Eye on Greenwich: The U.S. and China – Implications for the Future of Technology

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As the U.S. continues to ramp up pressure on Huawei, including imposing sanctions that restrict the company’s access to the high-end computer chips it needs to manufacture 5G networking equipment, smartphones and other equipment, this has dramatic long-term implications on the future of technology in the U.S., in Europe and other parts of the world.

This includes the impact on 5G networks and services being rolled out in manufacturing, healthcare, retail, and other industries. 5G offers massive improvements in speed, latency, reliability and power consumption over 4G networks, according to research conducted by McKinsey.

To help put these implications into perspective, HMG Strategy recently caught up with Barry French, Chief Marketing Officer and EVP, Marketing and Corporate Affairs at Nokia. Barry will participate with HMG Strategy President and CEO Hunter Muller in an executive interview at the 2020 HMG Live! Greenwich CIO Executive Leadership Summit on October 22 where he will discuss the latest on U.S. – China relations, how the U.S. government’s handling of Huawei affects other technology companies, along with the promises offered by 5G applications and services.

HMG Strategy: What’s the latest update on relations between the U.S. and China?

Barry French: That is a question one could spend pages and pages trying to answer. Before I take a shot, however, let me just say that Nokia is really a neutral party in all of this. We try to understand the issues as we need to adapt to meet changing customer needs, but we are happy to leave political issues to politicians.

The latest update is that there is a radical change underway to at least some kind of decoupling. We don’t believe this will be – or even can be – a complete separation, but the future will look much different than the past. 

As we are a technology company, we look at things through that lens and see the creation of `tech trading blocs.’ China and the U.S. are the two dominant ones, Europe struggling to find a middle ground and other countries loosely aligned to one of those three. There will still be some porousness among these blocs, but certainly sensitive technology that has strong links to national security and economic prosperity will be much more tightly controlled than in the past.

As proof points, just look at the U.S. `clean path’ initiative, where the government is pushing for networks built by trusted suppliers and limiting U.S. government traffic to those networks.  There’s also China’s planned Export Control Law, which will strengthen government control over exports of sensitive technologies.

So, in short, all companies need to think long and hard about how this will impact their operations – and there are no easy answers.

How do you expect things to play out with Huawei on a global scale?

BF: Well, as you know, Huawei is a competitor of Nokia, so I don’t want to comment about them specifically. What I will say is that it certainly appears that governments are taking a much stronger position related to the security of their national telecom networks and, as a result, are choosing to work more closely with suppliers that they see as trusted. That is the decision of respective governments, and we are simply trying to meet the needs of customers.

I certainly do not see this trend to focus on trusted suppliers going away, and I actually think it will strengthen in coming years. It should not, however, slow down the amazing progress of 5G. Nokia – and I am sure others – are ready and able to meet demand – and things like spectrum availability are more likely to slow 5G deployment than the deployment of the needed technology. We are ready to go – and, in fact, now have helped many of our customers already launch live 5G networks.

Tell us about the incredible promise that 5G offers to businesses and other organizations.

BF: Great question. If 5G is just about downloading another YouTube video faster – as nice as that might be – we will have missed the point and the promise. 5G is completely different than earlier versions of wireless technology and it has the potential to enable all kinds of new use cases that make the world a better, more productive, and more sustainable place.

I know that is a big statement, but think about the following: The digitalization and automation of enterprises has yielded significant productivity gains, but those benefits have been limited to about 30 percent of enterprises, largely in IT-centric industries. Traditional asset-intensive industries – which typically make up more than two-thirds of GDP for most countries – have yet to experience the full benefits of this digital transformation.

The reason for this is that existing wireless technologies were not designed for industries like manufacturing – but 5G is ideal for the purpose. Why it is ideal gets into a lot of technical details, but just think about networks that can manage the automation of a massive number of devices across a factory floor, all needing to work together with extreme precision. There are many other examples, but we’ll leave it at that for now. 

As a result, the impact will be huge. In fact, Nokia just released a report highlighting research from our Bell Labs team saying that new 5G-driven networks will deliver $8 trillion in value around the world by 2030.

How would you characterize the impact of the pandemic on 5G acceleration?

BF: The pandemic has put new demands on networks everywhere.  Nokia’s Deepfield team, which looks at network traffic, saw an unprecedented jump in traffic early in the pandemic – in the range of 30%-to-45% year-over-year. While that has stabilized some, it has certainly not gone away – and 30% increases or so are very common. Of course, the patterns have also changed with more people working and schooling from home rather than being in the office. 

5G can certainly help address these challenges. But so can fixed networks. I know many people think that fixed networks are a bit old school and boring, but I would say far from it. Most of the traffic increases we have seen are actually in fixed networks, and that means new technologies and new solutions are needed. Customer like AT&T and others are saying publicly that fiber is their top priority – and for good reason.

Clearly, there will be winners and losers with 5G, yes?

BF: Every change has its share of winner and losers. But I have a hard time seeing who really loses with 5G. It seems to me to be like one of those rare things where the more 5G there is, the better it is for everyone. As I said before, it can be a key part building a better, more productive and more sustainable world.

The losers will be those who move slowly. It will be the countries that are slow to release 5G spectrum or do so with onerous terms, or that put in place well-intended but misguided regulatory barriers. It will be the companies that don’t step up to seize the benefits of digitization and automation that 5G can help enable. 

Given this, my advice is that speed matters, and first movers can gain an advantage that competitors struggle to match. Act fast. Learn. Iterate. Push the boundaries. There is much to gain and little to lose, particularly given the challenges we are facing in the world today.

To learn more about Hunter Muller’s upcoming interview with Barry French and to learn more about the upcoming 2020 HMG Live! Greenwich CIO Executive Leadership Summit and to register for the event, click here.

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