Executive Summary

–  The US and China are in a new form of superpower race, fiercely competing head-to- head in 5G advancements. The significantly higher speed and connectivity of 5G has the potential to boost economies to new heights. However, this amplifying technology also concerns national security; allowing for faster cyberattacks, more vulnerable sites for attack, and the security of critical infrastructure and confidential data.

–  The technological rivalry between the US and China creates a divide between all nations, forced into deciding which 5G providers to choose, from the two opposing sides. Southeast Asia is experiencing extremely fast technological adoption, due to their young population, affordable mobile data, and high mobile internet usage rate. These factors contribute to the massive potential of their digital economies, relative to the rest of the world.

–  Policy Options:

• Promote regional and global cooperation to develop rules and norms for global governance of the cyberspace.
• Create policies and laws to regulate economic and social development, while protecting national sovereignty and interests.
• Foster public-private partnership between relevant ministries and telecommunications companies, to implement the suggested policies.
• Develop a national talent strategy to absorb and implement 5G technology.

US and China

The fifth generation (5G) of wireless technology has become one of the key areas of technological competition between the United States (US) and China. 5G is designed to handle massive numbers of devices and high rates of data transmission, further increasing the interconnectivity between devices and people around the world. The speed of 5G promises to be 100 times faster than the fourth generation (4G) and will be essential to a future world of smart cities filled with endless devices connected to the Internet of Things (IoT). The tremendous impact of this technological advancement will be felt across the global economy and national security of each individual state.

The trade and technological rivalries between the US and China have escalated over the past few years. Economic and national security concerns of the US have grown, as China’s industrial, technological, and economic development strategies have become more robust. The major issues associated with 5G networks have become politicised. Both countries increasingly view the control of 5G, which is the next wave of advanced technologies and applications, as an urgent matter of economic and national security . Although several nations are coming forward and claiming that they are ready to utilize 5G technology, with the commercialization of new generation devices, the surrounding infrastructure to support this network is not ready. Huawei (China), Verizon (US), Nokia (Finland), Ericsson (Sweden), and Samsung (Korea), are all in fierce competition to fully implement 5G at their respective national levels.

Implications on Southeast Asia

In this context, Southeast Asia remains one of the most dynamic markets estimated at USD50 billion in 2017 and expected to increase to USD200 billion by 2025. Huawei estimated that Southeast Asia provides opportunities worth USD1.2 trillion, with a potential of USD80 million for 5G service subscribers. These capabilities will dramatically enhance the performance of mobile data networks by enabling new types of machine-to-machine communication, paving the way for the next generation of digital applications that require highly reliable access to massive amounts of data.

However, 5G networks create security concerns through the countless number of connected devices, due to the exponential increase in data volume that challenges the detection of malicious traffic. The advent of 5G will impact the way society is interconnected, extending the usage of mobile data from simple phones to many devices including cars, drones, roads, bridges, and buildings that either provide or utilize data. In 2019, the US accused Huawei of stealing US intellectual property and lobbied their allies to keep Huawei out of their 5G networks, due to national security concerns. Yet, Huawei has denied the allegations. In response, Huawei filed a lawsuit against the US government, for restricting their federal agencies to use Huawei products. Huawei claimed that the US had no solid evidence to support that the former was linked to the Chinese government. On February 6th 2020, Huawei sued Verizon for allegedly using 12 of their patents without authorization, infringing their intellectual property rights. Although the aforementioned patents were not directly related to 5G, they were all key components of network communications technology. Whether or not these two companies are linked to their respective governments, they act as proxies in this tense international rivalry. One must remember that this technological battle is not only taking place in the commercial arena, but its potential extends into military issues. The utilization of 5G would enhance new forms of cyberwarfare, creating a new superpower race to lead the world, based on technological capabilities. Beyond the political fight over 5G, the US and China are competing to develop innovative applications that will run on top of deployed 5G networks. Applications such as driverless cars, advanced factory automation, and smart cities will likely be the largest sources for long-term economic and political leverage from 5G.

Southeast Asia is readily integrating emerging technologies, including blockchain, Artificial Intelligence (AI), robotics, cloud computing, and financial technology (FinTech). However, for such technologies to truly reach their fullest potential, the pace of 5G deployment will depend on carrier preferences, government regulatory policies, strategies, and infrastructure, to capture value in a complex technology ecosystem. Thus, the ‘Power Transition Theory’ highlights the importance of innovation imperative, in which technological progress either drives or imposes constraints on global powers. So far, several countries in Southeast Asia have begun testing 5G. Singapore and Thailand are at the forefront of the 5G revolution and intend to implement by 2020. In the Philippines, Globe Telecom confirmed a partnership with Huawei to develop 5G by supporting the Philippines’ controversial public safety campaign, related to the drug war associated to approximately USD383 million. In Cambodia, the Prime Minister welcomed the 5G network as a major step for Cambodia’s economic and technological development. In Myanmar, ZTE signed an agreement with the country’s launch of the 5G network. Vietnam is the only country in the region that has avoided Huawei technology, due to security concerns. Instead, Vietnam plans to be among the very first in the world to develop its own 5G technology. Paying close attention to the aforementioned cases, it is important to distinguish between the nations where 5G is being deployed, and which specific 5G company is being deployed. Geopolitical issues will have a large influence on which 5G companies are deployed in specific countries, due to issues of national security. Technology has become so crucial to a nation that advanced products are becoming key drivers in the dynamics of international relations.

Although, the US ban has created a rift with other allies and partners, countries in Southeast Asia can seemingly be divided into two categories, either linked with the US, or linked with China. Therefore, these countries will face difficult choices concerning whose 5G networks and applications to adopt. The respective governments are likely to come under pressure from the US to avoid dependence on China for 5G. In this context, Beijing has made the development of 5G networks as a national priority, including ‘Made in China 2025’. If China successfully capitalises on this technology, it will be able to spread its 5G systems through the Belt and Road Initiative (BRI). One could argue that Huawei has risen to global leadership in 5G development. In contrast, the efforts by the US and its ties to exclude Chinese 5G networks will continue, with the US-China trade and technology rivalries showing little signs of slowing down. For this reason, the US has an advantage in terms of innovation capacity, but China will benefit from its head-start in implementing 5G applications within a structured ecosystem, penetrating the global market.

Finally, one should not underestimate the Chinese drive to reduce its country’s dependency on US technology, through accelerated research and development in leading semiconductor technologies. Strategically, China will likely gain first-mover advantage in 5G as it moves towards commercial-scale deployment of its 5G network by 2020. The implications of how Southeast Asia responds is beyond merely 5G technology. The main issue at hand is about global technological dominance and the success of China’s Digital Silk Road. 5G will revolutionise the global digital landscape via IoT, big data analytics, and AI. Until now, no country in the region including US treaty allies, is willing to support the ban for political reasons. After all, the security risks incurred from the use of 5G is not only related to this technology alone, but in context of both national policy and technical resources, designed to protect national critical infrastructures from cyberthreats. Narratives about 5G are not always based on scientific evidence resulting from rigorous technical assessment, but from the perspective of national interest and desire for global dominance.

Policy Options

For Southeast Asia to truly thrive in the Fourth Industrial Revolution, governments should work together to consider these challenges and develop collaborative solutions, to ensure that the benefits of new networks can be securely and effectively harnessed. Specifically, in the case of Cambodia, the decision to choose 5G technology should be based on the cost-benefit analysis of quality and productivity, while still cautiously considering the risks to national security. Public-private partnership is key – Smart Axiata and Cellcard are pushing the rollout for their 5G networks with support from local Huawei and ZTE vendors, and approval from the Ministry of Posts and Telecommunications to carry out commercial services in Cambodia. These local initiatives embody Cambodia’s hunger for new technology adoption, a result to the nation’s young population, affordable mobile data, and high mobile internet usage rate. 5G is after all, only a form technology. The implications of 5G are ubiquitous in the cyberspace. This cyberspace must be governed with proper laws and regulations to enable economic and social prosperity, while rigorously protecting Cambodia’s sovereignty and its national interests.

The opinions expressed are the author’s own and do not reflect the views of the Asian Vision Institute.