5G is on the way, and it’s going to be amazing, but its birth looks like it maybe more than a little problematic.
5th generation mobile technology promises ultra-quick data speeds, you will be able to download an HD movie instantly for example, and a level of interconnectedness we have never seen before. It looks likely to become the platform on which the 21st century will be built. It will facilitate autonomous vehicles and the drone that will deliver your pizza, it will allow your cupboard to talk to your fridge, and allow you to switch on your toaster from the other side of the globe, which I have yet to fully understand the benefits of, but I’m sure I won’t be able to live without it as soon as I have the ability. No doubt there are countless innovations that will spring from the technology that most of us are unable to conceive of right now. Some countries will auction off their 5G networks this year, no doubt for eye watering sums, and you can expect to see handsets in shops before next Christmas, but the full networks are still a couple of years away.
The industry is expected to be worth $123 billion in five years’ time, so as you would expect that the race to dominate the technology is on, and is ultra -competitive.
The early leader, by quite some margin is Chinese firm Huawei, and it is making a few western governments feel a little uneasy. Huawei’s rise has been spectacular, from a small time player in the domestic market, it has rapidly risen to become the third largest manufacturer of smartphones in the world, and it looks likely to take the top spot before too long as it out innovates Apple and Samsung while keeping their prices a couple of hundred dollars cheaper. Apple is struggling with sales in the Far East, as Huawei takes their market share in huge chunks, but it is in the manufacture and development of the hardware behind 5G network that Huawei enjoys a huge lead over all other companies.
If you want a 5G network for your country any time soon, you have little choice but to buy the kit from Huawei. Here is the problem, and it’s a big one. The Chinese government requires Huawei, and all Chinese firms, to share data with it’s national intelligence services upon request. Late last year Huawei’s chief financial officer was arrested in Canada, charged with money laundering, breaking sanctions with Iraq, and industrial espionage, specifically the theft of the intellectual property of German firm T-Mobile amongst others.
Western governments are understandably reticent to allow 5g infrastructure to be provided by a firm that potentially tells tales to the Chinese government and there are fears of a mythical ‘kill switch’ built into the technologies. Specifically the fear is that if things aren’t going China’s way they can switch off another country’s autonomous car, power grids, and communications networks, and use those data networks to intercept government business for nefarious purposes. Foreign governments also may wish to slow down Huawei’s exponential growth to allow their own domestic firms to catch up a bit. Australia and New Zealand have already banned spending on Huawei equipment in their own national infrastructure, and the US has been threatening trading relations with foreign governments that use Huawei kit. But banning their presence is also fraught with problems.
There are few competitors that come close to Huawei for leading 5G technology, so if you try another route, the chances are that you may miss the boat, hobbling your national economy while you try to play catch up. Banning Huawei and other Chinese firms also runs the near certain risk of kicking off a trade war. Since China’s economic rise of the last two decades, there are very few global firms that don’t rely on selling into the Chinese market for a good chunk of their bottom line. Germany is a good example of the precarious position any Western government are in. The country has some of the slowest internet in the developed world, it needs 5G badly to ensure that it keeps it’s competitive edge, but companies like BMW have huge markets in China, and have signed joint business ventures in the country. Ban Huawei and you can bet China will ban BMW, meanwhile the German government is under pressure from the US government not to get too close to Huawei, particularly as the US has a significant military presence in the country and doesn’t want to have its communications routed through Huawei infrastructure.
5G looks set to change the world in some pretty profound ways in a handful of years at most but thanks to Western firms being asleep at the wheel it is going to come at a cost. Is it a cost worth paying? Only time will tell.
By Phill McCoffers