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The U.S. government doesn’t want 5G tech that’s made in China

WANG ZHAO/AFP/Getty Images

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Everybody wants 5G, the superfast next-generation wireless technology. And Huawei, the giant Chinese electronics maker, is the world’s largest supplier of 5G networking equipment. But the U.S. government banned Huawei and Chinese company ZTE from its telecom infrastructure back in 2012 because of concerns that the Chinese government could use the equipment to spy on companies and government agencies. This week, The Wall Street Journal reported that the United States has been trying to convince foreign allies to also dump Huawei.

The warnings about Huawei’s equipment might be working. On Wednesday, New Zealand banned the company from its telecom infrastructure. Australia did the same back in August, and the United Kingdom yesterday warned Huawei to tighten up its security overall. Stu Woo was one of the reporters who wrote the story in the Journal. He tells Molly Wood that the thing that makes 5G so useful is also the thing that makes it so vulnerable. The following is an edited transcript of their conversation.

Stu Woo: It’s going to allow many more devices to be connected to cell networks. So we’re talking things like a heart rate monitor, your sneakers, fridges and even things like self-driving cars and different parts of the factory. So the U.S. thinking is that if there’s Chinese equipment that’s connecting all these electronic devices, there are going to be a lot more things that are going to be vulnerable. From the U.S. point of view, they don’t want to give China the ability to find out how our factories are operating, how much stuff we’re making or give it the ability to just shut down all wireless communications. 

Molly Wood: Right, but from the business perspective, I mean what is the analogy here to not using the biggest supplier of a given technology? Would it be like not using, I don’t know, Windows worldwide? Just saying, like, “No, we’re going to wait until there’s another player in this game.” 

Woo: Yeah, that’s not a bad analogy. So right now there are only three major makers of cell tower equipment. That’s Huawei in China, they’re No. 1, and No. 2 and 3 are Nokia, which is based in Finland, and Ericsson, based in Sweden. And if you discount the U.S., where Huawei is barred, Huawei is about as big as Ericsson and Nokia combined. So I talked to a lot of wireless providers in Europe, and they say, “We’d like to use each of those three companies to compare their technologies. And we’d also like to use them so we can compare their prices and force one of the other companies to lower their prices.” So in the U.S., consumers pay more for their cellphone bills than basically anywhere else in the world. And part of that is because U.S. carriers can only buy from Ericsson and Nokia. They don’t have a third supplier that brings down prices. 

Wood: Is there a third? Is there a suitor waiting in the wings, if you will?

Woo: A new competitor? Is that what you’re asking? 

Wood: Yeah, is there another competitor? I know that Qualcomm, for example, has been working to try to ramp up its ability in 5G. 

Woo: Yeah, the company that stands to benefit the most is Samsung. You know them as the world’s biggest maker of smartphones, but in the world of cell tower equipment, they are a startup. And they could gain more market share if Huawei is banned from many markets. 

Wood: And then I guess the only other question is, is there evidence that the Chinese government has ordered Huawei or ZTE to sort of activate this spy network, or is this based on sort of a possibility that they could?

Woo: That’s a great question. There is no publicly available evidence that either Huawei or ZTE has either spied on or done any sort of cyberattacks on behalf of the Chinese government. When I ask U.S. officials about this, they say, “Well, look, there’s a classified report and an unclassified report, and I can’t say what’s in the classified report.” When I bring this up to the people who work at Huawei, they say, “This is like trying to disprove a negative.” For instance, if I told you, Molly, that, “Hey, I would never rob your home.” And you said, “Well prove it. Like, how do I know that you’re not going to rob my home, you know, 30 years from now.” Well, I can’t do that, and that’s how Huawei feels about this. So it’s more about the possibility and a Chinese law that compels Chinese companies to aid authorities in any sort of investigation. That’s what they’re worried about, the possibility. 

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