There is a saying nowadays “Data is the new Oil”. The world has evolved and technology being the focal point of the scheme of things. Chinese State Champion Huawei was placed US Government’s commerce department’s entity list, banning the tech company from buying critical parts it needs from its US producers. For all focus on the current trade war between US & China, it’s this brewing tech war that has the potential to reshape the world order and its starting to do with this Huawei development.
Now let’s understand why this matters
This fight is basically over who will build & lead innovation for the next internet & communication technology which is called 5G. This technology started way back with 1G which was a technology which involved making wireless phone calls possible. 2G came in the scenario which bought in texting capabilities. The revolutionary 3G delivered web-browsing to the phone wielding masses. Finally with the advent of 4G wireless video-streaming became a reality & through its constant connection to GPS satellites enabled rise of companies like UBER. Currently we are living in the world of 4G, but the transition to 5G has started and will accelerate rapidly in the next couple of years. 5G, however will be different than previous mobile upgrades for an instance data speeds will be 100 time s faster than the previous versions and will handle larger data with far lower lag time than ever before. So to sum it up, it will really help handle machine to machine communications.
Moreover the evolution of 5G will have a profound impact on the IoT infrastructure considerably. As of 2018 the global market for IOT technology which consists of software, services, connectivity & devices $318Bn by 2023 at a staggering CAGR of 20%. While software & services are clearly leading the pack in revenue by the end of the period the growth rate from 2018 to 2023 is slightly higher for connectivity & devices as new LPWAN & 5G Services & rise of edge computing, respectively will drive higher revenue growth.
On enterprise adoption side, companies are just beginning to use IoT for more than cost control or productivity & operations enhancement. Capabilities enhanced by new technologies such as augmented & virtual reality, machine learning & AI are going to change the ways companies use IoT with an eventual goal of enabling them to not only improve their current products & processes but also generate new revenue streams through the development of their own new products & services. All these will enhance doubly when 5G spectrum is developed & launched. 5G speeds are 100 times faster than the currently used 4G networks. Hence 5G will surely help create sustainable environment for corporations to improve revenue & productivity.
There is no real reason that 5G infrastructure can’t be built with both Chinese & western hardware as our current network is 4G. Huawei already provides much of the world’s network hardware outstripping its western counterparts like Ericsson & Nokia. But the trump administration has argued that allowing Huawei equipment into the guts of global 5G networks could allow Beijing to access the streams of data that will be passing through the company’s hardware, leaving American companies & citizens susceptible to spying. The other argument that the US administration is making is that building a 5G networks with Huawei networking gear equipment could leave them vulnerable to an infrastructure attack should the US & China ever go to war.
Messaging aside, the decision to place Huawei on the Commerce Department’s entity list as a national security threat is a seminal moment—the US government is effectively saying that where a piece of technology hardware comes from is the deciding factor in determining it’s safe to be used in US networks or those of its allies. For a country like the US whose economic strength was built upon the globalization of supply chains and maximizing efficiencies. AT&T has started to name their current 4G internet as 5G E where E stands for Evolution which is basically telling American consumers that We are here to stay & build and All American technology for the consumers in house.
The Commerce department has issued a 90day exemption to US companies to continue doing limited business with Huawei, but they’re targeted waivers meant to support continuing operations for existing customers. Huawei will struggle to operate like this even if waivers continue to be renewed. So far, The US has not seen much of a response from Beijing while China’s political leaders are up in arms about the Huawei developments, they will keep quiet publicly & work with Huawei to explore ways to negotiate with the US department of commerce as a remedy to address charges against the company. This could include a major fine in the $1 billion range and disciplining of executives, much like they did last year with China’s other state-backed tech giant ZTE.
China on the other hand has started preparations to restrict the exports of rare earth minerals to the US, while also setting up its own unreliable entities blacklist for unfavorable foreign companies. At the same time, Japan’s Softbank has announced it will be building its 5G network with equipment from Nokia & Ericsson snubbing Huawei which has previously been a 4G supplier for large mobile carrier. As to the Chinese entity list, this echoes the language of the US bureau of Industry & Security’s Entity List on which Huawei finds itself now. That could be a deliberate sign of a tit-for-tat response as China doesn’t really need a formal list, having already imposed bans on prominent US companies like Google & Facebook. This list will cover foreign enterprises, organizations & individuals that don’t obey market rules, violate contract & blocks, cut off supply for non-commercial reasons or severely damage the legitimate interests of Chinese companies.
But look the problem is Huawei is already developing technology and this is deemed to be threat for the US as China and would have an upper hand in the technology which if case of adversary could prove to be a factor of might.
Yes, We have to agree this time that China indeed has upped the Ante in terms to 5G technology but US along with its allies are catching up really fast and the kind of marketing Chinese companies operate upon is something which is questionable. But 5G technology is evolving and with the US embargo on Chinese technological goods it’s a trade war of sorts scaling to a different level altogether.
Hence China & the US are getting into a war of sorts in the development of 5G spectrum but conventional war never!
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