Huawei Vs The Rest: A game of Monopoly

The arrest of #MengWanzhou, daughter of #RenZhengfei (owner of #Huawei), was described by Justin Trudeau as purely a criminal justice matter on behalf of the American authorities - related to dodging sanctions on Iran. However, given the rather laissez faire attitude displayed by the US administration over the Khashoggi affair, it seems like an overkill, considering Meng's stature as the CFO of one of China's biggest technology firms. Trump even suggested that he was open to intervene if it gave a positive nudge to the ongoing trade talks with China.

There is also talk about #Huawei's propensity for 'subversion' - carrying out electronic espionage for its home government, or building back-doors in its code and devices to enable access for state-sponsored hackers. However, as #Snowden's leaks showed, America's spies are equally capable of leveraging national firms for espionage.

Leaving aside the sanction-dodging or backdoor espionage potential, the real issue seems to be China's growing clout in cutting-edge industries, and its much vaunted 'Made in China 2025' aspirations. And one critical event staring us in the face is the upcoming World Radio Conference (WRC) in 2019, by the International Telecommunications Union (ITU) which establishes performance and interoperability criteria for mobile networks. The group's 500 member organisations will, in effect, decide what standards #5G networks will operate on. And for the first time, China stands to win big.

And that is a big deal! 5G will not just offer a quantitative improvement over previous technologies (high speeds), but it will also be qualitatively superior, allowing industrial-scale automation, by allowing the integration of a large number of devices in near-instantaneous communication, across a wide geography. Innovation unleashed under this wave of advanced technologies/applications will have major implications on economic and national security.

The standards for 5G networks that get adopted at the WRC will ultimately decide who has a decisive say on 5G development, and by extension, the nature of man-machine interaction. The winner stands to win big economically and politically. This is the real bone of contention between the US and China. And they have divergent views over these standards. While China favours low frequencies for core communications and high frequencies as supplemental, the US prefers the opposite (likely due sensitivities related to military control over low frequencies). Given this fundamental difference, and the 'bipolar' camps that are emerging around the world, we're staring at a 'winner-takes-all' match-up.

The 'accepted' standard is likely to gain universality, leverage 'first mover advantage' and earn royalties for years to come. A case in point are the Standard Essential Patents (SEPs) for 4G LTE technology, where #LG and #Qualcomm own 44% between them, while China's #ZTE and #Huawei own just 7%. The competitive edge is there to see, and it will only grow in the 5G era.

To conclude, the US-led activism we are witnessing against Chinese telecom giants like #ZTE and #Huawei has a lot to do with the geopolitics of 5G. Given China's early entry into the 5G game (back in 2013), it's mature technology plans and strategies (including the conceptualisation of a #DigitalSilkRoad as part of the #BRI), it's rising influence within the ITU (leadership positions), and it's coherent all-hands-on-deck national approach to the issue, pushback from the US and its allies was only expected, and is likely to take on more steam.

Prepare to wade into muddier waters!