5G Infrastructure for Global Digital Economy: US and China in Race to Redefine the World Order

5G Key Features

5G is the next generation of wireless technology. ‘Generations’ are technically defined by their data transmission speeds and in encoding methods, or ‘air interfaces’. These promise greater speed (to move more data), lower latency (to be more responsive), and the ability to connect a lot more devices at once (for sensors and smart devices). 5G networks use OFDM encoding, with the air interface designed for much lower latency and greater flexibility than LTE or the 4G technology.

5G will have data transfer speeds of up to 100 gb/sec; latency of only 1 ms - much lower than 4G, and will enable a video film to be downloaded in 1 sec. It will support more connections on a broad range of frequencies 300 MHz-90 GHz, and a million devices per sq kilometre. While most 4G channels are 20 MHz, 5G channels can be up to 400MHz. Data will move 100 times faster; it will handle far more data, with far lower lag times. It is about machine-to-machine communications, with billions of Internet of Things (IoT) devices connected - from washing machines to self-driving cars to entire smart cities. Its architecture supports three service categories:-

a. eMBB (Enhanced mobile broadband) – entertainment, smart home;

b. mMTC (Massive machine type communication) – smart city, IoT devices;

c. URLLC (Ultra-reliable low latency communication) – driverless cars, e-heart surgeries, virtual reality, augmented reality.

5G is an investment for the next decade. This infrastructure will transform society, industry, automation and be the backbone for digital economies throughout the world. Unfortunately, the race to control this technology has taken a rather ugly turn with the United States linking Chinese technology to a national security concern and also to trade issues with China. Starting with cyber security concerns in Huawei 5G technology, with back doors for espionage by the Chinese government and Chinese security laws that can enable such espionage, have led to global debate on Huawei and national security.

NATO Cooperative Cyber Defence Centre of Excellence report on ‘Huawei, 5G and China as a Security Threat’ issued in March 209 observed that “To date, there has been no evidence, at least publicly, of significant vulnerabilities in Huawei technology.” The report also notes that “Huawei is the largest telecom equipment manufacturer in the world; it passed Apple as the second largest maker of smartphones after Samsung, presently the only company that can produce at ‘scale and cost’ all the components of 5G network, with its closest competitors Nokia and Ericsson not yet able to offer a viable alternative.” This pretty much answers the cyber security concerns voiced by the US. Snowden revelations in 2013 provided enough proof that the US National security Advisor (NSA) and the UK Government Communications Headquarters (GCHQ) are no saints when it comes to surveillance and espionage.

It needs to be underlined that many countries, including China and the US have been conducting research on hardware Trojans. Notwithstanding Chinese efforts – over 400 papers since 2010 in Chinese language domestic journals with proposals for Trojan circuit designs – it is the US that is still considered the leader in hardware hijacking. Researchers from the University of Cambridge believe that “a backdoor on Huawei’s HiSilicon chip is more likely to be caught than on a chip of American semi-conductor company Xilinx.” This group works on both detection and planting of Trojans in processor chips. The British government publishes annual report on the security of Huawei products. March 2019 report identifies hundreds of vulnerabilities in Huawei products. A government official said, “It does not identify any deliberately planted back doors but lists numerous problems that are very common in commercially developed programs.” This was echoed by the FireEye in media briefing in Hong Kong in July 2019, “Speaking strictly from a security perspective, we have seen nothing from Huawei that would give us alarm”, and by Stephen Chen of the South China Morning Post in July 2019, “Huawei has nowhere to hide amid Trojan claims”. This pretty much sums up the debate on cyber security concerns in Huawei products, but is not likely to close it.

Why does 5G matter?

5G is a big opportunity to build global infrastructure, a challenge to the West. Digital economies will ride on these platforms – routers, switches, base stations, smartphones, towers, cloud data centres! This is a fight over who will build and lead innovation for the next generation of internet and telecommunications technology. Is the Western reaction a response to ‘Made in China 2025’ plan? China declared in 2016 its plan to build all core technologies – semi-conductor chips, 4G/5G telecom equipment, e-commerce and social media platforms, hardware and software for all kinds of digital economy apps including Fintech, digital payments, and entertainment, encryption technologies, quantum computing, smart cities connected through IoT devices for increasing productivity and efficient governance. It’s another story that technologies such as facial recognition, CCTV cameras are increasing surveillance and control of people in China. But then so are the uses of same technologies’ increasing the hold of companies like Amazon, Facebook and Google - and of the Western governments over the people through implicit understanding or coercion through laws enacted in the democratic governments. European biometric database is an example of that.

China Continues to Innovate

So, it’s clearly not cyber security or national security concerns. It’s the Chinese political and technological challenge to the hegemony of the West in 5G infrastructure that is the issue. And 5G will be critical to the growth of digital economies. From reverse engineering, copying, espionage, and forcing global companies to transfer technology as a condition to access its vast market, China, in recent years, has emerged as an innovator in many advanced technologies. 5G technology and smartphones constitute only one of these. Artificial Intelligence (AI), Machine Learning (ML), digital payments, social media, smart cities and in many more areas its prowess is becoming visible. To highlight the importance of innovation, to quote one example, processing of e-commerce transactions’ peak volumes on festivals like single day, the a big challenge that companies like Alibaba have taken head on. The peak demand of e-commerce transactions in the US is only three times the off-peak demand, while it’s eleven times in China.

The challenge is to process peak volumes of transactions in acceptable timeframes. China treated this as an opportunity to scale up its technological prowess. Alibaba’s payment platform processed 120,000 transactions per second, which was three times that of a leading global payment system capacity. Chinese cloud providers created world records in computing efficiency. In a 2016 Sort Benchmark competition on cost efficiency, Alibaba’s cloud set the record at $144 for sorting 100 terabytes of data, while it was the US companies that held the record at $155 in 2015, and $451 in 2014. Similarly, in sorting a trillion unordered records of size 100-bytes, Yahoo was at the top with 1.4 terabytes per minute (tpm) in 2013. But it was overtaken by Baidu with 8.4 tpm in 2014, Alibaba at 18.2 tpm in 2015, and Tencent at 60.7 tpm in 2016! It is obvious that massive computing platforms with cost competitiveness are setting the stage for AI and ML in wide range of applications.

Against the backdrop of Trump order placing Huawei and a few more Chinese companies in the Entity List, China is moving forward to convert the ban into an opportunity to innovate. Threat to cut Huawei’s access to Android has made it unveil its own Operating System (OS), named ‘Harmony’ (Chinese name HongMeng), in the Huawei Annual Developers’ Conference on August 9, 2019, in Dongguan, South China. It will be initially rolled out on devices like smart watches and smart TVs, not on smart phones. Huawei needs buy in of the global developers to create apps on its platform, to make Harmony acceptable in the world. With advantage of a huge internal market, tacitly backed by the Chinese government, it may not be difficult for Huawei to create a compatible version of WeChat super-app, which is absolutely critical for its success, more so because Tencent Holdings is on the board of Huawei. That alone will enable Hongmeng (Harmony) transition to phones from IoT devices. The Android apps will thus run on Harmony. An International Data Corporation (IDC) analyst said, “It’s not easy to build up a base of developers unless they have a critical mass of users to cater to.....It’s difficult to compete with Android and iOS outside China.” So from internal market to global will be a big leap of faith for the developers that will pave the way for Harmony smart phones to appear. The Huawei service processor (SVP) told the global app developers that it’ll take them only a day or two to port their apps to Harmony. It’s that simple. Till then Huawei will depend on Android, and hence on Trump!

US Government trying to Redefine the World Order

In May 2019, the US government placed Huawei on the Commerce Department's Entity List, banning the tech company from buying critical parts it needs from US producers. While the current trade war between the US and China is underway, it's this brewing technical war that has the potential to reshape the world order. And it's starting with this Huawei development which is couched in terms of cyber surveillance and espionage leading up to national security. The US is fuelling fears that Huawei, through its 5G networks, will engage in surveillance on behalf of the Chinese government. In an effort to shape the world order, the US has gone to the extent of using Cold War terms for the next generation networks that nations will be building. Secretary of State Mike Pompeo has struck a cautionary note to the world leaders arguing that the Internet ".... has to be a system that has Western values embedded in it, with rule of law, property right protections, transparency, openness. It can’t be a system that is based on the principles of an authoritarian, Communist regime.” The world is sought to be divided between US-led or China-led 5G infrastructure!

European leaders are viewing this through the prism of their own trade interests with China. Chinese retaliation can result in job losses in countries like France, Germany and the UK. They believe there are elements of the network that Huawei could build without endangering national security, with Western telecom firms such as Nokia, Ericsson building the core of the network, the software-heavy switching systems that govern how machines and humans will talk to one another. Huawei could be assigned the more peripheral parts of the networks - the cellular tower systems that communicate with phones and other devices.

But Trump makes no bones about Huawei being a lynching horse in its trade war. "We're not going to do business with Huawei. We're not doing business with them," Trump told reporters on Friday (August 9, 2019), and "That doesn't mean we won't agree to something if and when we make a trade deal.” Trump is clear that the US would not do business with Huawei, but that could change if there was a trade deal! 5G is not a national security, but a trade issue, and also perhaps a technology supremacy race.

Where does India fit in the Global Order, and what is the Way Forward?

While there will be normal cyber security challenges because of vulnerabilities, as reported by British reasechers, the key question is whether 5G presents a bigger national security challenge? How different it is for India with technology from Huawei and others? Do we have to choose 5G technology from either of the two camps - US-led or China-led. Its importance for our digital economy, and for our armed forces does not need any reiteration. But what is it that we need to do while upgrading our telecom infrastructure? India has developed technological capability in 4G and 5G to some extent, and can be ready with own technology in 2-3 years, provided the government supports the industry.

We need not be caught in a bigger global trade war that is reshaping the world order. But given the hype around 5G globally, India has to start trial runs if we have to be at the forefront of building 5G for five trillion dollar economy. We don’t have any cyber security testing labs for testing telecom equipment. Given surveillance history of the US NSA, India has to test equipment from Nokia, Ericsson or Huawei. No short cuts. Some immediate short term measures are required.
India has to take up the design and development of the end-to-end holistic architecture of the national digital communications and computational infrastructure, that will act as a blue-print to decide the critical components that need to be controlled and regulated strategically, components can be supplied by global players, and components that need to be indigenously developed and deployed. This blue-print should act as the guiding principle for making all policy decisions regarding the relevant technologies. Sadly, we don’t have one, as outlined below.

Lack of framework to develop and induct indigenous technology.

Several start-ups have created innovative technologies in the country. However, there are no mechanisms to induct them into military and the government due to archaic norms of tendering etc. A start-up cannot have proven sites, the Government has no ability to evaluate innovations, and officers play safe by choosing existing solutions from abroad. Start-ups lose steam against the bureaucracy and move to Singapore or the US. This trend has to be arrested. For example:-

a. In the US, military funds innovative research by framing its requirements at high level. The technologies thus developed by companies – big and small – are deployed in test beds, sandbox environments, and then get rolled out on a large scale. And the tested technologies find global markets.

b. In China, it’s very different. Government lays out a blue-print for the industry to collaborate – it gives large funds, industry too invests – to develop technologies. For example, scores of initiatives under the ‘Made in China 2025’ to develop core technologies are taken up by the industry and deployed nation-wide. Developments are proven, and ready for the global markets.

India is unique. It doesn’t fit into any of these models.

So how do we handle the challenge of building core technology ourselves, and deploy the same. Creating R&D capacity, and cyber security and testing labs in the private sector are the immediate tasks for the government. Some of the policy initiatives are as follows:-

1. Government should fund R&D in 4G and 5G in the private sector for long term goals, say matching funds invested by private sector, with the condition that the licence for IP developed with grant, will be retained in India. It should provide start-ups with test beds in military for trial runs, and for telecompanies to deploy on trial in sandbox environment under the watch of TRAI, before large scale acceptance of indigenous platforms.
2. Initiate the setting up of a cluster of labs across the country in a Public Private Partnership (PPP) model that can focus on development of the next generation communications and computing infrastructure, so that we don’t play catch-up and are ready with the required core technologies for the future. In the immediate future, the Government can extend the usage of lab facilities given to academic institutions under 5G test bed and other nano-science activities to the start ups doing research and development (R&D) in 5G. This should also include creation of a semi-conductor post silicon test and bring up ecosystem - RF and communication protocol testing, ESD testing and failure analysis laboratories - and open it to Indian industry. Today not only one has to go out of country for fabrication, even to do some of these IC test and debug activities one has to send chips out of the country incurring delay and expense.
3. Existing Wipro cyber security lab in Hyderabad, for its global clients, can be mandated by the Government to test and certify components and products from 4G/5G vendors. However, the government has to notify standards for this to happen. For testing various components of the network including firmware chips etc for vulnerabilities and finding back doors, the government should require the global companies to share firmware code and other relevant details for testing by this lab
4. Encourage and incentivise adoption of Indian semi-conductor chips:-

a. Mandate usage of Indian semiconductor chips in defense and strategic network equipment wherever Indian chips are available/feasible within reasonable time.

b. Clearly identify and promote the indigenized core technologies critical to the systems in programs like ‘Make in India’.

c. Incentivise the telecom operators to use Indian made equipment (maybe subsidy on license money or some other method).

d. Indigenous products in core technology face tremendous price pressures in the market from incumbents. As an example, owning WiFi chipsets would mean significant technology ownership in India. But these chips are being sold as commodities, at very low prices, since the R&D expenses have been recovered by incumbents over decades. But a policy such as the government subsidizing, say, the first million units of any indigenously developed and owned chip/system sold by an Indian company, can help ward off the pricing pressures and establish a market. Lessons of Software Technology Parks can also help.

5. Electronics company for fabless chips development and for setting up a fab needs to be set up in the private sector for fabless chip design and development for myriad applications in military and commercial space. Funding by the government is essential, which can be tied up to a roadmap of deliverables. Such a company can enlist participation of start-ups, use their technologies, create patents, participate in setting up of global standards in 4G, 5G, cloud infrastructure, chip standards etc. It may leverage Japan as a partner for fab technology. Key objective is to ensure that IPRs belong to Indians, and stay in the country.
6. Some other challenges are the absence of a standards and compliance body and indigenous encryption technologies for sovereign data control. Above all, the absence of a framework to help induct indigenous 4G/5G technology developed by start-ups in the national telecom infrastructure. There are some options like a Large Scale Integrator (LSI) that maybe the face of a complete integrated solution for the military and other critical infrastructure applications, built around technologies developed by start-ups. Or a consortium of start-ups be recognized as a national effort to roll out these technologies.

Immediate Steps

5G will be key to Digital India becoming a trillion dollar digital economy, and a significant part of five trillion dollar economy in five years. All the telecom companies use equipment manufactured by Nokia, Ericsson, Huawei, Samsung and Siemens, like any other country in the world, except that Huawei from China has attracted major attention. 5G trials have to begin. India has to test both the Western and Chinese equipment for security, especially back doors. It is time that the indigenous technology developed by start-ups be inducted for large scale trials by telecom companies. India has time to do so since it is projected that even by 2024, only 6 percent smartphones will be 5G.

Data consumption per smartphone per month in India is presently 9.8 gb; it will double by 2024 as subscriptions reach 1.1 billion, out of which 82 percent will be LTE (compared to 38 percent in 2018). Ericsson estimates that users are willing to pay 66 percent premium for 5G TV, Virtual Reality Cloud Gaming, 5G in-car entertainment and virtual Tactile Shopping. Thus 4G will be in use for another decade; it’ll continue to improve, reaching data transfer 2 gbps. So, India still has time to put its act together! We need to remember that in India the present 4G data transfer speeds average 6 mbps, compared to 45 mbps globally. So, we have a long way to go.

In 5G trials we must include Indian start-ups. It is time that telecompanies be asked to test and try the 4G and 5G chip sets of start-ups in field trials, under the aegis of the regulator. This alone will give them a chance to prove their technology in competition with Nokia, Ericsson, Siemens, Samsung and Huawei. We have enough time to help them rollout and compete. As noted above, governments in the West and in China have models to help develop technology through funding, buying the same and deploying it in key projects in military and civil sectors. Without this effort, India will remain a laggard in indigenous technology development, and dependent on imported technology. In the absence of government’s ability to evaluate and test technology, the start-ups are at disadvantage with respect to foreign players who come with proven and certified technology. Start-ups cannot be put at disadvantage for government’s inability to test and certify technology. Some of the above policy approaches be tried immediately.

(Dr. Kamlesh Bajaj was the Founder CEO, DSCI; and Founder Director, CERT-In. He is a Distinguished Fellow at EastWest Institute, a global think tank and Adjunct Professor, NIIT University, Neemrana)