How can America regain its technological sovereignty? The big-picture concept, described by White House economic adviser Larry Kudlow, is to have all the U.S. 5G architecture and infrastructure principally supplied by American firms. In this big picture, Finland’s Nokia and Sweden’s Ericsson are included because “they have big U.S. presences.”
Kudlow believes in the free market economy and small government, a stable dollar, and deregulation. So, when the U.S. Attorney General William Barr suggested that the U.S. should take control of Nokia and Ericsson to challenge Huawei, to put “our large market and financial muscle behind one or both of these firms” and to “make it a far more formidable competitor,” Kudlow dismissed the idea outright.
The U.S. government, Kudlow said, “is not in the business of buying companies, whether they’re domestic or foreign.” Instead, the White House will host a 5G summit with global tech leaders in early April.
Exactly how an industry discussion can hasten the development of an alternative to Chinese technology remains unclear. What’s clear, however, is that the lack of a viable alternative has dampened America’s efforts to clamp down on the use of Huawei products in Europe. Of the 91 contracts that the Chinese company has signed over high-speed 5G networks worldwide, 47 were with European operators.
Huawei in Today’s World
The most unpleasant fact remains that the historical total control of the high-tech sector by America cannot hold. Powerful incumbents like Cisco and Alcatel-Lucent, along with Nokia and Ericsson, have long been disrupted by new entrants, much like how General Motor, Ford, and Chrysler were disrupted by Japan’s Toyota and Honda and Korea’s Hyundai some twenty years ago. Equally, Huawei is no longer a scrappy upstart doing businesses only in “the third world.”
Today, Huawei is filing the most patents in Europe, has spent more money on research than Cisco or Nokia or Ericsson, has earned half of its revenue from outside of China, has more than 40,000 non-Chinese employees, boasts an income twice as much as that of Cisco and significantly more than that of IBM, and has been said by British telecom network BT to be “the only one true 5G supplier.”
And without Huawei, Apple wouldn’t have its largest international market, China, which just can’t seem to buy enough iPhones. Facebook wouldn’t have a well-connected India, Bangladesh, and the entire continent of Africa for the overseas expansion of its social network.
It’s the idea that using technology to alleviate the suffering of billions of impoverished people is made possible only because of new entrants who don’t mind doing the scrappiest work at the lowest margins that allows a low-cost disruptor like Huawei to grow and become dominant.
The lesson here is there is no fix, and the solution would certainly not be to direct our hatred and fear toward one company in a doomed last effort. All seems broken and in ruins, but it isn’t. A fix, however, does require a pivot in our focus to do what matters.
Battle Over 5G
The battle over 5G is not over some basic or even applied research agendas spearheaded in Silicon Valley or Shenzhen. The battle is over product standards. What’s at stake is the mundane, unexciting coordination factors required to grow the network at scale.
Inside the United States, fiefdoms are vying for power. The day the Federal Communications Commission considered assigning the low-frequency spectrum to the 5G network, NASA and the National Oceanic and Atmospheric Administration protested, claiming doing so would affect the reliability of weather forecasts because of radio interference disrupting satellite equipment.
At a time when China is aggressively pushing 5G ahead, the American wireless-communications policy is being overseen by an astonishing tangle of agencies. All have overlapping interests and bureaucratic turf to protect. And most notably, the agency most closely charged with overseeing 5G, the National Telecommunications and Information Administration, hasn’t had a leader for months, with no director even nominated. The technology risk that the United States is facing is largely due to a lack of personnel.
Across the government, for instance, nearly 100,000 federal law enforcement agents, officers, and personnel are working without permanent agency leaders, from Customs and Border Protection and Immigration and Customs Enforcement to the Drug Enforcement Administration and the Bureau of Alcohol, Tobacco, Firearms, and Explosives.
The lack of leaders in these agencies, and the consequential lack of coordination, is because there has never been a systematic transition for the Trump administration. Trump decided early on during his campaign to shut down the transition team. It was Steven Bannon and Chris Christie who reportedly begged him to at least do the minimum to meet the legal requirement.
Lacking Government Support
Then there is the groundwork that must be carried out before “the market” can turn innovation into commercial products. The Internet, GPS, the Kevlar vest, fracking technologies, and solar and wind technologies were never the brainchildren of private-sector research. They are the results of research paid decades ago by the government. Early-stage innovation in most industries would not have been possible without government support.
At the time of this writing, the president has proposed cutting research spending in nearly every arm of the government, including by $424 million at the National Science Foundation, $4.7 billion at the Department of Defense, and $3.2 billion at the Department of Energy. Except in key areas, including artificial intelligence and quantum technologies, the overall funding for fundamental research is to be reduced.
Herein lies the biggest risk. Competing with other nations in innovation is not like competing in chess. Unlike a game of chess, information for innovation work is never complete. The ceding of technical and scientific leadership to a rival is not about launching a new app faster. What’s costly is the innovation that is never created because the country has ceased to lay the groundwork for it.
It’s cutting 26 percent to the Environmental Protection Agency, which has eliminated many of its research programs, while also nixing money for the Energy Star rating system. It’s about what you never learned, which might have saved you later. It’s the willful destruction of the green energy sector, of which China is also racing to the front in addition to 5G and artificial intelligence (AI).
Whatever Washington would like to call it – the trade war, the AI arms race, the battle over tech – at the heart of the matter, it is impossible to escape the antiquated idea of war. The more transparent the power grab or the more naked the justification of a crackdown, the more barbaric the language of war becomes.
Leaders who deem war the sole and inevitable solution to disagreement are not only helplessly retrograde but also intellectually deficient. There is no way that China can destroy the U.S. alone. Only America possesses the total capacity to erode its own advantage to the point that it sinks into irrelevance.