The global contest for 5G escalates: Huawei, ‘clean networks’ and digital decoupling

With the recent expansion of the US-led ‘Clean Networks’ initiative, 5G wireless appears to be the leading edge of a Trump administration campaign to ‘decouple’ the United States and like-minded partners from Chinese digital technology across the board. Yet the prospects for US Secretary of State Mike Pompeo’s declared goal to build a worldwide digital fortress against ‘malign actors such as the Chinese Communist Party’ are uncertain at best. 

US Secretary of State Mike Pompeo’s claim that ‘the tide is turning against Huawei’ seems to have been vindicated by a series of negative decisions in European countries regarding Huawei’s involvement in their next-generation telecoms networks. Most notably, the UK government has changed its’ February decision allowing Huawei’s participation as a ‘high-risk vendor’, in consequence of a new security review.  Similarly, the new progress report on implementation of the European Union’s ‘5G Toolbox’ risk mitigation framework recommends member-states to establish plans to phase-out ‘high-risk suppliers’.

These developments reflect growing distrust of China around Europe aggravated by Chinese economic practices, the COVID-19 pandemic and events concerning Hong Kong. They coincide with enhanced US efforts to check expansion of Chinese firms’ global role in 5G networks. Pompeo’s recent call for struggle against Beijing’s totalitarianism as ’the mission of our times’, in which he singled out Huawei, has framed the issue of global 5G leadership in ideological terms. Yet it is doubtful that current US measures add up to an effective strategy for Washington’s declared goal to ‘lead the development… of secure and reliable 5G communications infrastructure worldwide’.

A stepped-up US global campaign against Chinese presence in 5G networks

In March the US government published a ‘National Strategy to Secure 5G’ that aims to ‘promote responsible global development and deployment of 5G’.  The next month, 5G became the leading edge of a State Department-led ‘Clean Networks’ initiative, which was recently expanded to other lines of effort.  Described as an ‘all-of-government, enduring strategy built on a coalition of trusted partners’, the stated objective is to secure critical assets against intrusions by ‘malign actors… such as the Chinese Communist Party’.  The April announcement declared that 5G network traffic entering US diplomatic facilities will need to follow an end-to-end ‘clean path’ that is free of equipment from Chinese vendors.

To address pushback that cites a lack of alternatives to Huawei, US interests have also promoted ‘Open Radio Access Networks’ (O-RAN) as a 5G solution that’s hoped to facilitate growth of a ‘trusted vendor’ community, by opening up network architectures and so disrupting a global telecoms equipment market presently dominated by a handful of vendors.  Two draft bills to support O-RAN development are going through Congress, and the proliferation of O-RAN standardisation groups recently added a US-led and dominated industry coalition that conspicuously omits Chinese members.  The US State Department in May convened a conference on ‘integrated and open networks’ aimed at reconciling competing interests among US and European firms.  This approach was presumably pushed by Trump’s National Security Adviser during his July visit to Europe’s 5G battleground states.

But the critical factor leading third parties to reconsider Huawei has been expanding US export controls to penalise foreign parties that supply Huawei with components for its most advanced equipment, including 5G base stations. By cutting Huawei off from the Taiwanese firms that manufacture cutting-edge processing chips using US-origin technology, the US government has cast a shadow over the firm’s ability to deliver on third countries’ 5G infrastructure roll-outs. 

Even if Huawei successfully substitutes non-US controlled technology to deliver products with a comparable performance level – a massive re-engineering exercise that would probably take years – this re-engineering effort will harm customers’ confidence in the equipment’s reliability and security. This latter factor was cited by the British government as the reason for its changed security assessment. 

This is a textbook case of ‘weaponized interdependence’, with the US government leveraging control by US firms of upstream technologies in the global semiconductor supply chain to exert power against China and, indirectly, against those allowing Huawei even a limited role. Yet the same interdependencies raise doubts about the long-term viability of this approach.

No silver bullets: O-RAN and export controls

O-RAN is not a stand-alone 5G solution that can be developed from ground-up by a ‘trusted vendor’ community. It builds on existing standards developed through a transnational collaborative process in which Chinese contributions have been foundational, and through which Huawei has – arguably – become the largest single holder of 5G standard essential patents. The leading industry group promoting O-RAN still has various Chinese contributors. Even if ‘open architecture’ 5G networks were equipped wholly by vendors deemed ‘clean’ by Washington, they would be built on Chinese patents with royalties payable to Chinese firms. 

Diverging from this common foundation raises the prospect of incompatible standards ecosystems, without certainty that foreign firms and governments would choose a US-led ecosystem – unless Washington starts applying significantly greater pressure. Whether this is achieved by the ‘Clean Networks’ program remains to be seen, but the history of ‘open’ approaches to ICT progress means that non-US actors may well perceive a US-led, Chinese-exclusive O-RAN market as a vehicle for oligopoly by US firms.  This would align neither with other countries’ ambitions for ‘digital sovereignty’, nor incentives of the existing oligopoly.

At this stage of O-RAN’s development, telecom operators seem reluctant to bet nationwide 5G roll-outs on solutions that lack proven deployments at scale, established systems integrators, or performance competitive with Huawei’s current offerings. Meanwhile, the transnational 5G standards-setting process keeps adding functions that enable real-world applications – the real prize motivating countries to lead in 5G. Washington recognised this reality in June by relaxing export controls so US firms can exchange information with Huawei in global standards-setting forums, in order to ‘not cede leadership in global innovation.’

US export control measures have undermined Huawei’s prospects outside China, but their long-term efficacy is uncertain.  ‘Weaponizing’ networks of interdependence leads those affected to develop alternative networks insulated from these effects. Indeed, non-Chinese players in the semiconductor ecosystem are already taking steps to circumvent US export controls, or openly lobbying against them. The US government’s capacity to monitor work-arounds by US firms and foreign competitors while coordinating responses is questionable, while the growing role of open-source development further complicates the challenge. The history of US export controls failing to prevent technological diffusion raises doubts that they will preserve the level of US dominance allowing the current knee-capping of Huawei.

A fragmented 5G world?

Unless Washington significantly raises the stakes, the odds seem against most nations committing to 5G networks that are ‘clean’ of Chinese technology.  Most will keep seeking the middle road typified by Singapore, which in June announced that European vendors will supply its major 5G network cores without excluding Huawei, while also signing agreements to accelerate national integration with China’s Shenzhen-oriented digital tech-ecosystem. Others, like Japan and India, appear to be hedging by indigenising development of next-generation networks, potentially accelerating global technological fragmentation

Even in Europe, the situation remains unclear. The ‘5G Toolbox’ progress report urges member-states to institute plans for mitigating extant dependencies on ‘high-risk suppliers’ and avoiding such dependencies in the future. That most have yet to do so is unsurprising, given that Chinese vendors’ share of 4G RAN products across Europe is estimated at over 50 percent. Banning Huawei implies a massive exercise in physically replacing gear, and in the absence of proven O-RAN solutions, at least temporary dependence upon one or two vendors whose equipment may not meet performance expectations. 

Fundamentally, few foreign actors see the 5G issue in Pompeo’s stark ideological terms, while Washington’s capacity to force choices through ‘weaponized interdependence’ will likely be diluted the more it is used. The outcome of a ‘scorched earth’ approach to 5G decoupling is less likely to be a future networked world safe for like-minded democracies, than acceleration of a ‘6G arms race’ and the emergence of a global Splinternet.

An earlier version of this article was published by The Diplomat on July 31, 2020.