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China’s 5G Progress and Implications for a Global Telecommunication Divide

Mar 22, 2019
  • Eric Harwit

    Professor, University of Hawaii Asian Studies Program

As the world prepares for new fifth generation, or “5G” communications technology deployment, China looms large as both a supplier of equipment and a setter of global system standards. But is the world ready to accept China’s participation, and will suspicions of PRC technology intentions lead to a division between full capacity 5G networks for some nations, and “5G-lite” for others?   

Deployment of 5G networks stands to revolutionize many areas of daily life. With transmission speeds rising from some 70 Megabits per second (Mbps) in fourth generation (4G) to as many as 4.5 Gigabits per second (Gbps) in 5G, users of 5G-capable smartphones will see faster speeds of everything from video content download to mobile game functioning. But 5G will enable many other new functions, such as wireless virtual reality, remote surgery, and connected smart cars, factories, and homes. 

Chinese mobile carriers and smartphone makers already have a head start in deploying and experimenting with 5G networks, giving them an advantage as their equipment companies compete for a share of the global 5G pie. For example, Chinese domestic media reported that by early 2019 Beijing Mobile was operating a 5G base station in China’s capital with a download speed of 2.8 Gbps, allowing transfer of a multi-gigabyte movie to a 5G device within a few minutes. The carrier also planned to have full 5G coverage within the city’s fifth ring road by the end of the year. Beijing Unicom had already installed multiple 5G base stations at several sites in 2018, and Beijing Telecom set up a 5G pavilion at the city’s 2019 World Expo to showcase virtual reality and Internet of Vehicles functions. 

Chinese smartphone makers are also stealing a march on 5G handset sales. At the February 2019 Barcelona MWC (formerly Mobile World Congress), Oppo Electronics announced its 5G Android phone would debut in the spring of 2019, and Xiaomi unveiled its affordable $679 5G phone to go on sale in May. Not to be outdone, global telecommunication equipment leader Huawei Technologies launched its foldable 5G Mate X smartphone, one with claimed download speeds of 4 Gbps. Outside of China, South Korea’s Samsung boasts its own foldable 5G Galaxy Fold, though at a pricey $1980. But as for American-designed smartphones, analysts predict a 5G iPhone will not arrive until 2020. 

American concern over China’s rapid advance in 5G technologies, and the potential to be a dominant force in the sector, were made manifest as early as March, 2018 in a report by the US government’s Committee on Foreign Investment in the United States (CFIUS). The committee asserted that Huawei owned about 10 percent of 5G essential patents, ones that would grant holders rights to rich royalties as the technologies were incorporated into internationally recognized standards for 5G operating systems. 

By the end of 2018, according to the German market intelligence firm IPlytics, Huawei’s 933 essential patents for 5G ranked second only to Samsung, with 1166. China’s ZTE Corporation came in third, at 796. A Chinese media report indicated that by February, 2019, Huawei had the most 5G patents, with 1529, and the company, together with ZTE and two other Chinese firms, owned 36 percent of 5G patents. The report noted American firms had only 14 percent of the patents. However, some of the communications patents, such as those owned by American firm Qualcomm, are more valuable than others, so that the sheer number of Huawei patents does not necessarily translate into disproportionate profits. 

Even before the advent of 5G technologies, the US viewed Huawei with suspicion as a potential gateway for Chinese government spying. In 2011, the American government blocked Huawei from buying California-based tech start-up 3Leaf Systems, and in early 2018 pressured AT&T from selling Huawei phones in the US. The Chinese company came to global attention in December of last year, when Huawei’s chief financial officer, Meng Wanzhou, was detained in Canada based on US charges that she had conspired to defraud American banks and violated sanctions on conducting business with Iran. 

Following the American lead of banning most Huawei, ZTE, and a number of other Chinese firms’ products from use by the US government and government contractors, Australia and New Zealand announced in 2018 they would not allow Huawei to take part in building their 5G networks. The governments and communications carriers in Japan and the United Kingdom had either decided on or were considering similar bans. However, US ally Germany seemed more willing to allow Huawei to take part in constructing the new systems, as Economy Minister Peter Altmeier indicated in early March, 2019, that his country would “not want to exclude any company,” including Huawei, from taking part in upcoming 5G auctions. 

At the same time, Chuck Robbins, CEO of Cisco Systems, a rival of Huawei, suggested governments should not worry about Huawei’s dominance of 5G technology. “The current infrastructure around the world is built on a combination of communication suppliers from Europe, from China, from the U.S., everywhere.” While Huawei competes in both wide-area radio technology and core network equipment, Robbins noted “there’s not going to be one manufacturer” providing 5G equipment. And even the 2018 CFIUS report conceded that the United States remained dominant in the standards-setting space. 

Despite the moves to restrict Huawei’s penetration, by the end of last year, Huawei had signed 26 commercial contracts for 5G, and shipped more than 10,000 base stations to global markets. According to Huawei’s rotating chairman Guo Ping, “For 5G markets that choose to not work with Huawei – they will be like an NBA game without star players: the game will go on, but with less deftness, flair, and expertise.” 

As for Huawei’s future role in the US market, in early March the Chinese company tried a new tactic to force the issue: it filed a lawsuit against the American government, arguing it has been unfairly banned as a security threat. While the chances of the lawsuit succeeding are likely remote, Huawei’s public insistence on its equipment being safe and secure could bolster the company’s reputation with customers in Europe, and in many other developed and developing global markets where it is already well established. 

A future 5G divide, then, could be between the US and its allies, and most of the rest of the world. Should America and a handful of developed nations shut out Huawei and perhaps other manufacturers’ “Made in China” 5G equipment and smartphones, those countries may have to settle for a network lacking many of the bells and whistles the cutting-edge technology has to offer.

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