By William Rau and Claude Barfield
In our last piece, we outlined a number of steps the Joe Biden administration could take to strengthen US leadership in 5G. Here are our additional recommendations.
Employ a targeted national security
rationale for Huawei restrictions
When it comes to China and 5G, the Biden administration will have to navigate a series of complex challenges related to trade and national security. First, the new administration seems ready to continue — and even tighten — the Donald Trump administration’s crackdown on Huawei’s use of US semiconductors in baseline 5G equipment. In 2019, Huawei was placed on the Department of Commerce’s Entity List, cited as a “significant risk” to US national security. But the Trump administration left loopholes allowing some US and foreign companies to continue selling components and semiconductors to Huawei. Last week, the Biden administration closed those loopholes, with Commerce Secretary Gina Raimondo asserting the new administration will utilize the Entity List “to its full effect.”
Beijing has hotly protested the administration’s actions, arguing they render the US untrustworthy as a trading partner and would “severely disrupt” world supply chains — an acknowledgment that the restrictions would cripple Huawei’s 5G operation. Still, whether these constraints will be limited to 5G or extended to other Huawei products remains to be seen.
Another complication stems from a federal district court ruling this week that granted Chinese smartphone giant Xiaomi a temporary injunction against a Trump-era investment ban. The presiding judge called the US government’s stance “deeply flawed,” and at a minimum, the Biden administration will need to present stronger national security evidence against the company if it decides to appeal.
The view here, as noted in previous posts, is that there is a strong security rationale for excluding Huawei’s baseline 5G equipment from US networks — but extending this logic to Chinese firms’ other lines of business moves into the realm of anticompetitive sabotage.
international pressure on Huawei
According to one report, Huawei and ZTE held a combined 41 percent share of the global 5G equipment market in 2020 — Huawei with 31 percent, ZTE with 10 percent, and western rivals Ericsson and Nokia each with a mere 15 percent. Huawei also claims to have built over 140 5G networks in 59 countries thus far.
It appears the US campaign to convince allies not to use Huawei 5G equipment still has a ways to go. Here, Biden inherits a partially successful campaign from Trump; the Five Eyes, France, Sweden, and several Baltic and Eastern European countries have already limited or excluded Huawei from their 5G rollouts. But given Huawei’s continued dominance, the Biden administration must maintain pressure on European and Asian partners.
Finally, new reports indicate Nokia is struggling to finance its 5G rollouts and will cut some 10,000 jobs to lower costs. While Ericsson is in better shape, both companies may need help to compete with the huge subsidies Huawei receives from the Chinese government. And though open radio access networks (O-RAN) may ease competitive challenges in the future, the US and its allies may be forced to take counter measures (i.e., funding western competitors) to stem the Huawei juggernaut.
Work with Congress to fund key 5G initiatives
In December 2020, the Federal Communications Commission (FCC) unanimously ordered American carriers to “rip and replace” Huawei and ZTE baseline equipment from their networks. Lacking funds to reimburse carriers for this, then-FCC Chairman Ajit Pai urged Congress to swiftly finance the operation as it had promised in 2019. Two weeks later, Congress followed through with $1.9 billion in funding, and the FCC has begun deliberating which carriers will receive subsidies, and how. Assuming FCC Democrats will continue the initiative, further progress appears imminent.
Rip and replace represents a gold standard for cooperation between agencies and Congress. The USA Telecommunications Act — likely to become law soon — would authorize Commerce Department grants for US carriers that deploy O-RAN 5G technology, giving Commerce the authority to select grant recipients and advise Congress on O-RAN. The bill stipulates that Congress should ensure the Commerce Department consults with the FCC on where to allocate funding.
Bolstering the US 5G workforce is another key objective. Michael Mandel predicts 5G will create 4.6 million jobs over the next 15 years, and the bipartisan Telecommunications Skilled Workforce Act (reintroduced last month) represents a good first step. If passed, the bill would authorize a working group led by the FCC to address the need for more tower technicians and telecoms crews, which FCC Commissioner Brendan Carr has championed. As previously discussed, Biden should look to capitalize when goals align across parties and agencies, and appoint a White House 5G czar to take charge when they do not.
Unforeseen challenges are inevitable, but for now, Biden’s work is cut out for him.