Why 5G Has Become a Focal Point in Great-Power Competition?

By Xiang Ligang

In recent months, President Donald Trump defined the race to 5G as “a race that America must win”. A long article in The New York Times reported that the US administration defined 5G competition as a "new arms race" and believed "whichever country dominates 5G will gain an economic, intelligence and military edge for much of this century." The report quoted an analyst who claimed the transition to 5G was a revolution and "this will be almost more important than electricity." 

5G has become a focal point in competition among great powers now and will emerge as a major front to test their strengths in future. Why has 5G become so important and how will it change the world technological, economic and even political landscapes?

I. The Internet enabled the United States to maintain economic, military and cultural supremacy in the world.

In 1970s and 1980s, rapid economic growth in Japan and the huge advantage it gained in the manufacturing sector put heavy pressure on the United States in the economic front. The Americans could not compete with the Japanese on the sophistication of the manufacturing sector. With considerable economic gains, Japanese companies were on a buying spree in the US property sector to the shock of US economy and culture. 

The key step to turn around the situation was National Information Infrastructure, also known as information superhighway program. The US government defined it as a new opportunity for future development. The US made huge investment and ushered in a new economic era.

Information superhighway delivered a tremendous boost to social productivity and economic performance from which the US made significant benefits. Such gains were found not only in the economic field, but also in politics, military and culture, putting Japan and all the other competitors behind.

Information superhighway facilitated the development of personal computer (PC) industry as all servers, PC structure, CPU and key components were defined by American companies and largely developed and produced by them in the early stage. All the core technologies were in the hands of American companies. R&D and production of routers, optical devices, optical fibers and other physical Internet infrastructure were mostly conducted by American companies. Internet protocols, PC operating systems, web browsers, and server operating systems were all developed and produced by American companies. The earliest Internet websites were founded and developed in the US. In fact, almost all Internet companies around the world imitated their American predecessors.

The world leading Internet companies that we knew were all American companies, such as Intel, IBM, Microsoft, Cisco, Apple, Oracle, Yahoo, AOL, Google, Facebook and Twitter. The list went on. Facing the shocks of these new companies and new economy, traditional European and Japanese companies lost their luster. The capital market praised new economy and new businesses as new growth drivers. As the US emerged as the center in the cyber-world, the global financial center shifted from Europe to the US.

As Internet power swept across the world since mid-1990s, chips based on Internet, PCs and Internet services became the biggest US exports to the rest of the world and underpinned the US economic growth. These products, developed by a small number of elites and produced by a few select companies, carried considerable added value. With low need for labor force and social resources as well as minimal impact on the environment, these products brought about extremely high returns and huge rewards for the US.
At the same time, the US exported not only products, but also its cyber culture. The US culture and values of freedom, democracy and openness accompanied Internet technology to every country and every corner in the world, which boosted the US soft power to some extent. They were also a major catalyst of changes in the political landscapes in the Middle East and Eastern Europe. The Internet has become a symbol of the American spirit, a major medium for the US to export its political ideology, culture and values, and an important tool for regime changes in some places.
The Internet has brought huge economic, political, military and cultural gains to the US and enabled it to maintain supremacy for decades. The US has a far deeper appreciation of the value and power of information technology, from this perspective, than any other country in the world.

II. Moreover, Internet capacity means huge information and intelligence value.

Power on the Internet not only offers huge economic gains, but also gives an edge in the intelligence war. The US is the forerunner in establishing its surveillance centers on the Internet to collect political and economic intelligence around the world with huge success.

The well-known secret surveillance program “PRISM” mines data and collects intelligence directly from central servers of US online companies. Leaked documents gave detailed description on the deep reach of the PRISM program on real-time and stored communication. The authorized eavesdropping targets include any clients outside the US who use services provided by companies participating in the PRISM program and any US citizen who communicates with people outside the US. The data acquired by the US National Security Agency (NSA) in the PRISM program include emails, video and voice chats, videos, photos, VoIP chats, file transfers, notifications of logins and online social network details. FBI and NSA mine data from technology companies, such as Microsoft, Yahoo, Google, Facebook, PalTalk, YouTube, Skype, AOL and Apple.
In such surveillance programs, the US monitors its domestic Internet, intrudes into overseas servers, crushes its rivals with all kinds of intelligence, and even gains strategic initiative by eavesdropping its allies. The intelligence war is a huge success for the US.

The PRISM program is underpinned by a network of hardware, software, systems and databases completely designed by the US. Information can be easily collected and monitored only in such a network. The US intelligence community is keenly aware of this.

III. Europe came to gain the upper hand in the competition on 2G.

The United States who dominates the Internet should have controlled the telecommunication sector across the world, because mobile communication, like the Internet, was also first developed, deployed and produced by the United States. Motorola and AT&T were forerunners in the R&D of wireless communication in the world and the earliest manufacturers were all American ones, which put the US in a unique position to become the world leader on mobile communication. However, in the eve of 2G era, the US missed out on this market opportunity due to resistance from Europe.

Facing the US dominance on the Internet, Europe was unwilling to be subject to the US on wireless communication. Backed by political support, European countries joined forces to resist the US by establishing GSMA (Global System for Mobile Communications Alliance) and its own standards to resist the US control and influence on the European mobile communication sector. Pushed by GSMA, Europe developed its own 2G standards—GSM to rival CDMA of the US. Facing the technologically more advanced CDMA, European countries built alliances around the world, particularly with China—the largest wireless communication market in the world. A gigantic GSM system emerged in the world in the 2G era, while the United States who only forged alliance with South Korea saw its market squeezed.
In the 2G era led by Europe’s GSM standards, system equipment, chips and mobile phone industry based on GSM flourished. Industrial leaders in mobile communication were Nokia, Ericsson, Siemens, Alcatel, Sagem and Philips, while Motorola of the US declined.

The United States basically lost its dominance on wireless communication in the 2G era, leading to huge economic loss and more serious consequences for intelligence and military.

IV. Smart Internet with 5G as a cornerstone represents a new strategic competition.

The substantial improvement in data rate in the 3G and 4G eras and consequent exponential growth in data business and information industry have fundamentally changed people’s way of life.

In this context, 5G technology will be epoch-making technology. It will lead us to the Internet of Everything with not only high data rate, but also ubiquitous networks, low energy consumption, reduced latency, Internet of Everything, and reconstructed security. While improving our daily life in many ways, 5G will spread into many industries and, along with big data, cloud computing and artificial intelligence, change social administrative and operational capacity, bringing a new revolution to the whole society. 

5G will find its terminals not only in computers and mobile phones, but a myriad of traditional products, such as machine tools, automobiles, production lines, unmanned drones, door locks, air purifiers and fans, and kitchen ventilators and so on. With these new smart terminals, transportation, medical care, production and household will all be ushered into the era of smart Internet by 5G.

For example, a 5G-based smart transport network will feature autonomous driving and, more importantly, a robust administrative system free from traffic congestion and with minimal traffic accidents. Accidents cost tens of thousands of lives would never happen anymore. In addition, 5G will substantially boost smart industry, smart agriculture, smart logistics, smart health management, smart household and mobile e-commerce. 5G will help social management to go smart in every aspect, delivering a strong boost to social efficiency.

Therefore, 5G will not only change people’s daily life, but considerably enhance productivity, cut production cost, improve public security and promote public administration of the whole society. Once such a system be established on the basis of 5G and operated in an efficient and smooth way, it would make a huge difference to the society. In other words, the development of the world will be fundamentally changed with the arrival of 5G.
As 5G technology and network deployment will determine competitiveness on smart Internet business in the future, countries have paid more attention to 5G than to 3G and 4G. For example, in the United States, the operators build 5G network so slowly that the US administration once toyed with the idea that a government-owned 5G network be built and then rented to the operators. Of course, the idea was abandoned as it was completely against market economic principle.

The strategic competition on 5G is unfolding, a competition which is not limited to technology and has spilled over into industry, application, intelligence, military, politics and diplomacy etc.

Therefore, to improve 5G network building, to a large extent, is to improve infrastructure capability, as well as national strength and strategic capability.

V. China’s mobile communications industry.

In the first and second generations of mobile communications, China was basically incapable of developing and producing equipments and handsets. All the devices and terminals were imported. In the 3G era, Chinese companies proposed the TD-SCDMA standards which was adopted internationally. Nevertheless, China was in a catch-up stage. In the 4G era, China was on a par with leading countries in the world, as the TD-LTE and LTE FDD standards it proposed were adopted as international standards. In the 4G era, Huawei rose to become the largest telecom equipment manufacturer in the world. Seven out of top ten mobile phone producers were Chinese ones. Internet services enjoyed skyrocketing growth. Internet companies such as Baidu, Alibaba, Tencent, JD and Meituan provided increasingly higher-quality services to consumers.
In recent years, Chinese mobile phone manufacturers have come a long way, moving up into the medium and high-end market segments and expanding into the global market. The seven Chinese companies among the global top ten have forged strong R&D and production capacities. It is worth noting that mobile Internet and, in particular, Internet services represented by mobile payment have boomed in China. Innovation and entrepreneurship of these Chinese companies speak volume of the comprehensive competitiveness of Chinese business developers.

Now, Chinese telecom operators have more than 3.5 million 4G base stations, covering the whole country with high signal quality. The 4G network is available not only in large cities, but also in remote areas and villages, which has substantially improved social efficiency and cut social cost. It has facilitated such social services and products as mobile e-commerce, mobile payment, food delivery, shared bicycle and shared car, which has made life more convenient and China a world leader in this respect.

With the nationwide deployment of 4G network and a huge and increasing number of users, mobile Internet companies are seizing opportunities by transforming mobile Internet from a platform for social media and information communication to one for comprehensive services from social media to mobile e-commerce and mobile payment. Such a powerful platform featuring good service and better performance is spreading and penetrating the world. Nowadays, with Alipay or WeChat, Chinese tourists can apply for tax refund at European airports and pay in many stores in Europe and Japan.
Now, China Mobile is the largest telecom operator in the world, with a large number of users (twice the population of the United States), sophisticated network, high profitability, strong economic competitiveness, and comprehensive services. Among the top four telecom system equipment manufacturers, two are Chinese — Huawei and ZTE. Huawei is the only company in the world capable of R&D and production of the whole series of system equipment, terminals and chips. All these have laid a foundation for the future development of 5G. Many Chinese companies such as China Mobile, China Telecom, China Comservice, Huawei, ZTE and Datang have participated in the 5G standards making. In many areas, Chinese-supported technologies are included in the 5G standards.
As large as China, the United States only has about 350,000 4G base stations, which could ensure neither high-speed internet services in remote areas nor good coverage in urban areas. Surfing experience is not so good. Take mobile payment for example. Chinese users can pay with their phones wherever covered by mobile network. Many Chinese go without carrying cash or bankcard, only with their mobile phone. For Americans, as not all the places in the US are covered by mobile network, they cannot pay with their mobile phone if they don’t carry cash or bankcard.
The United States led the world in the traditional Internet era and China learned from it; in the early stage of mobile Internet, Twitter and Facebook shaped the world and Chinese Internet companies also learned from them. Similar features of US applications could be found in Weibo and WeChat in China. The dynamics began to change in recent years. Recently, Facebook founder Mark Zuckerberg announced strategic transformation of his company’s business focus by providing voice and video chat, small group chat, payment services etc. It is widely believed in the industry that this push was to become more of a WeChat-like service. Zuckerberg himself said he regretted not learning from WeChat sooner.

China played a catch-up role to take standards in the previous traditional Internet and mobile Internet eras. The Chinese internet industry faced litter external pressure at that time. In the 5G era, China, defined by the US as a rival, will be squeezed in an all-round way. China must rise up to this competition with an open mind, by integrating internationally advanced technologies and absorbing all valuable technologies and talents. Good products, high-quality business services and wonderful user experience will speak for themselves.

Xiang Ligang is an observer in China’s telecom industry.