The Wall Street Journal reports Philippines Has Chosen Sides: Not the U.S.
The U.S.-China technology war is raging around the world, but the Philippines is no longer torn. It is binding its telecommunications future to China’s.
The country got its first taste of next-generation 5G services in late June with gear supplied by Huawei Technologies Co. This month, a new carrier backed by state-owned China Telecommunications Corp. will begin rolling out a network largely designed in China, to be executed by Chinese engineers in the Philippines.
The moves are a blow to the U.S., which has in recent months pushed allies to shun Huawei. U.S. officials contend Chinese companies could be compelled to conduct espionage for Beijing.
Huawei, which has repeatedly said it wouldn’t spy for China, estimates its 5G equipment will spread across more than 130 countries, including in Europe. Huawei’s 5G system is up and running in South Korea and will be deploying in the United Arab Emirates this year. Both countries are U.S. allies.
Chinese companies’ dominant presence in Philippine telecom networks stands to move the Southeast Asian country further away from the U.S., its treaty ally—testing a relationship that has already grown strained.
No Technical Reason to Exclude Huawei
The Register reports MPs Find ‘No Technical Grounds’ to Exclude Chinese Giant.
The UK’s Science and Technology Select Committee said it can’t find any “technical grounds” for chopping Huawei out of the UK’s 5G and other telco networks, but said government should consider “ethical” issues and its relationship with “allies”.
The committee of Commons MPs wrote in a letter (PDF) to Minister of Fun [Secretary of State for Digital, Culture, Media and Sport] Jeremy Wright that Huawei’s involvement in the 5G network posed no techie issues, excepting, of course, the not-so-minor point that if the country pulls the Chinese firm’s kit from either its current or future networks, it could cause “significant delays”.
The UK will have to choose between bowing down to Trump and doing what it thinks best.
Huawei in Germany
Earlier this year, Angela Merkel Ignored Trumpian Pressure to ban Huawei in 5G auction.
“There are two things I don’t believe in,” Merkel said in an onstage discussion on Tuesday at the Global Solutions summit in Berlin. “First, to discuss these very sensitive security questions publicly, and second, to exclude a company simply because it’s from a certain country.’’
European carriers have warned governments that sidelining Huawei would delay fifth-generation networks by years.
The threat escalated when Nato’s Supreme Allied Commander in Europe, US General Curtis Scaparrotti, warned Germany that Nato forces would cut communications if Berlin were to work with Huawei.
NATO Threat
If the US will not share sensitive NATO data with Germany, so what?
Heck, it’s likely a good thing to not listen to US propaganda about Russia, Iran, or whatever.
What’s It Really About?
The US is just as likely to have security back doors as China, if not more so.
This isn’t really a security.
Rather, 5-G is Tied Up in Trump’s Trade War Disputes.
What do 5G and the Chinese telecom-gear maker Huawei have to do with the escalating trade war between the US and China? In a word: everything. 5G, the next generation of wireless, will not only allow you to download an entire season of Stranger Things in minutes, but also serve as the foundation to support the next generation of infrastructure, including billions of internet-connected devices powering smart cities, cool new VR and AR applications and driverless cars.
“The leader of 5G stands to gain hundreds of billions of dollars in revenue over the next decade, with widespread job creation across the wireless technology sector,” the Defense Innovation Board, a group of American business leaders and academics, said in a report for the US Department of Defense earlier this spring.
How’s the US Doing?
Wireless industry trade association the CTIA claims the US is “tied” with China. And it’s advocating for policy objectives to keep pushing the US toward dominance. But the Defense Innovation Board offered a more dismal outlook. In its report issued in April it offered a scathing assessment: “The country that owns 5G will own many of these innovations and set the standards for the rest of the world,” it said. “That country is currently not likely to be the United States.”
Why is the US Behind?
- China has invested massive amounts of money in companies such as Huawei to develop 5G technology, to great success.
- Chinese companies hold the majority of the world’s 5G patents. The Chinese government also controls China’s wireless service market and is pushing its three major providers, China Mobile, China Unicom and China Telecom, to combine efforts to develop a standalone 5G network that’ll commercially launch in 2020.
- There are no major US companies building and developing 5G telecom equipment. Thanks to decades of market consolidation, US companies once dominant in providing telecom gear have been sold to foreign companies.
- The defense department assessment is the US hasn’t been quick enough in making available the wireless spectrum that’s essential to deploying the service. And the spectrum the US is making available is the wrong kind.
- The US has been allocating a lot of so-called millimeter wave or mmWave spectrum, which can transmit huge amounts of data very fast. But signals can travel only over short distances, and interference like trees or even bad weather can disrupt service. The problem with using this spectrum is that it’s hugely expensive to build a network this way. And it’ll be impossible to blanket the nation with the service, because it’ll be too costly.
- The US needs midband and low-band spectrum in the mix. The only problem is that the prime spectrum that could be used for this service is already being used by the military. And getting government agencies to share spectrum with commercial entities is no easy task.
Trump Prepares to Ease Ban
On May 24, Venture Beat reported Trump’s Glib Approach to Huawei Invites Nasty Unintended Consequences.
The U.S. government has spent the last year and a half making the case that Huawei is an international security threat — a telecommunications hardware company that could help China’s government surveil communications and seize control of 5G-networked assets. But President Donald Trump suggested yesterday that this “very dangerous” company may not be such a threat after all as the U.S. might be willing to look the other way if China agrees to a trade deal.
Does this sound like pay-to-play politics? Of course. After the last two years, is anyone even slightly surprised that Trump would shrug off international security concerns to settle an economic dispute? Of course not.
Regardless of how this situation plays out, Trump’s glib attitude toward trade relations with Huawei is inviting highly unpleasant and long-lingering consequences. The most obvious: Foreign rivals now can plausibly argue that the U.S. targets individual companies to force political outcomes, which is effectively an economic form of hostage-taking.
No Trust
The current state of affairs is likely irrelevant. It can change on a whim for any reason or non-reason.
Companies may seek to install Huawei equipment only to be told days or even hours later they need to rip it out.
There is no reason to believe any decision Trump makes will stick.
You cannot run a business this way and you shouldn’t run a country this way either.
Mike “Mish” Shedlock
The 600MHz band auction will open up low band spectrum for 5G. But it will take some time as it requires a “repacking” of UHF TV stations and ATSC 3.0. I agree that the military could surrender some of its spectrum, specifically all the radionavigation (radar) space, which is shared with amateur radio. The problem with that is that it is actually easier to relocate the few TV transmitters in the 600MHz band than it is to move all the various radar, satellite and re-outfit all the aircraft radar systems in the military’s inventory. Also, as the frequencies go lower, even with fractal antennas they still get larger and harder to fit into a handset.
In the meantime, there’s not really much demand for spectrum that cannot be addressed with segmenting exciting cell sites. Beamforming antenna arrays create many different sectors within a single location, and moving from point to point wireless to fiber optic backhaul has been a “twofer” in that it increases bandwidth to/from the tower site and opens up that spectrum for more handset traffic.
The real goal of 5G is to compete with cable using fixed point wireless for the last mile. No matter what frequency band is used to deploy that product it will still require thousands of microcells to provide good service.
Great article Mish. I see this Huawei situation as the turning point in economic history for the USA. Historians will look back and point to this as the point where the US was stuck in a meme of free-market, financialized capitalism and Asia, especially China, was focused on developing high tech and manufacturing skills. 50 years from now, Americans will hope to get jobs with those rich Chinese companies that give people great benefits like healthcare and pensions, instead of being stuck in American gigs like driving for Uber, or changing the lady down the street’s oil.
Or working in one of Beijing’s American laundries…
Yup.
It’s the same story all across near all technology fields. Eventually, the rest of the world will get tired of 60s era airplanes which their makers are incapable of upgrading or replacing as well. Ditto space travel. Eventually even pharmaceuticals and highly complex microchips. Just as they already have wrt cars, electronics and most else. Increasingly including basic science.
It’s just not efficient to design, engineer nor produce much in the US anymore. For every penny going to productive activities, five dollars are now mandated to be pilfered off by “investors”, ambulance chasers, “administrators”, “regulators”, “property owners”, politicians and other deadweight riffraff contributing zero or less to anything of value.
While Americans may largely have been successfully indoctrinated to fall for the scam that the above wastes-of-space are some sort of useful beings, there is no way every foreigner out there will forever sit around, hat in hand, subsidizing the rabble. So they won’t. Instead designing, engineering and building more and more of what they need and want themselves. And since people, and their needs, aren’t really all that different across the world, the stuff foreigners build, will be the stuff Americans desire as well; completing the circle.
It’s a process which has been going on since the late sixties at the least, and which was becoming clearly visible, to anyone who cared to look, by the 80s and 90s. The only thing different this time, is that is now so near full completion that even the most braindead dittohead is starting to catch on.
Mish Logic:
It is just so great that other countries like China subsidize certain manufacturing and technology fields. Even if it means or seems that these industries lose lots of money in their home countries. Even if it means they so undercut American companies that the American companies go bankrupt, move to abroad, are sold off, have little to no native engineering and have no funding to do R/D.
America should not fight this. America should embrace it. Because it means the American consumer is getting awesome deals for this stuff.
National security? Leading home grown technology and new industries? High tech jobs? Having native engineering and understanding for this technology and future spin off technologies?
Mish never sees the irony in his own conclusions. And yeah, you cannot run a business this way and you shouldn’t run a country this way either.
“There are no major US companies building and developing 5G telecom equipment. Thanks to decades of market consolidation, US companies once dominant in providing telecom gear have been sold to foreign companies.”
Good post. I posted awhile back on the “innovation” in 5G. Nearly everyone of Mish’s points are just wrong. Several studies found that China is not far ahead as people think and more of the innovation still came from Europe, Japan and Canada when you look at 5G.. The US has never been at the forefront of wireless technology. Think of all the companies that innovated in 3G and 4G and only Qualcomm comes to mind. They still own a good chunk of patents in 5G technology. The US won’t miss out on anything on the 5G front because the radio equipment is being made by multiple non-Chinese vendors. Additionally, there are sharing agreements that all vendors have to be a part of when it comes patents and licensing deals. For decades this is why wireless technology has been deployed so well. Trump maybe a roadbump but with little in the way of regulations to worry about, companies need not worry about Trump.
5G facilitates DNA and other human detection methods that will allow the tracking of everyone’s movements in real time. China is already tracking the movements of their citizens and denying them access to travel and other “privileges” if rules are violated – totally eliminating free will.
There is a reason that you don’t hardly hear any promotion around 5G, like there was with 3G and 4G that expanded service and reduced costs. There also is no documented business model that I can find for 5G, but it will get funded because govt needs it.
Broke countries will follow suit, including eliminating cash – heck Sweden is already getting useful idiots to sign up for chips in their hand to eliminate the need for cash.
Let’s see the impact on all of the american companies that have moved their Customer Service to the Philippines….China can be patient as they are strategically bordering off the western world…south seas islands are a start…technology companies still have their manufacturing facilities in China…a lot of ways China can win and/or lose…
I’m OK with falling behind in 5G, Let the other countries test it out and see if the health risks are real and fix the issues themselves. For once, we’ll be the one copying off them. Let China see how it feels to have intellectual property stolen.
And in real world tests so far, 5G isn’t that much faster than 4G. I doubt you’ll be able to download 8 hours of UHD content in a few minutes.
Because that is all that 5G is about, right? Downloading your UHD Netflix shows. Headline should perhaps read, “China is the best & has spent the most R&D just so low level IQ twits can save a few minutes & enjoy their shows sooner. Thanks China!”.
Nor should you run a country with an open-borders policy.