National Security Council: 5G a threat to US national security

We usually don’t write about (geo)politics, unless related to Nokia, but the recent news circulating American media got my attention by mentioning 5G and Nokia. Axios received a leaked memo from a US National Security Council official about the threat of 5G and China for US national security.

As the memo describes, China has strict regulation in their telecommunications market where 70% of the market share is dominated by Chinese vendors, while foreign vendors have a limitation to their share (I think max. 7% per company, but not sure). Such market share, coupled with government support, allows Chinese vendors, mainly Huawei and ZTE to faster develop and cheaper implement their networks gear abroad. As a graph included in the memo shows, in the last 6 years, Huawei gained 21% of the LTE market, while ZTE took 7%. The market share of Ericsson fell 19%. Nokia before Alcatel-Lucent acquisition lost roughly 15% of the LTE market, while combined with ALU the loss is “just” 4%. In other words, in 2016, Huawei took 29% of LTE market, Nokia 26%, Ericsson 24% and ZTE 12%.

Graph from leaked memo

The US sees Huawei and China as the No.1 threat to the upcoming 5G network inside and outside the US. Internally, the leaked memo suggests a nationalized 5G infrastructure, but the White House denies allegations of plans of nationalizing the network. FCC’s Ajit Pai is strongly against the state moving into private market. He argues that the federal authority couldn’t be as effective as the free market, saying:”Any federal effort to construct a nationalized 5G network would be a costly and counterproductive distraction from the policies we need to help the United States win the 5G future.”

Nationalization, in my opinion, isn’t the biggest “news” from this memo. Of course, the most capitalistic country arguing for nationalization is ironic by itself, but a much greater deal are the statements from the memo related to China. The memo suggests that an initiative where the US would help allies and developing nation in rolling out 5G with “secure equipment” could be a “democratic counter” to China’s Belt and Road initiative. A democratic counter implies that an “undemocratic” options sits on the table, too. This not only shows that China’s Belt and Road initiative is a real threat to US world domination (as I call it), but that 5G could also play a significant role in it. Not only from spying using “Chinese” equipment, but from a network that would allow a lot of unmanned military applications.

A part of the leaked memo mentioning foreign policy

Till today, we mostly heard about the technological advances 5G will bring, but here we have a real (geo)political concern about 5G. The memo uses phrases as “Chinese neo-colonial behaviour”, which is strong language, and brings up legitimate issues about 5G, Huawei and losing power in the region China targets with the “Belt and Road” initiative. Inside the US, a nationalized or a public 5G network won’t make a lot of differences considering the authority the government has via different agencies. The implication abroad could be huge, and for Nokia and countries like Croatia, where we are stationed, it could be positive.

The “democratic” countermeasure of (financially) helping allies build their 5G network with non-Chinese 5G equipment could accelerate 5G deployment in Eastern Europe, Africa, Middle East and other regions of interest. Belt and Road seems to be far more influential than the (US) media in general reports. China’s investment plan is aggressive by itself, and if we count 5G and potential measures China could make in response to United States’ 5G plan, a really interesting geopolitical future is ahead of us. Not to mention the tension that will be built up in the networks segment were Nokia operates.

You can find the memo (presentation) here.