China has taken the lead in 5G, a technology that the world needs. Trying to hold China back is a losing strategy. Image: iStock

The US defense establishment’s obsession with targeting Huawei as a national security threat is contrary to the emerging reality of the 5G market. Many have criticized this hawkish and simplistic view, and with good reason. Yet within this group of critics, the narrative that China’s fast-paced advancements in 5G threaten America’s competitive edge in the digital sphere remains widely accepted. Opinions that reduce the so-called 5G battle to an issue of competitiveness in capital investment or market share are misleading and should be countered.

Fifth-generation wireless technology is not merely a matter of hardware deployment, spectrum allocation, and who gets what customer or procures this or that contract. It is an opportunity to fundamentally transform the telecommunications market and the process by which network providers integrate their core services. And this need not be a matter of who succeeds in doing it first.

Currently, the biggest problem all telecom companies face with 5G is what is termed in the industry as scalability. This is a technology’s capacity for serving an increasing volume of users without undue strain, and in this, Huawei has admittedly taken the lead. As the largest telecommunications firm in the world, Huawei has signed more than 40 contracts for 5G networks, the majority of those with European firms. It can now boast that two-thirds of the 5G networks outside China use Huawei products. However industry experts tell me that the real prize is innovating upon the secondary impacts of the 5G upgrade. These involve all the opportunities that come with delivering what 5G really means technologically – that is, replacing hardware capabilities with software-defined networks (SDNs) and cloud computing services.

This is no easy task and currently no country or company has taken the lead. Many in the industry – whether they are American, European or Chinese – hope that the move from 4G to 5G will give companies an opportunity to open up the old LTE (Long-Term Evolution) service-based architecture and accelerate innovation in a number of key areas. These range from anything as broad as end-to-end solutions and downstream network repository functions to specific data-processing operations, core component interoperability, and unified data-management services.

The common argument that achieving “first-mover” status in 5G hardware deployment is like locating the Holy Grail ignores the fact that lucrative possibilities are everywhere. There is currently no fully integrated core 5G service in operation. And this will only happen after a long process of innovation and implementation of these technologies in the economy. Companies everywhere will benefit from this process, regardless of who does it first.

When the world went from 2G to 3G, everybody in the industry recognized that the existing architecture was insufficient to meet demand. People had a concept of what a core 3G service would look like, but no one could predict how companies were going to get there. Japan was the first country to offer 3G services in a commercial setting when NTT DoCoMo launched its FOMA (Freedom of Mobile Multimedia Access) service in 2001. Yet businesses all over the world – not just in Japan – were crucial to the larger integration process that saw huge numbers of innovations go into defining the 3G landscape.

Ask anyone in the industry about the importance of Internet protocol (IP), 3GPP specifications, W-CDMA standards, and all the components that went into integrating telephony, wireless voice, video calls, and mobile Internet access into a single 3G service. They will tell you it was not a matter of who did it first. American and European firms – in addition to their “first mover” Japanese counterparts – developed many of the 3G standards and specifications that made digital innovation possible. Some of these standards, such as TCP/IP, still form the backbone of end-to-end data communication today, even as Huawei establishes dominance in the market.

The dissenters will cry that China is not Japan and Eurasian integration is not the Trilateral Commission. The situation may be different than 3G given the process of Eurasian integration, the breakdown of Western institutions, and the revving up of geopolitical competition across the world. The “fight” over 5G can be seen as a battle for cyber capacity in the military sense and a battle for who will lead economic development in the digital sphere.

It is often repeated that 5G will launch the next social and economic revolution in areas like Industry 4.0, cyber physical systems, and artificial intelligence. These areas are crucial for the future control of the market and will give immense benefits to the player that can be the first to embrace the technology

It makes sense that creating a 5G infrastructure before anyone else will grant whoever does it an advantage in establishing the standards, specifications, and core components that other nation-states will have to rely on. It also makes sense that the reality of China taking the lead in this revolution frankly terrifies Washington because it is happening in tandem with the breakdown of the international legal order and the discrediting of democratic institutions across the world.

But the exact process through which all this plays out cannot be readily predicted. Indeed, the status of the 5G rollout is still murky. As of now, only a few controllers are focusing on innovation, which means the market is ripe for diversification. The old centralized model is not equipped to meet future demand. Standards for 5G have yet to be fully developed to ensure the network speed and interoperability that all Industry 4.0 technologies will require. The variation of vendors across vast regions has made implementation of these services a difficult and slow process everywhere.

Firms in many countries will gain valuable business in solving and innovating around these shortcomings. US firms like Oracle are already making great strides in developing standards that will drive the open-source architecture for software-based services centered on modular design. Regardless of how far China gets, the larger software-defined process will require years of innovation, and given how this happens globally, no country will be able to unilaterally force its vision of the digital economy upon others.

There are opportunities for old players to capitalize on rewriting the current telecommunications architecture and provide a sea of upgraded services. There are likewise many opportunities for startups in the telecom sphere to push for a more decentralized model. And this is not a matter of predictability. When 4G came on the market, for example, no one foresaw that it would initiate ride-sharing services.

Competition from China should not blind others to the larger possibilities of 5G. Whether the economic institutions and political structure of the United States will permit this, however, is another story.

Hunter Dorwart is an independent researcher living in Washington, DC. He explores issues on a range of topics including startup financing, international trade policy, artificial intelligence, and geopolitics. He is currently researching changes to international data privacy with the International Bar Association.

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