BEIJING: 5G networks could totally transform our world when it reaches full potential in the upcoming years.
The nations that embrace new technologies integrated with 5G stand likely to rise above everyone else to become tech super powers, while countries that remain reluctant to adapt could see their fortunes fade.
5G networks will set the stage for an even more rapid proliferation and further advancements in smart technologies, Internet of Things (IoT), artificial intelligence (AI), robotics, Big Data, robotics, automated manufacturing and so much more.
This fifth-generation of mobile and wireless internet connectivity will offer faster speeds (100 times faster than 4G) and more memory storage that result in more reliable internet connections for mobile devices.
POWERING THE GLOBAL ECONOMY
If data is the lifeblood of the modern economy, then modern mobile connectivity is its heart, bringing life to a whole host of functions, creating new opportunities and revitalising old industries.
Take manufacturing for instance. Developers of AI can boost the speeds at which machine learning and deep learning occur. Automated factories and logistics can decrease productions costs in the long term while ensuring much higher production levels and faster deliveries.
Many companies all over the world are playing crucial roles in integrating 5G technologies into the backbone of economies - including German-based robotics manufacturer Kuka, mobile services provider Ericsson, the South Korean smartphone maker Samsung along with many others.
But for the time being, Huawei and a few other Chinese high-tech firms are leading the pack in 5G.
Chinese data-powered darling companies will be key winners in this space – including Tencent Holdings, owner and operator of WeChat App, as well as network and telecommunication providers - China Mobile and China Unicom, alongside mobile phone producers Huawei, Vivo, Oppo and Xiaomi and data centres, such as Alibaba Cloud.
Observers have also noted that the benefits might be understated. Where 4G technology created an app economy that was not foreseen, 5G could spark innovations on a similar scale.
ADDRESSING CYBERSECURITY CONCERNS
Although 5G networks can usher in a new technology order that has clear global benefits, a number of governments led by Washington have expressed grave concerns that 5G could prove counter-productive and harmful.
There is some in-principle trepidation over 5G technology. By closely integrating mobile devices with cloud services, one argument is that 5G lures an increasing number of hackers who may attempt to unlock loads of confidential personal information, data and top secret documents that can be resold to buyers for commercial or political purposes.
But many fears mostly relate to concerns over cybersecurity and espionage if countries were to let Huawei build 5G networks for their economies.
Shenzhen-based Huawei, a telecommunications giant and smartphone maker, is considered to be one of the world leaders in 5G development, but the China-based company faces a huge image problem, since its founder Ren Zhengfei had been involved in the modernisation of the People’s Liberation Army when he was much younger.
So suspicions have arisen that Hauwei is selling smartphones with back-door devices that allow Beijing to spy on users are understandable.
EU CAUTIOUS STANCE
Still, Huawei vehemently denies such accusations, and with its emergence as the prime company that can offer 5G solutions, the EU has plenty of reasons to stay cautious. This careful approach that avoids over-reacting to pick sides over the brewing US-China rivalry is to be welcomed but countries cannot shy away from the huge advantages 5G will offer.
So it is useful that Brussels is taking a measured approach and believes that collaboration is preferable to banning Huawei outright.
Accordingly, EU Digital Chief Andrus Ansip has issued a recommendation for Huawei to engage in an “objective and proportionate approach” to 5G security.
The European Commission announced on Tuesday (Mar 26) that each member state has the right to work with Huawei to complete a national risk assessment of 5G network infrastructure. They will do so by June 2019 and are advised to update existing security requirements for network providers.
In other words, the door to Huawei playing a role in the EU’s 5G infrastructure for the time being has not been shut. Huawei’s big gamble on 5G would have been derailed had Brussels banned them from operating in the EU.
HUGE VICTORY FOR HUAWEI
Although Brussels allowed for its member states to opt out - meaning sovereign governments in the region could enforce their own bans - the EU’s recommendation is a huge victory for Huawei as the company had been facing stiff restrictions to operate in Australia, New Zealand, the US and Canada.
US Secretary of State Mike Pompeo had recently visited EU member states urging Brussels to take a hardline stance against the company, but to no avail since German Chancellor Angela Merkel had already rebuffed such requests.
Huawei has a golden opportunity to expand its presence in European markets. 5G will be a game changer and they know it.
Abraham Liu, chief representative of Huawei to EU institutions, issued a statement welcoming the EU’s proportionate approach, expressing understanding over their cybersecurity concerns and highlighting the company’s commitment to continue working with regulators to make the rollout of 5G in Europe a success story.
STRIDES IN 5G
Meanwhile, Huawei has increased its annual budget for research and development (R&D) from US$15 billion to US$20 billion since last year, essentially plowing back 14.9 per cent of its revenue into research, which makes it one of the top R&D spenders around the world.
The tech titan has also earmarked billions to upgrade 5G infrastructure, set up 5G bases around the globe and throw more resources behind cybersecurity.
For the moment, Huawei can not fully integrate into the EU’s 5G infrastructure. Once EU countries complete their security assessment in a few months, however, a thumbs up can pave the way for a further expansion of 5G networks there and more generally, an uptick in 5G adoption that could lay the ground for further innovation and the proliferation of 5G uses around the world.
HUAWEI’S SHARE IN EMERGING MARKETS
Regardless of how developments in the EU play out, Huawei will continue to boost 5G networks in China and build capabilities for an almost certain 5G future.
In a worst case scenario, the company can rely on expansion in emerging markets, in the Middle East, Africa, South Asia and Latin America. The potential for growth remains high.
Whether or not Washington and Brussels welcome Huawei into their respective markets will not make or break the company.
Huawei is a global leader as an innovator for 5G and they will march ahead. But the West risks getting left behind if they choose not to get on the 5G bandwagon, whether or not it involves Huawei.
Tom McGregor is a commentator on Asia-Pacific affairs based in Beijing.