‘Wireless Wars’: How China (Almost) Came to Dominate 5G

[beijingwalker]

‘Wireless Wars’: How China (Almost) Came to Dominate 5G​

August 14, 2023

The Diplomat author Mercy Kuo regularly engages subject-matter experts, policy practitioners, and strategic thinkers across the globe for their diverse insights into U.S. Asia policy. This conversation with Jonathan Pelson – technology executive and author of “Wireless Wars: China’s Dangerous Domination of 5G and How We’re Fighting Back” (2021) – is the 378th in “The Trans-Pacific View Insight Series.”

Explain the factors underpinning China’s domination of 5G and the impact on the global telecommunications industry.

The telecom equipment business has always been about scale. Sure, technology innovation is important, but the value to the customer – the service provider – comes more from the advantages of scale than from brilliant ideas. In wireless networking, the best technology is generally adopted as an industry standard, and that means everyone has to be granted access to it for a reasonable fee, so China’s telecom vendors aren’t disqualified for not developing the breakthrough innovations.

Second, the things that make a customer choose a vendor like Huawei are more related to product readiness, cost, post-sale support, ability to quickly roll out a network and make it work. Those are all things that can be achieved through massive investment and achieving a large deployed base. In other words, if you execute well and invest massively, you can overcome inferior technology innovation.

The end result is one company skyrocketing to the number one spot from nowhere, and growing, in about a decade, to be larger than all the previous leaders combined, which is what Huawei did.

Evaluate the effectiveness of the U.S. response to China’s dominance.

Huawei never saw this coming, and neither did anyone else. For so long the free countries of the world figured that a rising China meant two things: More consumers for their stuff and better cheap suppliers to help make the inputs. As a result, no one wanted to hold China accountable for its transgressions, like stealing IP, using government programs to help win international projects, and a general bullying of other companies around the world.

So when the U.S. led a basic blacklisting of China’s national champions, Huawei and ZTE, this stunned them and their government. Experts didn’t expect Europe to follow, but the intel experts in the U.S., and the U.S. Commerce representatives, did a great job of making the case to isolate and avoid the Chinese giant vendors.

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This has hurt them far worse than we know, I think. I find it very hard to believe the official numbers indicating that, after abruptly suffering a nearly 30 percent decline in revenue, Huawei’s next year saw increases in R&D, significant hiring, and continued positive net margins and profits. That doesn’t happen to a manufacturing company like Huawei when there is an unpredicted plunge in the top line. I think they are living on the CCP dole for now, crushed by these sanctions, but too big to fail for so many reasons.

Analyze the Chinese government’s role in wireless innovation.

The Chinese government has delivered tens of billions of dollars in subsidies, according to many sources, which has allowed Huawei to invest heavily in R&D – not inventing brilliant solutions, but finding ways to reduce power consumption, improve reliability, develop multiple product lines, shrink footprint. All the little things that actually bring in sales.

In addition, the government has been helpful, by many accounts, in using state intelligence agencies to secure access to other companies’ technology, particularly the innovations that are not required to be licensed. It shows up in Chinese products, helping them quickly gain share without spending the years needed to develop the technology themselves.

How are the key industry players shaping the new wireless ecosystem and competing with Huawei?

The key players competing with Huawei include the establishment incumbents, Nokia and Ericsson, as well as companies that are becoming more relevant to wireless infrastructure. Samsung is probably the biggest here, but others, like Cisco, Dell, Fujitsu, and NEC are all able to step up and play a role where they had been excluded. Newer companies like Mavenir may become important if Open RAN systems take off, and Rakuten has shown early success there. The giants like Google, Microsoft, Apple may end up disintermediating all of them with new business models and technology approaches.

For the incumbents, Nokia and Ericsson, they remain the last vendors capable of delivering a complete wireless communications system, but they need to step away from the dying model that built them and embrace the inevitable shift to newer architectures and technology approaches.


Assess the geopolitical risks of wireless wars and implications for the U.S. and like-minded nations of losing these wars.

If Huawei had been able to roll out its 5G solutions around the developed world instead of just dominating the developing world as they are doing, it would have thoroughly compromised the national security of these countries and put itself in a position of enormous control and power. Once a nation becomes reliant on a vendor for the workings of its communications network, port operations, city security and services, factory operations, etc. it is at the mercy of whoever controls that communications company. In a typical situation, no company wants to be seen as a strategic threat to its customers. It would kill the company’s commercial enterprise. But if it’s not about commerce, if commerce is just a means to an end, that all changes.

China’s communications industry is more about geopolitical pressure and compromise than about business, so losing the war – relying on China to deliver communications – would be a fatal development. But keeping Chinese companies out of this vital sector isn’t enough; if free countries can’t develop superior solutions to what China is delivering to its own companies and institutions, those free countries will end up falling behind China in terms of productivity, security, and general health and welfare. It’s essential that we find better solutions to the wireless challenges facing the world.

‘Wireless Wars’: How China (Almost) Came to Dominate 5G

Insights from Jonathan Pelson.

thediplomat.com

 

[Menthol]

For common people, 5G is probably just an increase in download speed.

But 5G is bigger than that.

Since USA blockage Huawei 5G, in the end it's only China who is really taking advantage of 5G and entering Industrial Revolution v4 by itself.

It's something that you never read in the mainstream media controlled by USA, to prevent public anger.

free countries will end up falling behind China in terms of productivity, security, and general health and welfare

As a reader, I'm very concerned... emotionally up and down.

Until I stop and think twice....


I don't know why this sentence needs to be written in the article above.

In terms of productivity, they export their own manufacturing to other countries.

For security, how can a country who always provokes other countries into wars talk about security? Yes, for suicide.

General health, seriously, it's like saying that health cost in their country is cheap.

Welfare, if there's no homeless and hungry robber in the daylight.

 

[BHAN85]

Chinese 5G is a way for China to get know how from Western companies through electronic espionage.

It's not needed, and places where industrial are important should have no wireless connections of any kind.

Just a single one wifi connection can be used by a infected Chinese smartphone to jump from connection in connection and send data from a private wifi intranet to CCP HQ directly in Beijing