TO: Security and technology community of the United States, its allies, and partners

FROM: Ngor Luong

DATE: August 22, 2024

SUBJECT: Stay ahead together: Identifying strategies to compete with China on global 5G

In May 2024, the Global China Hub of the Atlantic Council convened a group of technology developers, operators, and security experts for a workshop to identify strategies to compete with the People’s Republic of China (PRC) on global 5G. Participants discussed the impact of global 5G on the current and future economic and security environment, as well as strategies that the United States can pursue in coordination with allies and partners to leverage the technology for national competitiveness. This memo summarizes the workshop’s key takeaways to give policymakers a better understanding of the opportunities and challenges in developing and deploying 5G globally.

Strategic context

Fifth-generation (5G) wireless technology has the potential to bolster innovation and improve national competitiveness. Policymakers in the United States and China seek a better understanding of the security concerns and economic opportunities around the technology to lead in this new frontier. Spectrum availability and infrastructure are commonly used to compare 5G capability by country. Their impacts on 5G development and deployment are often intertwined. For instance, midband deployment for 5G results in a better range, which means fewer base stations built to achieve the same performance.

On the global stage, Chinese telecom firms have already deployed low-cost 5G equipment to various countries. Government subsidies have propelled Huawei ahead of its competitors. In 2023, the company led as the top global telecom equipment vendor, accounting for 30 percent of the revenue share. At the World Radiocommunication Conference (WRC) 2023, the PRC reportedly conducted more than 50 bilateral engagements and campaigned to gain global support for spectrum harmonization in the sub-6 gigahertz (GHz). This effort could further lower equipment costs for Chinese telecom firms while raising the cost of the competing equipment from trusted vendors, doubling the damage. With incompatible spectrum bands, US firms are locked out of harmonization benefits, including lower technical costs and economies of scale. Such harmonization will also likely boost the demand for 5G equipment compatible with that range, leaving the United States at risk of developing the technology in isolation.

Global harmonization led by China without US participation could create a bifurcated 5G world, with the country setting the global standard and the United States adopting a separate, incompatible standard. Chinese vendors could further benefit from selling to the global market, while US vendors remain reliant on widely used spectrum bands. Leaders in 5G will be able to set standards in both foundational infrastructure and spectrum range for future products to gain advantages in the commercial and security space.

Impact of global 5G on security standards and economic competitiveness

Reliance on networks with Chinese components in the supply chain can pose security threats to the United States and its allied and partnered countries. There are cybersecurity risks in procuring equipment from untrusted vendors, including product backdoors and supply chain vulnerabilities. Supply chain attacks threaten national security through sabotage and harm economic competitiveness by exposing private sector firms to espionage and intellectual property theft. Chinese policy requires domestic firms to maintain backdoors to give the government access to data for public security and intelligence gathering. Evidently, Chinese backdoors are installed in products shipped abroad to offer intel to the Chinese government. For instance, UK company Vodafone found hidden backdoors in Huawei equipment. Such a security breach of a country’s 5G network is also costly. If the vendor is compromised, the replacement of that vendor would require almost a complete rebuild of the network.

A bifurcated world with China leading in global 5G also imposes significant costs to economic competitiveness and innovation. Chinese telecom firms, benefiting from massive subsidies, have driven prices down and boosted global market share on an uneven playing field. Huawei’s prices are at least 30 percent lower than market prices. Non-Chinese firms would lose out on economies of scale, economic strength, and other competitive exports. In the current model, they are not effectively competing with the PRC companies. Moreover, as the market share of trusted vendors decreases, their incentive to invest in 5G and 6G research and development may also diminish. Chinese monopoly in the 5G market likely would reduce competition in the long run in ways that would not benefit the global community.

The security and economic benefits of 5G are not mutually exclusive. The United States and its allies need to be creative in addressing areas where there are competing interests. Workshop participants noted that commercial use of 5G need not trade off with that of the military. Both military and commercial stakeholders can coexist in bands targeted for 5G. Currently, the US military already operates its systems in the lower 3 GHz spectrum band used by commercial 5G networks in Japan, Taiwan, South Korea, and several NATO member states, likely through static coordination. There is an opportunity to scale static or semi-static spectrum sharing in the United States with greater coordinated access and certainty, with the recognition that there are challenges. In the United States, incumbent operators in the lower 3 GHz band such as the Department of Defense (DoD) determined that “sharing is feasible if certain advanced interference-mitigation features and a coordination framework to facilitate spectrum sharing are in place.” Additionally, studies suggest that static spectrum sharing may have limited spectral efficiency, that is, the maximum data rate to users per second with acceptable quality of service. These warrant the need to further explore new technologies to augment the efficient usage of finite spectrum resources. For example, the DoD and National Telecommunications and Information Administration (NTIA) initiated a “moonshot” effort to develop dynamic spectrum sharing (DSS) technology. The goal is to maintain the US military advantage and increase economic benefits by sharing the spectrum with commercial partners. It is worth noting, however, that DSS is not a quick solution. DoD and NTIA outlined a 12-to-18-month plan in collaboration with industry to advance DSS research. But others estimated that it will likely take five to seven years to deploy DSS successfully.

Meanwhile, the US government recently initiated studies to free up more spectrum bands at home. To implement the National Spectrum Strategy, NTIA is streamlining the technical studies of the lower 3 GHz band and the 7/8 GHz band.Workshop participants noted the urgency of completing studies to first determine the degree of spectrum allocation in the midband to support US private sector innovation and then coordinate with allies and partners to consider the band for potential harmonization. This should be done while recognizing that these technical studies are inherently time-intensive, and a challenge that is not unique to the United States.

Recommendations for coordinating with allies and partners to lead in 5G

The economic and security implications of 5G pose geopolitical challenges to the United States and its allies and partners. At the international level, US efforts to coordinate with allies and partners will have to address current challenges such as allocating spectrum bands for 5G domestically, countering China’s market-distorting behaviors, and mobilizing support from US allies and partners, and seize opportunities to benefit from the rapid development and deployment of 5G. Workshop participants raised several key areas in which the United States and its allies and partners can approach 5G in ways that align with their values.

Gain global acceptance via spectrum bands. The United States needs to ensure that its approach to identifying and allocating spectrum for 5G does not result in isolation on the global stage. Currently, studies of the lower 3 GHz band and the 7/8 GHz band need to move fast for the United States to coordinate with allies and partners, ensuring that it can capitalize on globally favored spectrum bands. There are clear benefits to identifying spectrum bands with which other countries can align. Commercially, it reduces the cost of equipment and expands business opportunities. Diplomatically, there are opportunities to develop a robust equipment ecosystem with like-minded allies and partners like South Korea and Japan using similar spectrum bands.

Such coordination is not without challenges. At WRC 2015, the International Telecommunication Union (ITU) rejected the proposed studies of the 28 GHz band, despite ongoing millimeter wave research and testing in the United States and other like-minded countries. Instead, the ITU prioritized the study of the 26 GHz band, now a globally accepted high band for 5G adoption, which was supported by multiple regions, such as Africa, Europe, and China. It’s worth noting that while the ITU’s Radio Regulations did not indicate the 28 GHz band as an IMT band for harmonization, global standards bodies like 3GPP have adopted a “tuning range” approach where the same equipment used for 26 GHz in Europe can be deployed in the 28 GHz band in the United States. This example indicates the role the ITU plays in accelerating the global adoption of certain bands for 5G. With the lower 3 and 7/8 GHz bands identified for WRC 2027 (WRC-27) study, there is a need to accelerate these studies and initiate coordination with other countries to ensure that it becomes a globally accepted band. The 7/8 GHz band, located adjacent to the 6 GHz band, falls within the same tuning range and offers similar benefits, making it a strong candidate for US-led harmonization efforts at WRC-27.

Improve the 5G global governance system. China has a history of manipulating global standardization bodies like the 3rd Generation Partnership Project (3GPP), which consists of equal representation by individual companies. Such equal representation opens the door to PRC influence. The Chinese government financially supports domestic firms to earn memberships and participate in the standardization decision-making process. Workshop participants raised concerns about Chinese firms, their history of intellectual property theft, and their market-distorting behaviors. For example, the Chinese government offers patent subsidies to increase firm and commercial presence in standards bodies like 3GPP. A 2019 study by IPlytics found Chinese firms owned 1,529 standard-essential 5G patents, or 36 percent of all 5G standard-essential patents, more than the 14 percent held by US firms including Qualcomm and Intel.Huawei has also sent 3,098 engineers to 5G standard-setting meetings and has filed 19,473 technical contributions. Addressing these challenges requires greater transparency to redress the PRC’s unfair standards process and create a clear global vision to govern both infrastructure and spectrum resources for 5G to enhance interoperability among US allies and partners.

Build partnerships with key regions. All participants agreed that it is crucial to avoid copying China’s playbook, that is, utilizing similar financing tools to compete with the subsidies given to PRC firms. Instead, the United States should focus on building relationships and sharing information to promote trusted alternatives, and secondarily encouraging partners to consider the economic and security costs of working with authoritarian regimes like the PRC and its firms.

In addressing these issues, the United States should also emphasize its commitment to digital sovereignty in establishing 5G partnerships with other countries. The US-Costa Rica alliance serves as an important example of an effective 5G partnership based on shared values and objectives. In April 2024, the two countries released a joint statement emphasizing their “strategic alignment with an affirmation of the visionary principles encapsulated within the 2021 Prague Proposals on Telecommunications Supplier Diversity.” These principles focus on using technologies like 5G for economic growth and societal betterment while also maintaining security.

To support wireless connectivity and innovation in Latin America more broadly, the United States must ensure that its spectrum policy avoids situations that could make China’s alternatives more attractive to countries in the region. The remaining strategic question facing US policymakers is how to define domestic 5G spectrum policy and to deliver a unified message to allies and partners, particularly on selecting trusted suppliers and allocating spectrum to stay ahead together in 5G. Workshop participants noted that an effective first step with allies and partners could be establishing greater predictability on the spectrum countries are likely to adopt.

Conclusion

The economic and security benefits of 5G have driven countries to compete for leadership in this technology. China’s playbook includes the use of industrial policy and export financing to suppress competition and exert influence on international standard-setting bodies and other countries. To effectively counter China’s market-distorting behaviors, the United States needs to coordinate to promote globally accepted spectrum bands, improve the 5G global governance system, and build partnerships with key regions. This is a critical first step in allowing the global community to gain access to a more secure, trustworthy, and diverse 5G network ecosystem while avoiding the trade-off between national security and economic benefits.

Ngor Luong is a nonresident fellow in the Atlantic Council’s Global China Hub. Luong is also a senior research analyst at Georgetown University’s Center for Security and Emerging Technology, where she focuses on China’s science and technology ecosystem, artificial intelligence investment trends, and artificial intelligence diplomacy in the Indo-Pacific region. Previously, Luong worked at the Center for American Progress, where she researched China’s industrial policy and 5G.

The Global China Hub researches and devises allied solutions to the global challenges posed by China’s rise, leveraging and amplifying the Atlantic Council’s work on China across its fifteen other programs and centers.

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