US interest in 5G isn’t really about 5G

5G
Michael Macdonald; Chief Digital Officer and Executive Consultant at Huawei Technologies Michael Macdonald; Chief Digital Officer and Executive Consultant at Huawei Technologies

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US interest in 5G isn’t really about 5G

5G will contribute a mere 0.2% of the global digital economy by 2025-26. So what is the US really so worried about?

5G is a victim of its own hype. Touted as the doorway to the digital kingdom, 5G opens up new opportunities to consumers and businesses by introducing scalability and reliability that previous generations just simply didn’t have. 

With a higher efficiency air interface, more bands to play with, massive scalability for connecting things, and reliable low latency, 5G is better than 4G in every way. But it has that extra ‘G’.

Where previous generations of mobile technology addressed the short to mid-term needs of users, 5G looks further ahead by examining the requirements of a yet unrealized digital economy with everything connected, everything sensing and everything intelligent.

The result, 5G is a service-oriented mobile solution that will turbocharge not just consumer broadband but also vertical markets through application integration for intelligent bandwidth and compute power that dynamically changes with service requirements.  

But service centric or not, the beauty of the Internet lies in its abstraction layer between the underlying network infrastructure and the data and applications that we use. Specifically, the very purpose of Internet Protocol is to allow packetized data to be transmitted ubiquitously and reliably, with little concern to what lies beneath, even if what lies beneath includes 5G.

5G, and mobile cellular technology overall, is just one small part of the underlying infrastructure powering the Internet, and the total value of all 5G global infrastructure pales in comparison to the total value of the digital economy that runs atop it.

Huawei Chief Digital Officer for Asia Pacific Michael MacDonald in a file photo. Image: Courtesy of Michael MacDonald

In fact, the entire telecommunications infrastructure market is about US$80 billion today and is projected to cross the $100 billion mark sometime around 2025.  Of that, about half will be 5G infrastructure by 2026. 

In comparison, the combined revenue for the twelve months ending March 31, 2020 of Alphabet, Amazon, Apple, Facebook and Microsoft was $943 billion. If similar growth continues, America’s big 5 Internet behemoths could be worth 2.5 times that, or nearly $2.5 trillion by 2026, or 50 times greater than the total value of 5G infrastructure. 

Stepping back even further, the total Digital Economy, which is generally accepted to contribute as much as 25% of the world’s gross domestic product (GDP) by 2025-26, will be worth approximately $20 trillion, with 5G contributing just 0.2%.

So why the US interest in 5G?

America is less concerned with owning a piece of the telecom infrastructure market and more concerned with sending a signal. 

Huawei is arguably China’s biggest international success story, in part because of a continued business focus that relies on a multi-decade investment strategy. The result: Huawei holds a leadership position in 5G that many consider being 12 to 24 months ahead of the nearest competitor.

Arbitrarily intercepting the trajectory of one particular generation of mobile technology, like 5G, and exaggerating its impact on the overall Digital Economy is akin to identifying a particular generation of CPU as the sole enabler for Artificial Intelligence.

Stop 5G and 6G pops up. Stop 6G and 7G pops up.  The naming convention is irrelevant.  These standards are developed by a consortium of international organizations and hundreds of individual members that include operators and vendors. 

A single vendor no more defines the process than a leading athlete defines the rules of their sport. The US’s attack on 5G is an affront to the standards process by arbitrarily targeting a handful of companies that have simply followed the rules and played a better hand, and it altogether ignores the ITU’s non-profit mandate of “connecting all the world’s people.” 

Is this really a case of the US wanting a piece of a $50 billion market or simply the agenda of a country threatened by being overtaken by another economy? 

As Attorney General William Barr put it in his keynote address at the China Initiative Conference, “for the first time in history, the United States is not leading the next technological era.”

The US-China tech war could be entering a competitive new phase. Photo: Twitter/AFP/Getty

Although seemingly inevitable, this is currently an exaggeration that specifically positions 5G as the only technology that matters and outright ignores the US’ leadership in hardware and software development. 

The race isn’t about 5G dominance, it’s about leading digital transformation that will position an entire economy to be more efficient and responsive to consumer demand.

I was always taught that you win a race by running faster, not by tripping up the leader. Gu Bin, associate law professor at Beijing Foreign Studies University recently wrote, “Now that the US has reached the top of the ladder of tech supremacy, it wants to kick it away.”

By many metrics, China has already passed the US, but unfortunately the US gets to change the rules as they play – at least for now. While it may not be inevitable that the Chinese economy will eclipse that of the US, it is certainly probable.

The US’ proposed stake in a 5G vendor is just the latest politically motivated attack designed to send a greater warning to the world that the US is still relevant.

In reality, the transition of the US economy from number 1 to number 2 would likely be as uneventful as the millennium bug, but I also wouldn’t want to go down in history as the one in charge when it happens.

Michael MacDonald is Chief Digital Officer at Huawei Asia Pacific

This piece was originally posted on Asia Times which can be found here.

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