brown, a principal analyst at telecommunications research firm Heavy Reading, told VOA.

“It also makes no sense in relation to competition with China — these are different markets in different phases of development.”

Riley Walters, a policy analyst at the Heritage Foundation’s Asian Studies Center, agreed, saying the “private sector is the most efficient way to distribute 5G capabilities, even if it’s not at the pace nationalization proponents would like to see. Deregulation should help cut the costs for domestic developers to move up their time horizon.”

Connecting America

5G — with speeds 100 times faster than the current 4G mobile internet — will allow the emergence of everything from so-called smart cities and farms to self-driving cars.

“We want Americans to be the first to benefit from this new digital revolution while protecting our innovators and our citizens,” said FCC Chairman Ajit Pai. “We don’t want rural Americans to be left behind.”

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FILE – Federal Communications Commission Chairman Ajit Pai answers a question from a reporter in Washington, Dec. 14, 2017. VOA

The $20.7 million Rural Digital Opportunity Fund, to come from existing FCC subsidy coffers, is intended to connect up to 4 million American homes over the next decade.

The expensive fiber rollout is seen as essential for carrying wireless network communications back to internet hubs.

“Intervention at this level will encourage private investment and accelerate coverage in these hard-to-reach areas — the economic and social benefits of rural coverage make it worth intervening to help make the market work,” Brown said.

“Creating a national fund to support these innovators is a great idea,” said Prakash Sangam, the founder of Tantra Analyst, which is involved in marketing and business development of wireless technology. “I also suggest that the U.S. government intervene and facilitate the resolution of conflicts between American technology companies so that they collaborate and effectively compete against the companies sponsored by foreign governments.”

Security concerns

One challenge is the lack of U.S. manufacturers of 5G network equipment, an arena where China’s Huawei and ZTE are set to dominate.

Trump’s 5G goals are in conflict with the Federal Trade Commission’s stance on Qualcomm, the world’s largest chipmaker. The FTC has sued the American company over anti-competitive pricing, according to technology analyst Patrick Morehead.

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FILE – A sign advertises 5G at the Qualcomm booth at CES International in Las Vegas, Jan. 9, 2019. VOA

“Qualcomm is the country’s only hope for 5G and 6G leadership and with the FTC about to potentially hobble it, the U.S. will never be a leader, China will,” predicted Morehead, a former industry executive.

A State Department senior official on Wednesday said the security concerns about Huawei and ZTE extend to all companies headquartered in China, contending they are effectively “under direction” of the Chinese Communist Party.

“It’s very important to distinguish how Western democracies operate relative to their private sector companies and vendors, and how the Chinese government operates with its companies,” said Ambassador Robert Strayer, deputy assistant secretary for cyber and international communications and information policy.

Strayer and other officials have warned that Huawei and ZTE could give China’s intelligence services secret access to sensitive communications networks and the ability to send commands to disrupt communications.

Trump did not mention the Chinese companies in his remarks Friday, but he said America’s 5G networks will “have to be guarded from the enemy.”

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FILE – Attendees take pictures of the new Huawei Mate X foldable 5G smartphone during the Mobile World Congress wireless show, in Barcelona, Spain, Feb. 25, 2019. VOA

Riley, at the Heritage Foundation, told VOA that the United States “can still limit the proliferation of imports that have a security concern, but it will be hard for U.S. companies to compete in price in external markets.”

South Korea last week switched on its nationwide 5G network. South Korea-based Samsung is offering itself as a global alternative to Chinese equipment manufacturers, but it still lags Huawei and ZTE, as well as Sweden’s Ericsson and Finland’s Nokia.

Wireless companies operating in the United States, including AT&T, Sprint, T-Mobile and Verizon, are deploying 5G this year, but widespread service for the majority of Americans could still be a decade away.

The radio spectrum coming up for auction will have very limited range, meaning small cell antennas will have to be mounted on about every fourth utility pole along streets, making 5G practical only in central business districts and other congested locations, such as stadiums, convention centers and shopping malls.

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Lower frequencies, which are being licensed for 5G in several other countries, would need fewer cell sites, but that spectrum in the United States is held by satellite operators who are reluctant to give it up.

“There are proposals to free some of it for fixed wireless, and the mobile industry wants it for 5G,” Brown said. (VOA)