UK to allow Chinese into 5G network

That's what the article meant, they'll be looking to be at the head of the queue for supplying 6G to Western countries.
I suspect it has less to do with where the kit is made and more to do with whose patents are included in the standards.

The way the international standards processes work is that the major manufacturers get together and agree to pool their patents to allow kit to be made which will inter-operate. The patents are licensed on what is called a "FRAND" (Fair, Reasonable, And Non-Discriminatory) manner. That is, everyone participating in the standard is guaranteed to get a licence to all essential patents on the same reasonable terms as everyone else. There are legal precedents for determining what "fair" and "reasonable" are, so it's a well established process.

What it means though is that each company who has technology which is essential (there aren't any known good ways of designing around it) want to get their patent made part of the standard. While it means they face competition using that technology, it gets widely used and they get a percentage of everything sold which uses it, no matter who made it.

To give you an example from a few years ago, DVD players are cheap, but contain lots of licensed technology. Nearly all are (or were at the time) made in China. However, the American and Japanese companies who owned the patents took a 40% rake off of each DVD player made as licensing fees. That meant that the Chinese did the work of actually designing the product (while making use of the patents), making it, shipping it to customers, and selling it, but only got a razor thin profit margin while the American and Japanese companies were raking in profits that were multiple times those of the manufacturers.

The Chinese were not pleased with this situation, so they developed their own DVD technology which used no American or Japanese technology and made players for them. These had no traction outside of the Chinese market because the American and Japanese companies had agreements sewn up with the media companies to use their technology exclusively, or in some cases such as Sony the same company owned DVD patents as well as big media assets.

The Chinese learned a big lesson from this experience. If they want to get in on the higher value added end of the technology business chain rather than just supplying sweatshop labour, they need to get in on the ground floor right at the beginning and do the R&D and get their patents included in the standards.

The first new major technology field that has come up where the Chinese were ready to do this was 5G. And so Huawei are there, having done the R&D and come up with their own world beating technology they are ready to participate in the game alongside the established players.

The Americans were not happy with this, as it cuts into their own national economic strategy. American factory workers were too expensive in this globalised world, but that's OK, the economic pundits had a solution. The actual hands on manufacturing would be done in third world sweatshops, but the US would own the brand names, the distribution channels, and most importantly, the standards on the IP rights which would let them take a rake-off of everything made everywhere. It was to be a rent-seeking economy.

The Chinese however are not playing the role in the game which was set out for them. They've shown they can come up with new technology and sell it to the world (which is ironic, as it was the US who were known as the global centre of IP piracy in the 19th century). They too would like to enjoy a comfortable middle class existence by climbing up the value chain. This shouldn't be surprising, as it is the same process by which the industrial revolution spread out of the English Midlands and around the world since the 18th century.
 
G4S stuck Chinese hardware in a data centre for Lincs Police a few years ago and hooked it up the PNC. I think it lasted a day before it was unplugged and dumped in skips.

Irrespective of what they are buying - even if its copper wires. This will end in tears at some point and it will cost a wedge to replace it
 
Nigel Farage on LBC spoke with Ian Duncan Smith about Huawei and how much of the global communications infrastructure they now have potential control over.

Maajid Nawaz on LBC from 12:00 - 15:00 will be discussing how did we sleepwalk in to a situation where we are so dependant on China.
 

New Posts

Latest Threads

Top