A Struggle to Control the World’s Wireless Networks

Bottom Line Up Front

• On March 6, Meng Wanzhou, CFO of the Chinese tech company Huawei, had an extradition hearing in Canada where she is being held on charges of fraud.
• Her case is a legal one but still tied to broader geopolitical implications between the U.S. and China over technical infrastructure tied to governments.
• The U.S. believes that Huawei is too closely connected to the Chinese state security services, leaving EU and Gulf allies in a precarious position.
• Technologies like the emerging 5G mobile internet infrastructure will be deeply embedded into the lives of governments and their citizens in the near future.

The ubiquity of social media and technology has elevated the debate over privacy versus security, particularly in the U.S., U.K, and E.U, where concerns abound that tech giants like Facebook do not have the best interest of their customers in mind, citing the improper use of data. Even more alarming, however, is the question of which entity is in control of the infrastructure that these social media companies depend upon—the 4G and, soon, 5G (fifth-generation) internet infrastructure, which includes routers, cell towers and more—upon which modern mobile communications and commerce rely. Throughout several American presidential administrations, the U.S. government has expressed grave concern over the growing presence of Huawei, a technology company closely tied to the Chinese government that supplies equipment to entities in the West that allegedly enables it to steal technology. Purely from a revenue standpoint, Huawei is the world’s largest internet equipment provider. It is now both the actual target of a U.S. criminal probe over Iranian sanctions as well as the symbol for a much larger battle over who will control the future of the world’s wireless networks.

Washington has sought to prevent major U.S. telecom firms from using Huawei products for fear that these products represent a ‘Trojan Horse’ for Beijing to use as a means of pilfering intellectual property, which China can use to gain both economic and military advantage. The U.S. has long accused Huawei of being an unofficial arm of the Chinese intelligence services, given the lack of a robust firewall between the government of the Chinese Communist Party (CCP) and the private sector in China. To be sure, China’s 2017 National Intelligence Law states that ‘any organization or citizen shall support, assist and cooperate with the state intelligence work in accordance with the law.’ Huawei’s defenders simply point out that the U.S. has similar authorities in the PATRIOT Act and other laws that require firms ranging from AT&T to Apple to comply with ‘national security letters’ and other request or demands for sensitive information.

The U.S. now finds itself pursuing an overt campaign to block Huawei’s products from dominating the emerging 5G networks, which will run everything from self-driving cars to smartphones and drones, providing a wealth of data about individuals and their preferences. It is far from certain how much impact the U.S. will ultimately have on the decisions of others, including its allies, as it relates to their respective technology needs. The E.U. is considering both the costs and benefits of using Huawei technology, as are many other countries and regions. Some have already committed to Huawei, citing its low costs—backed by Chinese loans that often come with strings attached—and ready-to-deliver products. Disregarding U.S. pressure, the U.A.E has signed a deal in which its state telecom company, Etisalat, would use Huawei products to build the Emirates’ 5G networks. Other countries are likely to follow suit, allowing China to further its access across the globe.

As the reach of ‘all things smart and mobile’ spreads and the Internet of Things (IoT) diffuses, companies and governments will begin to move more aggressively to exert influence through the provision of technology. China, in particular, has worked to harness emerging technologies as a means of exerting even greater social control over its citizens. Corporations such as Facebook have access to vastly more information on people than most governments could fathom, and related questions of whether to ‘trust’ a company have nearly become moot. The 5G age will accelerate this trend of extensive personal, corporate, and governmental data concentrated through networks designed by companies and governments, making data the new currency of geopolitics and access to it paramount to prosperity in the 2020s and beyond.