The global telecom industry is rejoicing after the US government said American firms would be allowed to work alongside Chinese ones on the development of 5G and other standards. Shares in Chinese technology firms have risen. There is even talk that sanctions against Huawei may be lifted.
Any such optimism will probably be short-lived. While this week's decision protects the global standards-setting system that includes Huawei, it is mainly a defensive measure aimed at safeguarding US interests. US authorities have merely recognized that boycotting groups such as the 3GPP, the mobile standards body, would have been a self-mutilating act. It could have made Huawei, already one of the most powerful companies in that community, look even stronger next to US firms.
"The United States will not cede leadership in global innovation," said Wilbur Ross, the US Secretary of Commerce, in his statement about the decision. "The Department is committed to protecting US national security and foreign policy interests by encouraging US industry to fully engage and advocate for US technologies to become international standards."
The rule change seems to have come after US stakeholders complained it would leave them at a strategic disadvantage. It is also a relief for other telecom stakeholders who feared a return to the old days of different standards for different parts of the world. While that still remains a potential long-term outcome of the current technology cold war, the risks have certainly diminished.
Perversely, the Commerce Department's move could precipitate much keener US interest in contributing to a global standard. China had a similar shift in the days of 3G. Originally determined to build a homegrown standard, dominated by local firms, Chinese authorities changed tack when their TD-SCDMA technology failed to attract much international interest. Subsequently, Chinese companies have concentrated their efforts on being as dominant as possible in the global institutions.
Unsurprisingly, Huawei is today one of that community's staunchest defenders. "If further fragmentation were to take place, the whole industry would pay a terrible price," said Guo Ping, one of Huawei's rotating bosses, during a recent press conference. "The lesson here is that unified standards are vitally important to industry development."
That is a somewhat awkward reality for US hawks. While they can remove Huawei from US networks, they cannot remove the network or technology expertise from Huawei. As a major licensor of mobile technology, the Chinese firm collects royalties on smartphone sales worldwide. Some of its smarts underpin the 5G networks that US operators are building, even if its physical basestations do not.
If the US is to remain a part of the global standards community, as it inevitably decided it would this week, the only way it can become less dependent on Chinese knowhow is to make the Chinese firms less influential in the standards groups. That could mean imitating China's strategy of trying to shape the international standard and essentially crowd out the other players.
How successful that strategy has been is up for debate. Huawei undoubtedly plays a more prominent role in the 5G standard than it ever did in 3G or 4G. Yet critics believe the company's influence has been overstated in the media. Its vast array of patents, they say, includes relatively few that are genuinely "standard-essential," despite the findings of several studies that tout Huawei's significance. Richard Windsor, an analyst with Radio Free Mobile, thinks US semiconductor giant Qualcomm has "a much stronger position in 5G" than one high-profile study gives it credit for. The 3GPP, for its part, remains tight-lipped on this entire subject. Revelations could be awkward.
Whatever transpires in the world of standards, no one should seriously expect a rapprochement between the US and Huawei after all that has already happened. Meng Wanzhou, the Chinese firm's chief financial officer (and daughter of its founder), remains under house arrest in Canada, awaiting possible extradition to the US to face charges of fraud. Countries including the UK are still under US pressure to ban Huawei from their 5G networks. And trade sanctions have not been eased.
Quite the opposite, in fact. A recent tightening-up of Commerce Department rules will stop Huawei from buying any components made with US technology. Previous restrictions covered only US components made on US soil, inflicting limited damage on Huawei and disappointing its US antagonists. Unable to procure equipment from important suppliers like Taiwan's TSMC, Huawei could be finished within a year as a result of the latest measures, according to some analysts. If that happens, any concern about US firms working alongside their Chinese counterparts in standards groups would be largely academic.
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— Iain Morris, International Editor, Light Reading