Today, Explained - I got 5G on it

Episode Date: March 27, 2019

You've heard about the trade war, but how about the phone war? Politico's Steven Overly explains why the US and China are fighting over Huawei and 5G. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Does your kid love to build stuff? How about having your kid build stuff that actually teaches your kid stuff about math and science? And it's still fun, so you can kind of trick them into doing it. KiwiCo is offering you, listener, right now the chance to try their educational projects for free. Go to kiwico.com slash explained to redeem the offer and learn more about their projects for kids of all ages. Throughout the country, mobile telephone stations are being expanded to become links in a nationwide network. The mobile telephone greatly expands the scope of voice communication. It provides added telephone service in our principal cities, allows for more efficient operation at railway terminals, furnishes easy contact between land and vessels on our

waterways, and at the same time adds to the convenience of travel. It provides an easy way of keeping in touch with vehicles on the major highways. It is one more step toward telephone service for anyone, anytime, anywhere. Stephen Overly, you cover technology at Politico. The whole world seems right now to be at odds over the future of telecommunications. What is happening? What's happening is perhaps the largest sort of shift in how we use our technology. And really what's behind this is something called 5G, which stands for fifth generation.

And it's essentially a much faster form of computing than what we have even today. You know, using our smartphones, all the apps we use, kind of the technology that powers that is about to get faster, it's about to get stronger. And there's a global battle right now about who controls that future. And at the center of it is this Chinese company, Huawei, which is like, what, like China's AT&T, but even bigger and more powerful?

Exactly. They're the largest telecommunications network provider in the world. And so what that means is a lot of the networks around the world, like the AT&Ts or the Verizons of the world, rely on Huawei technology. They're also the world's second largest provider of smartphones. They're behind Samsung, but actually bigger than Apple in terms of providing phones around the world. And so they're just this massive company with a lot of reach. And there's these real security concerns because of their ties to the Chinese government. And the U.S. has not been getting along with Huawei for a minute. What's the history of that beef?

Right. So there's all this tension right now, but really concerns about Huawei go back to the Obama administration. You know, in 2012, Congress released a report that essentially outlined security concerns that Huawei and ZTE, which is another Chinese telecommunications company, could be providing the Chinese government access to U.S. data or U.S. telecommunication networks if their technology were to be widely adopted. Huawei and ZTE seek to expand in the United States, but as a result of our investigation, we do not have the confidence that these two companies, with their ties to the Chinese government, can be entrusted with infrastructure of such critical importance.

Again, our advice to the private sector is this. Your obligation is to consider larger data protection and national security implications of your business decisions, and we would not advise doing business with these two companies. Certainly since that time, you've had lawmakers who position themselves as real hawks on national security or on defense that have been raising concerns about these companies. Why is this upgrade to 5G such a big deal? Like, what exactly is it, and why is it such a game changer? I remember, I think we all lived through the update from 3G to 4G, and like, I still use Wi-Fi most of the day, so I'm just a little confused about that.

I think a lot of people don't necessarily realize how often they are actually relying on these telecommunication networks now more than ever. Yeah. So when you're in your car, for example, and you're trying to use your phone, you know, chances are you don't have Wi-Fi in your car. True, true. You're relying on – or when you're taking the train or in more situations, you'll encounter where you want to use your phone, you want to transfer data, and Wi-Fi may not be available. So one of the reasons 5G is such a significant update is it's going to be much faster than 4G, which is what we have in a lot of places now.

Like how much faster? About 100 times. 100 times faster than what we have now. As with most telecommunication networks, you know, it will probably depend where you are in the service in your area. Like it won't be 100 times faster if you have T-Mobile. I have no comment on T-Mobile's telecommunications abilities. But, you know, it will be patchy. I think anytime we're talking about a technology update, including 5G, you know, there's what

companies promise, you know, what their marketing tells you and what you actually encounter in the real world. So how exactly does Huawei or any other telecom company implement 5G? Like, what is the technology that's actually being built right now? It's a great question and an interesting question because 5G networks will actually look quite different from the 4G networks that we have today. Okay. Which is part of what makes it a significant investment for any of these companies trying to do this line of work.

To break it down as simply as I can, right now we're used to having sort of these big cell towers, right, that sort of transmit over vast areas. 5G is going to be structured differently. You're going to actually have a lot of small towers, not even towers actually, they're boxes that could really be affixed to the top or side of a building. And you're going to have many of these smaller cells around cities, for example. Okay. Sort of many, many transmitting much stronger signals over a shorter range.

So how does the sort of implementation of 5G across the world, but especially, say, in China or the United States, cause this feud between the U.S. and Huawei in China to escalate. So right now there's this debate over who builds out those 5G networks, you know, who's going to create the equipment that goes in those different cell boxes. And so we're at kind of this critical point as these networks are just getting started, where the companies that build them out are kind of going to be locked in in many ways. You know, you'll have competitors, but, you know, once you've made this huge investment in this infrastructure, that's the company that's running your networks. And so it's a pretty pivotal question.

And I think that's one of the reasons why there's so much attention on Huawei right now. You know, we also have things like the trade talks. We have broader concerns about China's efforts to dominate the globe, particularly when it comes to technology and innovation. And that's also, you know, part of what's fueling this debate. I think there's a real fear that China could pull ahead of the United States on this and that there will be consequences for that. And what about the security concerns with China?

What's the U.S. most fearful of there if China, say, implements 5G networks here? So, you know, for these 5G networks to work, a lot of data, a lot of telecommunications or, you know, phone communications is going to be transmitted across them. And so that would include sensitive information. For the individual, it could be things like private phone calls or how you're using your computer or your mobile phone. For businesses, it could be transmitting, you know, sensitive information about their company or it could be kind of controlling devices within their organization, including big machinery in their manufacturing facilities. And for the government, it includes transmitting sensitive information, whether that's defense information or just any sort of federal information. And so there are concerns among

U.S. officials that if Huawei has built out these networks and they have strong ties to the Chinese government, the government could essentially use those networks to gather that information, to effectively spy on the U.S. government or U.S. citizens. There is some legitimacy to that. You know, there are concerns about security laws in China, for example, that require companies to provide information to intelligence officials. Traditionally, China has been much more involved in its economy and its big companies, sometimes owning big stakes in those companies. I think that is what's fueling a lot of the national security concerns about Huawei. And how is the U.S. acting on those concerns?

So the U.S. has taken some pretty bold steps. So last year, Congress passed a defense spending bill, and within that legislation, they effectively barred federal agencies from using Huawei's technology, and they barred those agencies from using contractors that use Huawei technology. Yeah, and the U.S. is the largest consumer, certainly in the country, if not the world. The U.S. government is the largest consumer in the country, if not the world. And so that's a lot of agencies and a lot of companies now in the United States that can't use Huawei technology

or ZTE technology, again, another Chinese telecom provider. And so that was a pretty significant step. It really limits the business that these companies can do in the United States. The Trump administration is rumored to be looking at other actions they could take against Huawei, against ZTE. But, you know, for right now, this act by Congress is probably the most significant step. And there are lawsuits, right? What's happening there? One of the real points of tension recently has been a lawsuit that, two lawsuits actually, that the Justice Department here has filed against Huawei and against one of its executives, arguing that the company has violated U.S. sanctions against Iran and that the company

has stolen intellectual property from T-Mobile specifically, but from U.S. companies. And these lawsuits, which were filed at the end of January, have essentially taken what's mostly been a legislative debate and kind of an economic debate and has now dragged it into the courts. And that's one of the key reasons that I think Huawei has been defending itself much more vocally lately. You know, after these lawsuits were filed, for example, Huawei's founder, who's typically, you know, pretty private and quiet person,

gave a couple of interviews to Western media defending the company, saying it's not a tool for Chinese spying and that, you know, the company is being inappropriately maligned by the U.S. government. The Chinese government has clearly said that it won't ask companies to install backdoors, and Huawei will not do it either. Our sales revenue is now hundreds of billions of dollars. We are not going to risk the disgust of our country and our customers all over the world because of something like that. We will lose all our business,

and then we would not be able to repay the banks. I'm not going to take that risk. I said I would shut the company down, also to express a kind of determination. We will not do this. You know, even more recently than that, Huawei has hit back with a lawsuit of its own, sort of essentially accusing Congress of behaving unconstitutionally when it banned Huawei's technology from federal agencies, saying that Congress doesn't have the ability to penalize a specific company when that company has not actually been found guilty of any wrongdoing. I object to what the U.S. has done. This kind of politically motivated act is not acceptable.

The U.S. likes to sanction others whenever there's an issue. They'll use such methods. We object to this. But now that we've gone down this path, we'll let the courts settle it. So we got Huawei and China flexing on one end and the United States flexing on the other. Where does this go? Well, I think it's important to note that this is not a debate that's limited just to the United States.

Really, the whole world has been pulled into this, partially because these 5G networks are going to be global. And while some countries share these national security concerns, not all of them do. And that's creating a real point of tension. Okay, so the past few days at this point in the program, I've had Luke Vanderplug on. Thank you. But Luke never actually fulfilled or built the project. I thought it'd be nice to give to an actual young person like someone under the age of 10. And my neighbor Jackson came to mind late last year. He had a birthday. So I wrapped up the project and wrote, you know, to Jackson, happy birthday on the box. And I left it on his front porch right before he would be leaving for school.

Because I kind of know what time he and his family leave for school. And just this week, since KiwiCo was back advertising on the show, I texted Jackson's dad, Terry, and I said, Yo, Terry, did you and Jackson ever get the gift I left on the porch, the KiwiCo project about whales? And Terry said he never saw the thing. Their projects are so desirable that they'll get stolen off your porch within like 20 minutes. KiwiCo.com slash explained is the place to go to learn more about KiwiCo. You can try it for free there.

Fun for the whole family. K-I-W-I-C-O dot com slash explain. So, Stephen, how are other countries reacting to Huawei's expansion and this sort of tension between these two superpowers? The reactions of other countries have really been mixed. And what's interesting, the U.S. has mounted a really aggressive campaign to convince other countries that Huawei poses a serious threat, that it should be banned from building out 5G networks. It's something that top U.S. diplomats and security officials have made a real push for globally. You know, just recently, for example, the Secretary of State Mike Pompeo said that the U.S. could withhold intelligence from countries that use Huawei's technology,

which is a pretty bold claim, but I think points to the seriousness with which the U.S. is trying to export these concerns about Huawei. I should say not all countries are biting, you know, I think for a variety of reasons, but mostly you're hearing countries trying to make up their mind for themselves about how real these national security concerns are, whether the U.S. maybe has other motivations here. So who's Team USA and who's Team Huawei? You know, I'd say in terms of Team USA, two of the countries that have come out strongest against Huawei would be Japan and Australia. Both have taken pretty bold steps to restrict the use of Huawei as they build out their own 5G networks.

OK. But the real focus for most people is on Europe. You know, Europe is one of our largest trading partners. They're a huge defense ally of the United States. And so a lot of the U.S. efforts to raise concerns about Huawei have been targeted at Europe. And there, the response has been mixed. a lot of the U.S. efforts to raise concerns about Huawei have been targeted at Europe. And there, the response has been mixed. You know, last month, I actually spoke with the retiring ambassador from the European Union here in the United States, you know, who said that he doesn't feel continental Europe is really ready

for one uniform response to Huawei. Okay. And you're seeing that play out. You know, countries like Poland and the Czech Republic, for instance, have signaled they'll be tougher on the company. Okay. one should do. Namely, first, discuss these sensitive issues publicly. And secondly, simply exclude just one participant, just because he comes from one specific country, per se. But I think we should not be naive about this, obviously. In China, they have very different laws than here. And we need to look at that carefully, evaluate it carefully, and then talk to our partners. There needs to be real proof of wrongdoing and proof of security concerns, and then a debate about how to maybe mitigate those

concerns. I would say the government in Great Britain, they're not ignoring what the U.S. is saying. They actually share some of the same concerns. I think many of these countries do. But where there's a division is how to respond to those concerns. The U.S. has been very strong about banning Huawei, keeping them out of 5G networks. Europe isn't ready to say that. I think a lot of these countries,

Germany and Great Britain in particular, feel that there might be other solutions. There might be other ways to keep Huawei in the 5G game, but sort of try to ensure that they're not acting inappropriately and giving any sensitive information to the Chinese government. German consumers need to be certain that the Chinese state isn't getting access to data on Chinese products that are sold in Germany. You're talking about Germany and the UK,

at least formally some of our closest allies. Things are getting a little sketchier now. Why don't these countries share the United States' concerns about this company? Well, some of them do share the concerns. It's not that they don't see Huawei as a threat. It's that they think there's a different response to the one the U.S. has proposed, which is sort of this outright ban. But it can't be ignored. There's also this perception that the U.S. war on Huawei isn't really about national security, that it's actually about kind of the U.S. preserving its economic and technological leadership. That's, I think, part of the reason some countries are skeptical of the U.S. argument for banning Huawei. And frankly, President Trump has fueled some of that perception with remarks that he's made.

I mentioned earlier the lawsuits that DOJ has brought against Huawei. President Trump has actually suggested that those charges could be dropped as part of its trade negotiations with China, that they're a bargaining chip on the table. And the Commerce Department imposed this stiff penalty on ZTE, and at the urgence of the Chinese president, Trump actually reduced that penalty in a way that helped ZTE, helped the Chinese government. And so some of the actions that the administration is taking, I think, raise questions about, you know, one, how committed they

are to this ban of Huawei, and two, you know, how pressing these national security concerns are if suddenly they can become a bargaining chip in a trade talk. What does it really mean if the U.S. maybe, in this regard at least, takes sort of a backseat in leadership if it sort of surrenders 5G to China or, as we've been seeing lately, like loses this race? It certainly could be a competitive disadvantage for the U.S. when it comes to creating new technologies that are based on 5G. You know, when you have this computing technology that's faster, that has less latency, you're going to be able to do a lot more, things that, quite frankly, you or I probably can't even conceive of right now. Seven or eight years ago, we couldn't

necessarily conceive of Uber technologically, right? Some of these platforms have been enabled by the fact that computing is much faster. And so if that innovation now comes from China, Chinese companies would certainly have a leg up on U.S. companies. This is perhaps a bit more nebulous of a topic within this debate, but there's a lot of discussion about values, you know, and it sounds sort of silly when we're talking about technology, but there are a lot of values that underpin technology, things like the freedom of data transfer, the freedom of expression online. Those are values that the U.S. holds very dear and that it says anyway are sort of built into the technology that it creates. If that technology is being created in China and by China, there's potentially a whole different set of values

that are baked into that technology. And so that, I think, is another concern that sort of underpins all of this debate around Huawei and all of this concern about who controls the future with 5G. Is it fair? I mean, you look at all the privacy issues we've had in the United States with Facebook, with Cambridge Analytica,

with any number of these scandals, Apple, Google, they're all there. Is it fair for the U.S. and for Americans at large to look at Huawei and China as this sort of automatically incriminating force? Or is there sort of more anti-China xenophobia sentiment there to be hashed out. There is definitely an anti-China sentiment involved in this debate. I don't think that can be ignored. Part of that is for good reason. You know, there have been a lot of instances where hacking or other sort of privacy breaches

have been linked to Chinese companies, even the Chinese government. Some of the business practices in China have long been very protectionist in terms of trying to advance Chinese companies over U.S. companies as opposed to creating a more level playing field. And so, you know, the skepticism with which China is viewed isn't baseless. But that now clouds kind of all of this debate. And I think, you know, we mentioned earlier the points that Angela Merkel made in Germany

about not wanting to ban a company just because of the country that it comes from. Part of why she said that is there's a perception that that is part of the U.S. motivation here to ban Huawei just because it comes from China. Instead, the focus on allowing companies from all countries to compete as long as they meet certain security and privacy requirements seems to be the direction that Germany is headed and perhaps other folks are headed as Stephen Overly, he writes all about the tech industry's influence in Washington, D.C. for Politico.

I'm Sean Ramos-Furham, and from Washington, D.C., this is Today Explained. Quick shout out before we go to the Recode podcast with Kara Swisher. Kara is the queen badass of technology. She gets interviews with all the heavy hitters, Elon Musk, Tim Cook, Sheryl Sandberg. On the latest episode of her show, she talks to me. We talk about this show

and where we think this young medium is going to go. We also talk about a movie filmed on the Santa Cruz Beach boardwalk that isn't us. It's probably the last time that'll happen. Recode, the podcast, now playing on devices everywhere. Thank you.