Ex-White House Aide Rove, Telecom Officials Raise Alarm About China Leading on 5G
Former White House Deputy Chief of Staff Karl Rove, Hudson Institute Senior Fellow Harold Furchtgott-Roth and telecom officials raised concerns during a Tuesday Hudson event about the threat of Chinese dominance over global 5G development. China, Huawei and ZTE loomed over U.S. telecom policy this year, beginning with the January leak of a draft National Security Council official memo proposing the U.S. build a national 5G network (see 1801290034).
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Rivada Networks CEO Declan Ganley said U.S. carriers will need to lead pushback against China via a radical shift in their business model. The U.S. telecom sector has only until the Feb. 25 start of the next Mobile World Congress to shift the bulk of the Western economies away from contracting with Huawei and other Chinese telecom equipment makers to provide equipment for 5G networks at a subsidized rate, Ganley said. U.S. carriers and their counterparts in Europe haven't moved away from a retail consumer-centric model, he said: That resulted in “propping up the price” of providing a gigabyte of data and made subsidized Chinese telecom equipment an attractive way to cut costs in deploying 5G.
“It's going to take something dramatic” like selling unused data capacity at market-rate prices “to prevent China from owning the cyber domain,” Ganley said. “Whoever architects these 5G networks” will have an advantage in cybersecurity, and the vast majority of countries are eyeing Huawei and ZTE as potential partners for constructing their networks. “We cannot let” carriers in Europe, South America and elsewhere “become Trojan horses” for nefarious Chinese technology, he said.
Nokia Head of Policy and Public Affairs-Americas Region Brian Hendricks agrees that within nine months, the 5G “equipment die will be cast” globally, with a “concerted effort by the U.S. and other Western governments to “present an alternative” to China's model for developing 5G potentially being helpful. “It's difficult to compete, but not impossible,” Hendricks said. “Monetization has become quite difficult” and customers “will be resistant” to any attempt by carriers to shift away from the current retail model.
Rove believes the U.S. needs to better use its advantages over China while figuring out how to “more efficiently use” available spectrum. “We can exploit” other countries' national security concerns about China and that country's reputation for producing “shoddy” equipment and deployments, he said. The U.S. should contact stakeholders in Africa and Asia who are “becoming skeptical” about becoming too “debt dependent” on China. The U.S. and others in the West should highlight themselves as a “better alternative” that can produce a better outcome for international lenders that China eventually will need to use to conduct large-scale deployments, Rove said.
The Trump administration appears to be viewing the race to lead on 5G in both economic and national security terms, Furchtgott-Roth said. “The greatest national security asset that the United States could deploy is to get to faster economic growth." The solution to driving up economic growth remains “less regulation, lower taxes, do things to define and enforce property rights.” The White House is “taking steps in those directions” and “the economy is picking up,” Furchtgott-Roth said.