From National Journal:
If we re going to force [companies] to buy more expensive equipment because we insist on it being secure, then we re going to have to give a bit on the timeline, said Tom Struble, the technology policy manager at the center-right R Street Institute.
That s not a huge issue for Struble, who believes the messaging around a race to 5G is largely overblown. But over the last several years, the telecom industry has repeatedly stressed the importance of the U.S. being the first to achieve widespread deployment of the new technology, which promises to dramatically increase mobile download speeds and usher in new, innovative products.
The industry argues that the U.S. economy could lose out on billions of dollars should it fall behind China in the race to 5G. In November, Huawei chairman Eric Xu warned that the U.S. is risking its first-place finish in 5G by preventing cheaper Huawei equipment from entering the American market. But other, less self-interested voices also see a serious benefit to the U.S. winning the 5G race.
5G is one area where the Chinese are rushing ahead, trying to spend as much money as they can to develop the technologies and maybe even setting some global standards that American and other companies would have to comply with, said Eric Harwit, a professor of Asian studies at the University of Hawaii at Manoa and author of the book China s Telecommunications Revolution.
Losing the 5G race to China, cautioned Harwit, could leave us maybe dependent, technologically, on Chinese companies and Chinese standards.
Shutting Huawei and other Chinese firms out of the Western world could slow China s 5G progress by denying it access to foreign capital. But Scott Moore, director of the Penn Global China Program at the University of Pennsylvania and a former State Department official, believes it will inevitably handicap American plans as well.
It does seem to me that you have a valid security reason for wanting to maintain control over that type of infrastructure, Moore said. The problem is, to create an alternative to Huawei and to other Chinese suppliers in that space is really, really expensive.
The White House has long seen 5G as a national security priority, even going so far as to float a widely ridiculed initiative last January to nationalize America s 5G build-out. But while that plan proved dead on arrival, Moore believes the campaign to block Chinese tech from the United States inevitably means the government will take on a larger role in any 5G effort. That role, he argued, could include substantial subsidies for telecom companies.
If we decide that the security risks have outweighed the costs of developing an alternative network, then I think Washington has to be in the driver s seat on getting that going, Moore said. And I think we have to expect it would involve some degree of public financing being plowed into that.
The notion that subsidies will be needed to make up for the loss of cheaper Chinese equipment isn t shared by all telecom experts. There are plenty of other willing equipment sellers, Phillips said. I just don t really see that [the rejection of Huawei] is going to stymie the market in the U.S., or stymie the market worldwide.
Harwit said the idea that significant subsidies would be necessary to complete America s 5G build-out is a little bit preposterous.
But even absent the 5G question, U.S. tech and telecom companies are still likely to be hurt by fraying U.S.-China ties. American firms such as Intel and Qualcomm supply tremendous amounts of hardware, including high-end computer chips, to Huawei, ZTE, and other top Chinese telecom companies. Should relations between those Chinese companies and the U.S. government continue to sour, some worry Huawei and ZTE will start looking for other suppliers.
We re not just talking about taking away a potential option in the market and us having to pay higher prices for telecom equipment, Struble said. We re also losing a big purchaser of American equipment. So it s going to hurt us on both ends we ll be paying higher prices to get equipment, [and] we ll also be selling less chips.