U.S. security experts are conceding that China has won the race to develop and deploy the 5G telecommunications infrastructure seen as underpinning the next generation of technological advancement and warn that the country and its allies must develop a response — and quickly.
“The challenge we have in the development of the 5G network, at least in the early stage, is the dominance of the Huawei firm,” said Tom Ridge, the former US Secretary of Homeland Security and governor of Pennsylvania on a conference call organized recently by Global Cyber Policy Watch. “To embed that technology into a critical piece of infrastructure which is telecom is a huge national security risk.”
Already some $500 million is being allocated to the development of end-to-end encryption software and other technologies through the latest budget for the U.S. Department of Defense, but these officials warn that the money is too little and potentially too late, unless more drastic moves are made.
(You can also hear more about this at TechCrunch Disrupt in SF next week, where we’ll be interviewing startup founders and investors who build businesses by working with governments.)
The problems posed by China’s dominance in this critical component of new telecommunications technologies cut across public and private sector security concerns. They range from intellectual property theft to theft of state secrets and could curtail the ways the U.S. government shares critical intelligence information with its allies, along with opening up the U.S. to direct foreign espionage by the Chinese government, Ridge and other security experts warned.
So far the U.S. has responded to this threat by delaying implementation domestically — banning the sale of Huawei’s products in the U.S. for one, and pleading with allies not to deploy the technology in their own countries.
The argument from the U.S. is that Huawei is essentially part of the Chinese government, has a reported track record of cooperating with undemocratic governments to surveil opposition parties and — for now — offers technology is so shoddy that it exposes networks to exploitation by malicious state governments and criminal activity.
In a risk assessment exercise conducted by the European Commission the German government concluded that current technologies may leave networks exposed to a “large-scale outage or significant disturbance of telecommunications services by nation-states or nation state-backed actors exploiting undocumented functions or attacking interdependent critical infrastructures”, according to a report in the South China Morning Post. The German report also cited “espionage of data initiated by nation-states or nation state-backed actors.”
Right now, delaying implementation and playing into the potential security threat that the Chinese government may pose are the only options the U.S. has, experts said.
Huawei’s opportunity
Huawei is pitching itself as not only the cheapest option on the market, but the only one that nations can fully implement right now. The risk, Huawei says, is that nations can either use its products or be left out of the increasingly competitive global market as new technologies are layered onto their higher-tech telecommunications infrastructure.
Technologies like autonomous vehicles, virtual and augmented reality, some machine learning applications, and other advancements will be enabled by the higher speed, lower latency networking capabilities that 5G provides. Countries that roll out the networking capabilities first will have a distinct advantage over others that take a more methodical approach.
That argument from Huawei has proven compelling for countries across Africa, Southeast Asia and Latin America.
To compete against that persuasive marketing pitch and the financial backing that Huawei receives from Beijing, the U.S. is going to need to open its wallet with far more than a $400 million commitment.
Senator Mark Warner, a Democrat from Virginia, actually proposed borrowing a page from China’s playbook to create a more interventionist industrial policy to compete directly with Huawei.
“We in this country have avoided the notion of industrial policy where the government tries to pick winners and losers. But when we compete with a nation with the size and scope and the focus of China, [current policies] may need to be rethought,” Warner said at the Washington-based United States Institute of Peace, a bipartisan, government-funded think tank.
The Senator floated the creation of a consortium created by the U.S. and its allies in the intelligence community known as the “Five Eyes” — Australia, Britain, Canada, and New Zealand — that would provide financing and support to create “a Western open-democracy type equivalent” to Huawei.
“There’s an undeclared digital war going on. We know that. They know that,” said Ridge. “[It’s] one thing [for them] to secure as much information as they can about our country through the backdoor. But the idea that we would willingly, knowingly permit them to embed their software in our telecommunications infrastructure is, to me, a political risk not worth taking.”
The private sector in the U.S. is already taking steps to respond to the threat. As Chris Cummiskey, a former Under Secretary for Management at the US Department of Homeland Security noted, end-to-end encryption technology developers already are working to secure communications on networks that are exposed to outside surveillance and hardware developers in Europe and the U.S. are moving quickly to bring their own technologies to global markets.
“Those guys [at the DOD] are freaking out and those guys have a pretty good reason to freak out,” said one executive we spoke to separately from the call, whose company develops encrypted communications technologies. “We’re going to lose the spectrum battle… I don’t see us being a more cost efficient manufacturer of hardware anytime soon… People who are going to be in the defense industrial complex are going to have to be using products that are hostile to everything.”
Meanwhile, Ridge agrees with Senator Warner that it may be time to rethink how the U.S. approaches competition with China in global markets.
“When you have a known adversary who has been responsible for economic espionage… surveillance… [and] for the theft of intellectual property and that known adversary is moving quickly and aggressively to expand tis economic and disproportionate geopolitical influence [through technology] we better look a little bit differently at the role of the public and the private sector in that space.”
As for countries who choose to do business with Huawei, Ridge basically called them insane. For him, the assurances from China amounting to “cross my heart and hope to die, we promise we will not spy on you” are meaningless. Believing them “is about as delusional as you can get,” Ridge said.