This article is the first in a three part series that focuses on the global battle for 5G in the Fourth Industrial Revolution between USA and China, the choices available, Huawei’s rise and its association with Communist Party of China (CCP) and finally India’s 5G conundrums in rolling out next-gen services that will shape its economic and geopolitical future.
The Fourth Industrial Revolution is upon us bringing the world of 5G and AI. Since the inception of the internet, the world has witnessed a constant upgradation of connectivity from 2G to 3G to 4G/LTE. The battle of 5G is at the top of all news cycles courtesy the trade war between USA and China and the US denouncement of Huawei but the battle for 5G supremacy goes beyond trade and is a critical component of the impending bipolarity the world will witness ahead.
5G refers to fifth generation wireless technology which will enable enterprise technologies, self-driving cars, virtual and augmented reality and multiple Internet of Things deployment possibilities. It will create smart cities; revolutionize medical services and healthcare. All critical infrastructure will be deployed on 5G connectivity as will all business models and network infrastructures. 5G is represented with high data consumption, ultra-low latency high throughput, high reliability and strong security. In 4G, latency is about 50 milliseconds while 5G will offer latency of minimum 1 millisecond ushering in the “real smart era of driverless cars and remote operations”. Hence 5G is not just about better internet speeds for your smartphone; it is about enabling faster wireless internet everywhere and for everything. To put it in perspective 4G speeds top out at 100 Mega Bits Per Second whereas 5G tops out at 10 Giga Bits Per Second. This makes 5G roughly a hundred times faster than 4G and presents significant challenges at design, development and implementation stages.
5G uses New Radio standards of sub-6 GHz range frequency bands; and millimetre waves of the RF spectrum which are far more complex than the current f low frequency range systems. We must think of 5G as broken into two parts, low-frequency 5G and high-frequency 5G. Low frequency 5G is mainly about sub 6GHz bands which are also called mid-bands. Mid-band spectrum (1-6 GHz) will play a key role in making 5G mainstream as these have the ability to travel longer distances.
The 3.5 GHz band has a near global momentum and has already been licensed in several countries, with more on the way. It uses the same radio bands that 4G currently uses with changes in signal encoding and wider channel bands to achieve about 50% better speeds than 4G. Technological advancements mean that the 3.5 GHz band can provide the same coverage with the same cell sites/ few additions as the current 2.6 GHz and 1800 MHz mobile bands with upgrades and new equipment. However, as radio spectrum is also used by broadcast TV, HAM radio and aircraft communications, the space available here is already congested. Hence while this makes mid-bands easier and relatively economical to adopt, it has many limitations. Mid and low bands are great for covering larger distances and rural areas at the cost of speed.
However, the real 5G with newer and better technology is about using higher frequency spectrums. The 26 GHz, 28 GHz and 40 GHz bands have emerged as most likely to enable the ultra-high-speed vision for 5G. The 26 and 28 GHz bands have the benefit of being adjacent, supporting economies of scale and facilitating early equipment availability for all or parts of both bands. Spectrum available here allows for very fast and very wide channels to communicate because it is not congested and clogged by devices that use 3G/4G currently. Development of 5G networks in the high-frequency band/ millimetre wave frequency are much more complicated, expensive and require small cells technology.
However, high frequency bands have one significant drawback -signals don’t travel nearly as far as the lower-frequency signals and are easily distracted by buildings, vehicles and surroundings. This allows for a limited number of users per cell tower. This effectively means that mammoth clusters of small cell towers have to be set up in urban areas to make them 5G ready making 5G infrastructure very expensive. Millimetre waves are thus suitable for small, targeted deployments, fixed wireless in a specific area and building smart cities. 5G applications in healthcare will use remote patient monitoring devices, health monitoring devices, ambulance, fire and police services with the possibility of critical services getting self-activated based on certain protocols. 5G’s ultra-low latency is critical to self-driving cars.
For example 3.5 GHz only has to cover 100MHz with 64 antennas but 28 GHz has to cover 800MHz with 1024 antennas. To build the best possible 5G networks, access to millimetre wave spectrum is needed. China, USA, Japan, EU, and Korea have started rolling out 5G networks in the mid-bands with commercial deployments to follow within a year while USA, Japan and Korea are in the process/have carried out trials in high frequency bands and will roll out networks soon. Korea may be the first to roll out 5G high frequency networks.
To optimize transmission power wastages, 5G uses beam-forming technology to precisely transmit data to the user‘s location; and employs Device to Device communication which allows a mobile device to also be used as a data hub for other devices that cannot access the base station signal. D2D is considered critical during emergencies and natural disasters. All of the above clearly show why 5G networks need to be absolutely reliable and how even a minor error could lead to a disaster of epic proportions. Hence we can see that 5G presents a quantum leap in digital connectivity with a new ecosystem of 5G hardware and related equipment, antennas, towers, wiring and spectrum.
It would be safe to say that with the advent of 5G, our absolute dependence on technology will reach an all-time high. There will probably be no sector untouched by the numerous applications that 5G will provide. This greater dependency is as much a blessing as a curse as any security breaches or compromised networks will effectively disable countries and companies. Privacy in 5G is crucial and critical. Higher 5G data transmissions automatically mean larger attack surfaces with multiple potential entry points and increased possibilities of cyber-attacks, distributed denial of service attacks, crypto jacking and ransom ware.5G will bring over 65% of the global population under connectivity by 2024. 4G systems currently serve around 7 billion devices today. This figure is estimated to rise to 21.5 billion by 2024 under 5G. Ensuring security, privacy and end to end encryption for over half of humanity is a mammoth task and an absolute goldmine in the hands of the select few that will have the power to access it as well as abuse it.
Huawei: US Enemy Number 1 or Sour Grapes
The wars in the previous century were fought for Oil. Countries were invaded, regimes overturned, democracies instilled just for its control. In the Fourth Industrial Revolution, data will become the new Oil and 5G infrastructure the heart and arteries that will transmit data. Thus, companies that have invested heavily into developing 5G systems: Huawei, Ericsson, Nokia, Samsung and ZTE will become kingmakers. Huawei holds pole position here with 28% market share while Nokia and Ericsson, account for 17 percent and 13 percent of the global market for telecom equipment.
Huawei is widely acknowledged for reliable equipment, engaging customer service and lower pricing models. It’s the lowest-cost provider and the only provider of end-to-end solutions for national telecoms: from servers to cell towers to handsets, all designed to perform perfectly with each other. It produces every element of a 5G system and assembles turnkey networks from antennas to the power stations to chips at scale and cost. Huawei’s equipment is estimated to be about 30% percent cheaper than Ericsson and Nokia. Mobile towers are heavy and expensive to install and require crane operators. Huawei has been able to shrink mobile tower dimensions by 50% and reduce the weight of its base station that requires only 2 people for installation minus cranes. Further, Huawei’s power equipment is 30% more energy efficient which enables network operators to optimize costs which can be passed on to the consumers.
Both Nokia and Ericsson refute Huawei’s claims of superiority and state they are well placed to challenge and compete. Both Nokia and Ericsson are also working to make it easier for carriers to switch. Nokia has developed what it calls a “thin layer” of its 4G technology to connect to a new 5G system, allowing a carrier to avoid a wholesale swap of another supplier’s equipment. Ericsson also has a solution to allow a carrier to swap out only a portion of existing infrastructure and make some areas work side-by-side with its 5G gear. It is also a fact that Nokia and Ericsson are rolling out 5G networks faster and along with Samsung are doing a much better job in the 28 GHz millimetre frequency bands that are favoured by advanced countries like Korea, Singapore, Japan and United States and will be responsible for the widespread adoption of the Internet of Things while Huawei is dominant in the mid-bands which hold the key to making 5G mainstream.
Huawei claims to have won 50 5G commercial contracts and have shipped more than 150,000 base stations though it is evasive about declaring the names of its contract partners. ZTE claims to have secured 25 commercial 5G contracts and commitments to partnerships with 60 carriers globally. Swedish giant Ericsson states it has 22 announced 5G contracts such as AT&T Inc., Swisscom AG in Switzerland and Australia’s Telstra Corp of which nine are now live networks, and 47 announced 5G partnerships while Finnish major Nokia has 43 commercial 5G contracts, of which at least 22 are with named customers such as T-Mobile, Telia and Softbank. Nokia has seen a spurt in its contracts since March and even secured contracts with Huawei’s current 4G customers.
Global Data’s 2019 report states, “Huawei’s 5G portfolio holds the strongest position overall with leading claims in all four criteria categories including superior baseband unit capacity and radio unit portfolio breadth. Of the other four vendors, which all tied for second place overall, Nokia stood out for strength in its radio unit portfolio while Ericsson won praised for products that ease radio installation, such as its Street Macro and Vault Radio offerings. Samsung rated strongest on baseband capacity and the radio unit portfolio and ZTE on baseband capacity and installation ease”.
Interestingly, the United States, the dominant player in the era of landline telecoms with AT&T providing network equipment to all countries globally finds no mention in the top 5G infrastructure systems at all! No US player currently has the capability to build the equipment to transfer signals between mobile phones and towers for 5G. US carriers such as Sprint and Verizon have launched 5G services but all networking gear comes from Ericsson and Nokia. US tech major Cisco sells switches and routers but does not provide wireless infrastructure solutions that allows cellular towers to connect with mobile phones and other devices.
Paradoxically this is a mess of its own making despite enjoying the first mover advantage. USA’s 1996 Telecommunications Act bill, simultaneous CDMA and GSM adoption left the market fragmented and made the cost of upgradation of wireless infrastructure expensive. Its prominent company Lucent sold extensively to China to maintain revenues in trying conditions and was forced to set up manufacturing locally and share technology with China setting up the platform for Huawei and ZTE’s eventual domination. EU on the other hand adopted GSM which became the global standard for mobile communication. It further benefitted from Alcatel’s purchase of Lucent and Nokia’s purchase of Motorola. Thus, European companies which are now ranked 2 and 3 in 5G ironically benefitted from US early mover advantage and the American approach which allowed for greater technological experimentation and innovation.
With 5G becoming critical to a country’s long term economic and technological prospects, US is afraid of losing the Fourth Industrial Revolution to China as Huawei’s dominance in 5G effectively means China will have the power to control the supply of hardware necessary to run the networks along with gaining access to the information flowing through the networks making it a national security issue. As a hardware provider, Huawei needs to be able to deploy software and this means a pipeline from Beijing to cell towers in the United States and if China’s history is anything to go by, the pipeline would definitely be a leaky one.
Huawei’s highly attractive price points only compounds US fears as cost is always a significant factor in the purchase of new technology for any country. In absence of a credible American alternative, the US is now simply left with strong arming its allies and foes to not adopt Huawei citing the “backdoor entry for spying” smoking gun. It is also threatening allies about possible compromising of critical infrastructure and denying intelligence sharing and other sensitive technology/ data on Huawei 5G systems.
In our book ‘The New Global Order’ we have documented how the United States under President Bill Clinton facilitated the rise of China’s Military-Industrial Complex after the fall of the Soviet Union in 1991. For any country to assert and maintain its dominance, the existence of a worthy enemy is necessary. Hence, it is quite interesting that US chose to turn a blind eye to China’s technological and military advancements that ironically came from itself and now when Huawei has risen to a position of dominance where it can threaten US dominance, it suddenly chooses to wake up and enforce its views on the world!
Part II – The Furious Rise of Huawei