As the US races to build an innovative 5G network to compete with China’s rapidly-expanding global rollouts, partnering with Japan could offer the US an advantage in winning over India and the Southeast Asia region, argues Yuka Koshino.
Since early 2020, the Trump administration and the United States Congress have been bolstering support to develop and promote a non-Chinese fifth-generation wireless network (5G) with its allies and partners in the world. To outperform Chinese vendors in technologies, the Trump administration has suggested investing in industries’ R&D efforts to develop a software-based virtualised 5G network on open hardware. To help make non-Chinese 5G affordable, the US has gathered resources to help countries finance the infrastructure. The newly established public–private development finance agency, the US Development Finance Corporation (US DFC), has started to prioritise investments in 5G projects. Congress has proposed a bipartisan bill to allocate US$750 million to promote R&D in 5G and an additional US$500m to help countries finance non-Chinese equipment for their 5G networks.
Some have dismissed these efforts, claiming that the US is too late to the game. China’s largest wireless network supplier, Huawei, has rapidly expanded its digital footprint in the world, especially in Europe. In February 2020, Huawei announced that it had secured 47 commercial contracts with European operators and revealed plans to build a factory in France for its customers. The decision by the United Kingdom’s government to give a limited role to Huawei in its 5G network was a major blow for the US and its efforts to prevent the spread of Chinese 5G in the region. The recent coronavirus outbreak in the US could further delay its efforts as more cities are put into lockdown and the government postpones 5G forums.
Parterning with Japan in Asia
Yet, not much attention has been paid to the vast potential opportunities the US can use in the longer term to compete with China in the 5G-infrastructure development race in Asia, especially Southeast Asia and India. These sub-regions have a vibrant digital economy and countries with the world’s largest number of mobile telephony subscribers, but relatively slow 5G rollout plans. According to research, India and Southeast Asia have the world’s second and third largest number of mobile subscribers – approximately 950m and 450m each, and India alone is expected to add more than 170m subscribers by 2025.
Most importantly, the US has Japan, a capable and willing partner, to pursue its aspiration to spread the most innovative and reliable 5G network in the region. Japan was one of the earliest US allies to follow Washington’s call to exclude Chinese vendors from its networks due to security concerns. The joint statement released after the October 2019 meeting of the annual US–Japan Policy Dialogue on Internet Economy shows some positive signs that the two governments have begun discussions to promote open architecture and public–private cooperation for digital infrastructure development in third countries to make the global 5G network more ‘open, interoperable, reliable, and secure’.
5G open architecture and network virtualisation
Furthermore, Japanese wireless equipment suppliers and information technology (IT) firms are critical partners for US counterparts to fulfil their ambitions to develop a more affordable and innovative 5G through open network architecture. Since early 2018, global mobile network operators, network equipment suppliers and software companies have established industry consortiums to jointly make the radio-access-network (RAN) of 5G more open, flexible and secure. Groups, such as the O-RAN Alliance, have set goals to develop standardised interfaces to allow IT and telecommunications equipment suppliers to jointly offer software-based virtualised 5G networks on open hardware. If successful, this effort could bring transformative impact to the existing RAN market – currently dominated by China’s Huawei and ZTE, Sweden’s Ericsson and Finland’s Nokia – by allowing new software and IT entrants and smaller equipment suppliers to enter the market.
These consortiums serve as vehicles for the US to work with Japanese partners to jointly produce pioneering 5G solutions. For instance, US traditional wireless equipment suppliers, such as Cisco and IBM, have partnered with Rakuten, Japan’s e-commerce giant, which developed the world’s first completely end-to-end cloud-based 5G network based on software virtualisation technologies. In early 2020, US software companies, such as Mavenir and Altiostar, partnered with NEC, Japan’s traditional network equipment supplier, to provide a virtualised RAN. Moreover, these Japanese vendors are already engaging with regional countries to start 5G. Rakuten, for example, will conduct trials with TPG, a mobile operator in Singapore, to prepare for a virtualised 5G rollout. NEC in December 2019 stated that India is a key market for its 5G, and was invited for the country’s 5G rollout. For local operators, this multi-vendor approach allows for more diverse, customised options with competitive prices to meet the needs of various 5G applications, from remote medicine, smart manufacturing and agriculture to communications and entertainment.
The FOIP vision as an enabler
Finally, the robust infrastructure financing tools prepared to fuel the US government’s Free and Open Indo-Pacific (FOIP) vision could serve as enablers to make non-Chinese offerings more affordable for regional countries. With its liberal policies stipulated by the Better Utilization of Investment Leading to Development (BUILD) Act of 2018, the US DFC could offer loans and invest in non-US firms that support US foreign policy objectives. It has also doubled its investment cap to US$60 billion, generating a US$30bn budget for new projects. CEO Adam Boehler’s stated interest and priority to build 5G in the “Indo-Pacific,” potentially with Japan, creates momentum for the US project in Asia.
Asia is the centre of the future global digital economy, and more than half of the world’s mobile subscribers reside in it. Thus, the stakes are high for the US government to ensure the security and reliability of their 5G infrastructure. Moreover, the US has the technology, financing tools and a willing and capable partner to provide a compelling alternative option for regional allies. While the Trump administration currently appears to be preoccupied convincing its European allies in the near-term, Washington should remember that strengthening cooperation with Japan for 5G development in Asia through high-level government agreements could bring them closer to achieving longer-term goals.
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