Comment: The US-China contest is a race toward 5G domination



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HONG KONG: Less than 10 years ago, all 10 largest technology companies by revenue were American. Global telecommunications standards were established by US companies such as AT & T and Verizon. Today, in contrast, four of the top 10 Internet companies are Chinese.

A decade ago, Huawei, China's leading telecommunications equipment manufacturer, was a little-known service provider for Southeast Asia, Eastern and Central Europe, rather than rivals of Americans in more developed markets. Its revenues totaled $ 28 billion in 2009. Last year, they reached $ 107 billion.

The friction between the US and China, which appeared to stem from trade disputes, moved on. Currently, telecommunications and wireless technology are at the forefront of the competitive dispute between the two countries.

Read: Huawei can create a world divided by lines of technology, a commentary

In a world where everything is dual-use technology, it is increasingly difficult to distinguish between what is commercial and civil and what is strategic and military. And technology, unlike commerce, does not easily lend itself to concessions at the negotiating table.

FILE PHOTO: The Huawei P30 handset is displayed in a phone shop in a shopping mall in Bangkok

Huawei P30 handset is displayed in a telephone shop in a shopping mall in Bangkok, Thailand, May 22, 2019. (Photo: REUTERS / Soe Zeya Tun / File Photo)

Having the technological advantage is existential for both countries.

WORLD ECONOMY FACES LONG-TERM RISK

"There is an even greater long-term risk facing the world economy than the current trade war. These are the very negative implications of the current US position against Huawei, "notes Chris Wood, equity strategist at Jefferies in Hong Kong.

The origin of the US ultra-aggressive stance remains a determination that China will not dominate 5G or other emerging technologies.

However, if not less a source than the Defense Innovation Board, launched in 2016 to help bring innovation and independent consulting to the Pentagon, it must be believed, the US is lagging behind in the development of the latest technology and in establishing global standards for 5G.

This is according to an assessment of the prospects of the two national giants in a report on the 5G Ecosystem that the council released in April.

READ: It is the US that misjudged this trade war, a commentary

The report portrays a technological world in which the US, far from being dominant, risks becoming increasingly marginal.

"The country that owns 5G will have many innovations and set standards for the rest of the world. Currently, this country is probably not from the United States, "the report concludes.

Chinese equipment is cheaper (and) in many cases it is superior to its western rivals.

A Chinese venture capitalist says he regards this as an affirmation that "we have won."

Last month, the US Commerce Department placed Chinese technology giant Huawei and dozens of its affiliates.

Last month, the US Department of Commerce placed Chinese technology giant Huawei and dozens of its affiliates on a "list of entities" for national security reasons. AFP / FRED DUFOUR

READ: Huawei still the default carrier for 5G, a comment

USA lost its edge

The introduction of 5G is a big deal, both by itself and its multiplier effect on a number of other technologies, including standalone vehicles, the Internet of Things, smart cities, virtual reality and battlefields, whether physical or cyberspace .

The companies or countries that are the first to change global standards. This, in turn, generates hundreds of billions of dollars in revenue, substantial job creation, and leadership in any other technology that requires ever faster data transmission, the council notes.

"In early 2010, AT & T and Verizon took the lead in rapidly deploying next-generation technology that has enhanced 3G technology. American companies such as Apple, Google, Facebook, Amazon and Netflix have built new applications and services … and helped drive the global dominance of the US in wireless and internet services, "he says.

Read: Cutting off the 5G smoke and mirrors, one comment

Today, however, the US has lost its edge when it comes to telecommunication technology for reasons that have little to do with predatory behavior, either Beijing or Huawei, which has now become China's national champion, partly because of the attacks . the White House and Congress.

Huawei is the leading manufacturer of equipment for the next generation of mobile phone networks,

Huawei is the leading manufacturer of equipment for the next generation of mobile phone networks, but several Western countries have banned the Chinese company's products for security reasons (Photo: AFP / Mohd RASFAN)

Part of the problem is lack of investment. China has spent $ 180 billion over the past five years and has ten times as many base stations as the United States.

US companies such as Verizon and AT & T have excessive debts to make the huge investment needed to increase the number of base stations needed, the report said, while other Western companies such as Nokia and Ericsson also saw their downfall.

Another obstacle is the fact that in the US, the government and military appropriates most of the spectrum being used by the rest of the world for commercial purposes, leaving the US market isolated.

Alone, the US, civilian and military markets are no longer large enough to dictate to others or prevent Chinese 5G from continuing to increase its market share globally.

The bigger question, of course, is whether what is true in telecommunications becomes true on a broader scale.

Meanwhile, the effect of any US sanction against Huawei or others may only accelerate Beijing's efforts to achieve self-sufficiency.

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