Today America is locked in a struggle for high-tech supremacy with China. The battlefields range from lasers, hypersonic weaponry, and advanced unmanned systems for the military, to artificial intelligence, robotics, quantum computers and even driverless cars in the civilian sector. One is transparently clear: whoever wins this struggle will become the dominant superpower in the 21st century; and one of the most decisive contests will be over 5G wireless.
Fifth-generation or 5G technology is much more than the future of global telecommunications, offering more bandwidth than anyone ever imagined (think of downloading entire movies in a few seconds) and enough to make the Internet of Things a daily reality. The rollout of 5G also demands billions of dollars to install the fiber-optic networks needed for these high-capacity systems, and billions more to operate them. Which companies and which countries design and invest in this new infrastructure, will have a hefty say in not only how 5-G transmits information, but also how others are to access the system. If it’s China, the results could be bad not only for American and European companies used to dominating telecommunications, but for freedom itself.
On October 4 Vice-President Mike Pence spoke at the Hudson Institute and warned, “Through the ‘Made in China 2025’ plan, the [Chinese] Communist Party has set its sights on controlling 90 percent of the world’s most advanced industries, including robotics, biotechnology, and artificial intelligence, ” including 5-G; as part of Beijing’s plan to emerge as the dominant superpower in the 21st century.
The same day Pence spoke, Bloomberg broke a story regarding a California-based company called Supermicro, where Chinese subcontractors have been stealthily installing back doors in mother boards for advanced hardware systems for years. It’s a sobering warning of what can happen if China’s telecom giants, who operate at the behest of the Chinese military-intelligence-complex, dominate the future of 5G.
That dominance already happening. As noted, 5G relies on fiber-optic networks which are very expensive to install and require an infrastructure investment of tens of billions of dollars. Here comes China, offering to build and install those networks at bargain prices, with workers and engineers eager to help. This allows bidders in government auctions of bandwidth for 5Gs to overbid, knowing that Chinese vendors will not only build the networks for bargain prices.
The result is a growing number of countries who are adopting or at least rolling out Chinese versions of 5G while the US fails to act. To date at least one telecom operator in 48 countries has an agreement or has announced testing of gear made by Chinese IT giant Huawei, which has notorious ties to China’s military and intelligence agencies. Ten countries have announced deals to starting using Huawei gear in their 5G networks, including the UK, Portugal, Italy, Mexico, the Philippines, and most recently, Saudi Arabia.
In Italy’s case, the government conducted their 5G spectrum auction and raised a surprising $7.6 billion. The reason was bidders were willing to overbid knowing that not only would Chinese contractors build the network cheaply, but they could get Chinese financing to complete the deal. In short order Huawei emerged as the clear winner, working with Italian mobile operator TIM and broadband provider Fastweb. On September 25 Italy’s deputy prime minister “cut the ribbon” for TIM and Fastweb’s first 5G base station for commercial use, featuring Huawei's end-to-end (E2E) 5G equipment.
What happened with Italy could well happen with Britain, where Huawei has secured three contracts to build 5-G “test” networks. Another American ally in Europe, Germany, could be next.
It is worth remembering that controlling how data is moving through these expanded broadband networks, as Huawei’s E2E equipment does, makes it a relatively easy step to controlling what gets moved—and to whom. The Supermicro story suggests that one unwanted destination might be China’s spy agencies. And if 5G really is the key to development of the Internet of Things, that development could well be held hostage to the priorities of Chinese companies as well as those companies’ hardware, and to their ultimate masters in Beijing—with fewer and fewer countries able to escape their grasp.
Given the Chinese success in spreading their 5G technology, there may be very little time to get the rest of the world to shift direction. Right now only the US and Australia have an outright ban on using Huawei (Canada still has not joined the ban). By the time the World Mobile Congress meets in late February, it may be already too late.
Fortunately, there is still time for the US to make its move. It can end the current impasse on 5G standards and practices which has stalled out further technical and commercial developments, and it can mobilize our domestic telecoms—AT&T, T-Mobile, Verizon, and the like—to rally behind a new plan on how to divide 5G bandwidth so that it can made affordable and accessible without relying on Chinese sub-contractors to provide the price break. Otherwise our telecoms will face the same unpalatable choice our allies are currently facing: either jump on the China bandwagon or get left behind.
Time is short; but the agenda is clear. The US needs to put pressure on allies, including the EU, and our own telecoms, to come up with a better plan for building 5G—before the future of wireless carries a single brutally simple message: “Made in China.”