You may have heard that China has cornered much of the world’s supply of strategic metals and minerals crucial for new technology, including lithium, rare earths, copper, and manganese used in everything from smartphones to electric cars.
As of 2015, China was the leading global producer of 23 of the 41 elements the British Geological Society believes are needed to “maintain our economy and lifestyle,” and had a lock on supplies of nine of the 10 elements judged to be at the highest risk of unavailability.
But you may not know that China is also on track to control most of the world’s flow of high-capacity online services the new industries, relying on the immediate communication among humans and machines, that will provide the jobs and opportunities of the future.
China’s Belt and Road Initiative, supporting infrastructure and investment projects in nearly 70 countries, will have profound consequences for 40 percent of the world’s economic output.
Crucially, each of the many trans-Eurasian rail lines that are part of this mammoth project will be accompanied by fibre-optic cables carrying impossibly huge amounts of data across thousands of miles without delay. According to Rethink Research, China is also planning to deploy fibre-optic connections to 80 percent of the homes in the country.
China’s ambitious deployment of fibre will have several consequences. In communicating with Russia and Europe, it won’t have to rely on undersea fibre-optic cables running through the Indian Ocean that might be subject to surveillance by the US. Even more important, it will have access to a giant market of consumers and businesses across an enormous terrestrial area that ties Central Asia even more closely to Russia as well as China.
Fiber-optic cables made of hair-thin, extraordinarily pure, synthetic glass through which pulses of light encoded with tens of thousands of gigabits of data are sent each second by lasers have been around for a while. fibre runs today between continents and between US cities.
What’s new about China’s massive deployment of fibre, both in its own territory and in its global market along its planned Belt and Road, is that China is likely to permit only 5G equipment made by Huawei and a handful of other Chinese companies to connect to that fibre.
Ninety percent of any wireless transmission actually moves through a wire attached to a “cell” spewing and receiving data from the outside air; in the case of 5G, that wire will have to be fibre. And the entity installing fibre in the ground or on poles can decide what 5G wireless equipment is allowed to physically connect to that fibre; in China’s case, it’s clear the country will prefer its own companies’ equipment.
A crucial element of 5G is to give wireless companies the ability to monetise their services more effectively, to ensure they’ll never again be treated like “dumb pipes” by online businesses they don’t control. For carriers or network providers, the great advance of 5G is “network slicing,” which will allow carriers to create, on the fly, multiple, customised virtual private networks for particular customers or applications.
This will create a high-priced, services-based, perfectly-billed-for ecosystem that’s very different from the 4G world. In effect, each 5G carrier will be able to define its network from moment to moment, charge whatever it wants for heavily marketed levels of service differentiation, and act as a gatekeeper for applications seeking entry.
This allows for unlimited pricing power and deeply undermines the internet protocol’s basic premise that any computer could speak to another using the same basic language. Instead, transport of bits will be completely software-defined and virtualisation: think proprietary cable network instead of internet access.
You can bet that Huawei, already the world’s largest maker of telecommunications equipment, will be looking for exclusivity in its geographic territories. This is the way telecom works, absent oversight: companies that have made big upfront investments in infrastructure will always carve up territories so as to avoid ruinous competition.
(The cable industry did this in the US, playfully calling their 1997 agreements to swap and combine systems to ensure individual companies would control entire markets the “Summer of Love.”)
And so Huawei, and perhaps a couple of other Chinese companies, will control which data rich services (think logistics, telemedicine, education, virtual reality, telepresence) are allowed to reach China’s global market over 5G.
This means China, through the actions of its 5G carriers, will be able to exclude US companies from that market. Yes, China already does this inside its borders; the Belt and Road Initiative will allow China to do this across huge territories that 65 percent of the global population calls home. China will have created, in effect, its own extraterritorial internet of high-capacity services, many of which we cannot now even imagine.
You may immediately think of the additional reach for Chinese surveillance; consider, in addition, the economic productivity and growth these high-capacity connections will make possible.
The ability to be in the presence of a doctor or a teacher, to work effortlessly from any location without any perception of difference, to upload enormous files without interruption in a split-second all of this will be made possible by China’s fibre-plus-advanced-wireless internet.
The risk to the US of China’s plans is obvious: American companies don’t stand a chance in this context. China, not America, will be the place where new online services are born. Although the US came up with the idea of the internet, we don’t have a sandbox to play in, a giant market in which to test new high-capacity services.
That’s because we haven’t committed ourselves to keeping up with Asia and the Nordics by upgrading the ends of our networks, the “last mile” network section that reaches homes and businesses, to fibre-optic cable.
Luckily, nearly 800 municipalities and cooperatives across the US are showing us the way. Sick of the expensive and second-rate connectivity they’ve been stuck with by federal policy failures, which have left most urban areas dominated by local cable monopolies charging whatever they want for whatever services they want to provide, and rural areas out in the cold almost entirely, they’ve taken matters into their own hands and called for the installation of fibre-optic cables. We need this policy issue to be on the radar screen at every level of government in America.
Here’s what should happen: Publicly controlled fibre-optic cables should form a kind of wholesale street-grid, available for lease under nondiscriminatory terms to private operators who sell services. Government doesn’t need to control connectivity; we are not China. Ideally, government should require frequent, open interconnection points for competing 5G operators to hang their gear on this street-grid made of glass, so that no one operator can pick which services succeed in a particular geographic area. Again, we shouldn’t replicate the domineering ways of China’s Huawei.
Above all, we need a plan. Right now we don’t have one.