By MARK SCOTT
LONDON — In smoke-filled conference halls and nondescript hotels from Brussels to Busan, South Korea, a yearslong battle has been underway for control over the future of the mobile world. More than 600 government officials and telecoms executives agreed in June to a first round of global standards for so-called 5G telecommunications infrastructure, or the next generation of mobile networks, at a ballroom on the outskirts of San Diego, California. (A second round will be negotiated by the end of 2019.) The agreement — a much-needed step to enable smartphones, mobile devices and, eventually, autonomous cars to work anywhere in the world — cannot be overstated.
It turns much of the hype surrounding 5G into reality by creating a worldwide consensus about how the technology should work, from Germany to Ghana. That includes the ability to download high-definition movies onto cellphones within seconds, and allow millions of machines to talk digitally to one another in the blink of an eye.
One thorny issue still sticks out: China, and its efforts to dictate the next generation of global telecoms rules.
Carriers like AT&T and Japan’s DoCoMo are now building networks based on this ultrafast new telecoms technology that will come online by the end of the year. Automakers and other industrial giants are incorporating the standards into their latest glitzy offerings. And Europe — where operators still lag behind American and Asian rivals — is likely to see its first 5G rollout by early 2019, at the latest.
“First implementation can start now,” said Francisco Mingorance, executive secretary of IP Europe, a trade group that represents European technology companies and research institutes. “It’s a significant move forward.”
Geopolitics of telecoms
Yet amid the industry backslapping, one thorny issue still sticks out: China, and its efforts to dictate the next generation of global telecoms rules.
The world’s second-largest economy is expected to represent more than half of the 1.3 billion global subscribers to these high-speed mobile networks by 2023, according to CCS Insight, a technology research company. By comparison, the U.S. and Europe combined will sign up just 337 million 5G subscribers over the same period.
Many Western officials are concerned their involvement will open up Western mobile networks to potential espionage or other national security threats.
In a bid to extend their influence over 5G, Chinese companies, notably Huawei — now the world’s largest telecoms equipment manufacturer — have intensified their lobbying efforts in obscure telecoms standards groups that meet regularly to hammer out the technical details for both hardware and software, according to industry executives.
The goal: To put a Chinese stamp on the global rules, helping the country’s telecoms firms pocket potentially billions of dollars by licensing their technology to others worldwide. (And, if Western fears are to be believed, giving the Chinese government backdoor access to Western mobile networks.)
The lobbying includes Chinese telecoms players sending more and more delegatesto telecoms conferences worldwide, increasing the number of executive positions they hold at 5G standardization organizations and significantly outspending Nokia and Ericsson, the West’s largest telecoms equipment makers, in terms of 5G research and development.
In the labyrinthine world of telecoms standards, companies and trade groups put forward rival patents and then vote to determine whose tech should be included in the global rulebook. This intellectual property can then be licensed — for significant fees — to others.
The system dates back decades and, until the recent 5G negotiations, was dominated by American and European players — Ericsson, for instance, developed the underlying tech for Bluetooth, which got its name from a Swedish Viking king.
European governments are growing increasingly skeptical amid national security concerns and the potential impact on European rivals.
“There’s clear competition,” Erik Ekudden, Ericsson’s chief technology officer, told me earlier this year. “Everyone is competing for 5G.”
This rise of China has not gone unnoticed by Western officials, many of whom are concerned that their involvement in setting 5G standards will open up Western mobile networks to potential espionage or other national security threats. Chinese companies deny these claims.
The U.S. recently blocked Broadcom’s hostile takeover of Qualcomm, a global leader in 5G intellectual property, in part because of fears that Chinese players would benefit when it came to setting the 5G agenda. Huawei and ZTE, another Chinese telecoms and cellphone maker, also remain persona non grata in Washington, including possible U.S. sanctions that could even put ZTE out of business.
And European governments, which have often been more welcoming to these Chinese telecoms players, are growing increasingly skeptical amid national security concerns and the potential impact on European rivals, accusations both Huawei and ZTE strongly deny.
China, the West and 5G standards
So is China dominating 5G? In short, no.
Over the last two years, Huawei, ZTE and other Chinese players have increased their share of patents underpinning the global standards — the higher the amount of intellectual property a company holds in the overall global telecoms rulebook, the greater control it can exert on how the mobile technology will be used.
The Middle Kingdom, combined, owns around 10 percent of global intellectual property for 5G as of 2017, according to LexInnova, a research group that tracks the industry. (Official figures are hard to come by, and a final tally will only be available by the end of next year.)
With China likely to be home to the lion’s share of new 5G subscribers over the next five years, it’s only natural for the country’s firms to want a larger seat at the table.
That’s certainly higher than the 7 percent of patents that Chinese companies hold for the current generation of mobile technology, known as 4G. But it’s not the full-court press that many European and American policymakers feared.
By contrast, Qualcomm alone accounts for more than 15 percent of current 5G patents and Nokia garnered a further 11 percent of the global total, according to industry estimates. Even Ericsson, which is undergoing a major corporate restructuring, still holds its own with roughly 8 percent of 5G intellectual property.
“So far, we haven’t seen the Chinese lobbying turn into a dominant position when setting standards,” said a senior executive at a Western telecoms company, who spoke on the condition of anonymity because of the sensitive nature of the ongoing negotiations.
Experts caution that China’s control of underlying 5G patents will likely rise next year when the second round of standards, which are not so reliant on existing mobile infrastructure that’s dominated by Western firms, gets hammered out.
Experts caution that China’s control of underlying 5G patents will likely rise next year when the second round of standards | AFP via Getty Images
But that’s only to be expected.
With China likely to be home to the lion’s share of new 5G subscribers over the next five years, it’s only natural for the country’s firms to want a larger seat at the table during negotiations over how the technology will work globally.
Does that mean Western governments shouldn’t be alert to potential national security threats? Of course not.
But with the likes of Qualcomm, Intel, Nokia and Ericsson, as well as a slew of Japanese and South Korean firms still defining the bulk of telecoms intellectual property for years to come, the myth of China running the board when it comes to 5G — at least for now — just doesn’t live up to reality.
Mark Scott is chief technology correspondent at POLITICO.
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