How 5G found itself in a trade war between Trump and China

What is it? 5G and the Chinese manufacturer of Huawei telecommunication devices do they have to do with the escalation of the trade war between the United States and China? In a word: everything. 5G, the next generation wirelesswill not only allow you to download an entire season of Stranger Things in minutes, but will also serve as a base to support the next generation of infrastructure, including billions of Internet-connected devices powering smart cities, new unmanned VR and AR applications of cars.

Of course, President Donald Trump wants the United States to lead in 5G.

What is at stake is not just the right to boast; The outcome of the 5G race will likely determine whether the US will continue to maintain its technological lead and shaping geopolitics over the next two decades, or will hand over this control to China, which sees technological dominance a way to become a global superpower.

In the middle of all this is Huawei. A year ago, most Americans had probably never heard of the company. Now, almost every day, the news is at the center of the trade battle between the United States and China. Huawei is a dominant supplier in the 5G market. But national security experts believe that the company's close ties with the Chinese government could be dangerous for the United States and its allies, as they could be used for espionage or to close critical communication networks when future conflicts.

Huawei is also emblematic of a larger problem facing the United States. As China tries to move from a country known for the manufacture of cheap plastic toys and chotchkes to a country at the forefront of advanced technologies such as artificial intelligence, autonomous vehicles, robotics and 5G, it adheres to a state-led industrial policy that, according to US intelligence officials, is based on intellectual property theft, forced technology transfers, cyber espionage and discriminatory treatment of foreign investment , according to the Council on Foreign Relations.

It is these concerns related to unfair trade practices that drove Trump's tariffs to import Chinese products and to block Huawei and other Chinese technology companies from accessing US markets.

China refuted these allegations in a 67-page document titled "The Facts and China's Position on Trade Frictions Between China and the United States", published last September. The Chinese Embassy sent the document to CNET when asked to comment on how the United States has categorized their efforts to transform their economy. In this document, China calls the US charges of stealing advanced technologies as "an insult to China's efforts to advance scientific and technological progress."

"The Chinese nation is known for its diligence, intelligence and ingenuity," the document says. "The progress of science and technology made by China is the result of years of implementation of a strategy of boosting the country through science, technology and education and strategy. innovation-driven development, as well as the hard work of the Chinese people, especially scientists. "

To help you better understand why the United States is so intent on keeping Huawei off 5G networks and what it means for the future of the wireless world, we have prepared this FAQ.

What is the 5G again?

This is the next (fifth) generation of cellular technology that promises download speeds 10 to 100 times faster than current 4G networks. It is deployed across the country now.

One of the key benefits is so-called low latency, which is the response time between when you click on a link or start streaming a video on your phone, which sends the request to the network, and when the network responds, delivering you the website or playing back your video.

This responsiveness is essential for driving autonomous vehicles that must make decisions in a split second to avoid accidents or to use an augmented reality app at the grocery store in order to choose a safe product for your child with pain. 39, a severe food allergy.

Why is it important for the US to "win" the 5G race?

The short answer is that, no matter which country is leading in the development and deployment of 5G technology, economic growth will be stronger and more powerful.

"The 5G leader is expected to earn hundreds of billions of dollars in revenue over the next decade, generating widespread job creation in the wireless technology sector," said the Defense Innovation Board. a group of US business leaders and academics. the US Department of Defense earlier this spring. Technology heavyweights such as former president of the Alphabet, Eric Schmidt, LinkedIn's founder, Reid Hoffman, and Walter Isaacson, author and former CEO of Aspen Institute , sit on the council.

For the United States, this means maintaining the technological and economic advance that it has developed with its 4G wireless technology. But for China, it is an opportunity to go beyond the United States and the West to become the economic and geopolitical superpower it longed for.

That said, not everyone agrees that it is a race. Former FCC president Tom Wheeler said the following in a blog:

"http://www.cnet.com/"Winning 5G" is not so much a "race" as a process. To characterize 5G as a contest compromises its great technological progress and the political challenges it presents. The 5G should be more than a topic of political discussion; the new network represents the need for a meaningful political strategy. "

How are the USA doing?

It depends on who you ask and what day. Trump is everywhere on the map. One day, he says that the US is lagging behind in the 5G race and must catch up with China. The next day, he says that the United States is winning and will dominate the 6G.

Even experts in wireless technology and technology do not seem to agree. According to CTIA, a professional association in the wireless sector claims that the United States is "connected" with China. And he pleads in favor of political goals to continue to push the United States towards domination.

But the Defense Innovation Board offered a darker perspective. In his report published in April, he proposed a scathing assessment:

"The country that owns 5G will own many of these innovations and set standards for the rest of the world," he said. "This country is currently not likely to be the United States".

Ouch.

Why is the Defense Innovation Council's assessment so bad?

There are several reasons. On the one hand, the authoritarian Chinese regime has invested huge sums of money in companies such as Huawei to develop 5G technology, with great success. Chinese companies hold the majority of the world's 5G patents. The Chinese government is also controlling the Chinese wireless market and is pushing its three main suppliers, China Mobile, China Unicom and China Telecom, to join forces to develop a standalone 5G network, which will be commercialized in 2020.

Meanwhile, no major US company builds or develops 5G telecommunications equipment. Through decades of market consolidation, previously dominant US companies in the supply of telecommunications equipment have been sold to foreign companies. And now, the 5G gear market is led by Chinese companies Huawei, as well as Nokia and Ericsson, both based in northern Europe.

The US free market approach also makes it difficult to quickly build a 5G national network, while the top four US mobile phone companies struggle to balance intense competition, network investment, and innovation for 5G.

But the biggest problem for the United States, according to the report, is that the country has not been fast enough to provide the wireless spectrum needed to deploy the service. And the spectrum made available by the United States is the wrong type.

More specifically, the United States has allocated many so-called millimeter-wave or millimeter-wave spectra, which can transmit huge amounts of data very quickly. But the signals can only travel for short distances and interference such as trees or even bad weather can disrupt the service. The problem with using this spectrum is that it is extremely expensive to create a network this way. And it will be impossible to cover the country with the service, because it will be too expensive.

Ideally, the United States needs a spectrum of medium and low frequencies. The only problem is that the spectrum of frequencies that can be used for this service is already used by the army. And making sure that government agencies do not share their spectrum with commercial entities is not an easy task. The report says that the United States must work faster to force military and government stakeholders to share this spectrum with the wireless industry.

How does Huawei fit into all this?

Huawei is one of the largest manufacturers of 5G equipment and its technology is also considered the most advanced. And it's the second smartphone maker behind Samsung, having overtaken Apple last year.

But they are not giants of technology, according to US experts in national security. The company, founded in 1987 by a former officer of the Chinese People's Liberation Army, still has close ties to the Chinese government, according to six US intelligence chiefs, including directors of the CIA, FBI and the National Security Agency, who testified before the 2018 Congress, the company could conduct "undetected spying" if its equipment was used on US networks. Huawei repeatedly denied these claims.

For years, national security experts in the United States have been worried about Huawei, fearing that Beijing could order the company to put in the background in its software to spy on the United States and its allies . They also fear that Huawei's equipment will be used during a massive cyberattack that could disrupt communication networks in the event of conflict between the United States and China.

The company has also been charged by the US Department of Justice with indicting 23 charges of intellectual property theft, obstruction of justice and fraud for ignoring US sanctions against the company. 39; Iran. Huawei CFO Meng Wanzhou was arrested in Canada at the request of the United States, and is awaiting extradition.

What is the government doing to ensure Huawei 5G equipment will not be used in US networks?

All this led the United States to crack down on society. Last month, Trump signed a decree essentially banning the company from all US networks. On the same day, the Trump administration also added a blacklist to Huawei, adding it to the "list of entities" American, which prevented it from buying any American products and services. (Yes, it also means Google Mobile services.)

Huawei has filed an application in a US court to declare US law prohibiting federal agencies from buying its products to be unconstitutional. He also sent a note to the FCC in which it opposes a ban because of threats to national security.

Nevertheless, software and software vendors have fled Huawei: Amazon Japan would no longer offer Huawei devices for sale. In May, Google banned Huawei from its Android updates, although the Commerce Department granted it a three-month general license to update its existing devices. . And now, it seems that Huawei could use Android again.

What about networks in other countries?

While the four major wireless operators in the United States have prevented Huawei hardware access from their existing 4G networks and do not plan to use it for 5G, they cover all of Europe and the rest of the world. British and German networks are using Huawei equipment to power their 4G networks and are starting to switch to the company's 5G equipment.

US Secretary of State Mike Pompeo has traveled the world to urge other countries to stop using Huawei equipment. He also threatened not to collaborate or share intelligence information with countries that use his equipment. This is a huge demand from the US government, which will cost these countries billions of dollars and delay their own deployment of 5G service.

It is therefore not surprising that these countries are not doing it. The United Kingdom and Germany say that they are always assess the risks posed by Huawei gear in their networks.

How is all this tied to Trump's trade war with Huawei?

In general, US officials do not like the way China conducts business or its ambitions to become an economic superpower by reinforcing its technological prowess. They claim that the country's policies are unfair and encourage the theft of intellectual property and the spying of companies while imposing control of foreign companies operating in China.

To fight against this, Trump waged a trade war, raising tariffs by 25% on some imported Chinese products in order to allow Beijing to come to the negotiating table. As part of this strategy, the Trump administration also used Huawei's national security concerns and its prohibition as bargaining chips in the negotiations.

It seems that Trump sends contradictory messages. Is it a problem?

Indeed, less than a month after having banned Huawei from US networks and prevented US companies from providing essential components, Trump then relaxed these restrictionsallowing US companies to obtain licenses to supply the company in cases where national security is not threatened.

Experts say that throwing Huawei and national security concerns into trade negotiations complicates things.

"This weakens your ability to take a clear and consistent position for the defense of national security," said Scott Kennedy, deputy director of the Freeman Chair in China Studies at the Center for Strategic and International Studies. According to him, this shows China and US allies that security issues may not be so serious.

Adam Segal, director of the Digital and Cyberspace Policy Program at the Council on Foreign Relations, agrees that Trump's approach is flawed. "When the president suggests concluding an agreement with China on Huawei as part of a broader trade deal, it sends a bad message to our allies," he said. "They will not commit to removing Huawei from their networks and risk being excluded from the deal they make with China."

What does Huawei's ban in the United States mean for 5G?

It is difficult to know precisely because politics seems to change almost every day.

But Hans Vestberg, CEO of Verizon, the largest mobile operator in the US, told a CNBC reporter last week that he was not worried about the current trade war between the states And China to its 5G network.

"We are executing our strategy with our suppliers in Western Europe," he said. "It seems like you can do it without Huawei."

He pointed out that Verizon was not relying on Chinese gears.

"We do not use any Huawei equipment, and we have no impact from the Chinese trade war," he said. "So for us, it's a non-event."

Similarly, none of the four major US carriers use Huawei equipment, so the impact is minimal.

What about the smaller players?

Smaller rural carriers will be affected as they used Huawei and ZTE equipment in their 4G networks as they were more affordable. And this could be a problem for introducing 5G into rural communities.

FCC Commissioner Geoffrey Starks and others are pushing for this Chinese equipment to be torn up and replaced to ensure the safety of the US wireless infrastructure.

"Having Huawei in our current network infrastructure This means we are exposed to the same kind of risks that we are talking about for our next-generation 5G networks, "he said in an interview with CNET. One thing I want to point out is that we can not just focus on making sure our networks are secure in the future, but that we make sure that our current networks are safe for national security, so that we know that there are already many Huawei equipment. "

Legislators have already proposed bipartite legislation to help fund this radical effort. In their bill, Senators Roger Wicker, Republican of Mississippi, and Mark Warner, Democrat of Virginia, suggested $ 700 million to solve this problem.

But the representatives of the rural carriers say that the cost is probably higher. Last month, Carri Bennet, General Counsel for the Rural Wireless Association, participated in a workshop on the issue organized by Starks at the FCC. She said the price to replace Huawei or ZTE technology is likely to be between $ 800 million and $ 1 billion.

She also explained that replacing this equipment would take a lot of time and effort and that it could not be "done overnight or easily". She added that members of her association believe that it would take between four and ten years to complete.

Chris Reno, director of accounting at Union Telephone Company, said: "Every dollar invested in working hours on the project represents resources that do not expand coverage, build towers, and improve. not broadband in rural areas communities. "

Are there any other effects of Huawei's ban and trade war on 5G?

Another potential consequence is that it could slow down the development of the final 5G standard and potentially divide the market in terms of technology.

The complete standard for 5G is not yet complete and the process to complete it will likely take years. Huawei and other companies developing 5G technology are very involved in the process. However, a Reuters report released last month indicates that some US chip makers are preventing their employees from working closely with their Chinese counterparts at group meetings.

Although the Commerce Department has not limited collaboration on the standard, any reluctance to collaborate, whether formal or informal, could slow the development of the technology. In the end, this could also lead to a split of the standard, which could mean that the United States would use a 5G technology different from that of China and other countries.

This has already occurred when the United States adopted the cellular CDMA standard in 2G and 3G, while the Chinese government employed it to finance the competing TD-SCDMA standard. Meanwhile, Europe has adopted its own GSM standard.

One thing is clear: the situation is still evolving. And it's hard to predict what will happen next.

The story was published at 5 o'clock in the morning.
Update, 7:30 am Pacific Time: add additional funds.