The US has off-shored much of its manufacturing. Together with offshoring manufacturing it has lost manufacturing and product technology. Attempts to compensate the missing hardware by software are bound to fail. The system won't work without the hardware and software can always be had, increasingly even for free.
Prosperity in the industrial countries is based on technological innovation. 90% of innovation is in manufacturing. The loss of manufacturing precedes the loss of prosperity.
Huawei hits 5G critical mass with Germany’s approval
Germany will allow Huawei to build out part of its 5G network, the business daily Handelsblatt reported last week after viewing a new draft law that the Angela Merkel government will submit to the Bundestag next month.
Japan and South Korea politely but firmly refused to exclude the Chinese telecommunications giant from their networks in October. Among the world’s major economies, only the US, UK, India and Taiwan plan to block Huawei 5G equipment.
Huawei now has the inside track in the race to develop “Fourth Industrial Revolution” applications that exploit 5G capabilities, including self-programming industrial robots, remote-control mining, “smart city” traffic management, telemedicine, and pandemic control.
For example, Huawei expects to add the digitized medical history and real-time health monitoring of half a billion people outside China to its Cloud-based artificial intelligence (AI) systems during the 2020s. China’s dominance in 5G, moreover, gives it a head start in developing next phase 6G broadband.
The German decision not to block any particular equipment provider from its 5G buildout was widely expected after Joe Biden beat Donald Trump in the US presidential election. Biden’s advisers have stated in the past that it is unrealistic to try to exclude billions of Huawei users from global communications networks.
A recent report entitled “Meeting The China Challenge: A New American Strategy for Technology Competition” from the Asia Society and the University of Southern California, declared: “While a ban on Huawei is feasible in some key countries, especially allies and partners, this is a global networking challenge that requires multifaceted solutions. Considering that Chinese components, user terminals, and software will be intermixed among the billions of connected end users of 5G globally, a total global market ban on Huawei and other Chinese suppliers is not practical.”
Some of the report’s authors are prospective Biden administration officials.
Japanese media reported in mid-October that Tokyo rejected American demands to exclude Huawei from its 5G network, and told Washington that it would take its own security measures to ensure the safety of data transmitted through Huawei hardware.
South Korea’s Yonhap news agency said that a senior South Korean official told a high-level American delegation, “We made it clear that whether a private telecom company uses the equipment of a specific enterprise is up to that company to decide.”
“Russian 5G will be made in China,” the Russian business daily Kommersant reported in September after the Russian mobile provider MTS switched from Nokia to Huawei equipment to upgrade Moscow’s mobile network. Russian President Vladimir Putin and China’s Xi Jinping signed an umbrella agreement on 5G cooperation, including for joint research and development, at the 2019 St Petersburg International Economic Forum.
Excluding Huawei’s 5G equipment from Germany would have caused major disruptions because the new 5G networks must be integrated with existing 4G equipment. Huawei accounts for 65% of the 4G infrastructure of Deutsche Telekom, Germany’s top mobile service provider, as well as 55% of Vodaphone’s equipment and 50% of Telefonica’s.
German officials earlier this month described the Huawei decision as a cliffhanger, as German industrial lobbyists wrangled with German security officials who were reluctant to incur the wrath of the American intelligence community. Trump’s loss at the polls appears to have tipped the balance in favor of the industry lobby, which wants to work with China.
In Sweden, home of Huawei’s largest competitor Ericsson, the national telecommunications regulator postponed an auction of 5G spectrum after a Swedish appeals court granted Huawei’s petition to reconsider a government ban on the use of its broadband equipment.
Ericsson itself criticized the government ban. China is one of Ericsson’s largest markets, and the firm’s biggest and most modern production facility opened last year in Nanjing. Ericsson is expected to build up to 10% of China’s massive 5G network, with a projected 10 million base stations in place by 2024.
One of China’s selling points in the competition for 5G buildout is that Beijing has already begun to develop the next generation, or 6G, broadband. In November, China launched the first experimental 6G satellite, testing transmission of data at Terahertz (extremely short) wavelengths. Researchers have discussed the use of Terahertz radiation as a mobile broadband platform, but China’s satellite launch is the first space-based experimental test.
During an Asia Times webinar in November, I asked industry expert Dr Handel Jones about the prospects for 6G. Jones, the president of International Business Services, a consulting firm, said: “China has at least two or three programs in terms of 6G. It’s a ten-year program, and it will be potentially ten times or a hundred times greater throughout than 5G. Quantum communications is one of the options, and China already has a link with quantum communications between Shanghai and Beijing. Obviously, the US should go to 6G.”
“But who is going to do it?,” Jones added. “We don’t have any company in the US today doing 5G. We have some of the infrastructure but not the base stations, not the fiber optic stuff, so globally, we have Huawei and ZTE in China; in Europe we have Ericsson and Nokia. Samsung is coming up and could be a force in that market in the future. So could some technology in Japan. But in the US, we don’t have any company that is even in 5G.”
The US appears likely to adopt the so-called “Open Radio Access Network” and “Virtualized Radio Access Network” approach, which eschews dedicated 5G base stations with custom-designed chips in favor of cheap, generic hardware powered by complex software.
The cited “China Challenge” report recommended: “The United States should not attempt to win a race between Huawei and a new American national champion. Instead, the United States should adopt a forward-looking strategy to enable a variety of new entrants to enter the 5G innovation space successfully. This strategy would erode dependence on a single equipment provider for the entire 5G network by facilitating the emergence of open and modular architectures such as ORAN or vRAN.”
ORAN/vRan requires the creation of billions of lines of computer code which must then be tested and re-tested in real-world conditions. It is not known whether this approach will work, or how much it will cost. By the time the code is written and the new network is tested, moreover, China will have built out its 10-million-base-station national network and likely will be well advanced in new applications.
This combination of sophisticated software and generic hardware is sometimes advertised as a “6G” answer to Huawei’s dominant position in 5G. That is misleading because the use of extremely short wavelengths to transmit data requires the solution of problems in physics that researchers have only begun to understand. And the use of open networks involving a wide variety of hardware vendors and equipment providers could create a network security nightmare, according to Ericsson.
Jason Boswell, the head of security for Ericsson’s networks division, warned last month, “As the industry evolves towards RAN virtualization, with 3GPP or O-RAN, it is important that a risk-based approach is taken to adequately address security risk. Secure Open RAN systems may require additional security measures not yet fully addressed.” Ericsson quietly dropped out of the industry group promoting ORAN/vRan earlier this year.
American tech companies abandoned the hardware business after the March 2000 stock market crash, and have concentrated almost exclusively on software. The “software-based solution” suits companies whose main business is coding software, but it is unlikely to keep America ahead of China and its growing network of industrial partners.