27 July 2020

The United States and Japan Should Team Up on 5G

JAMES L. SCHOFF

If not for the coronavirus pandemic, the world would be enjoying the Tokyo Olympic Games this week. Japan’s telecommunications industry had planned to take advantage of the fanfare to bolster its launch of 5G mobile commercial service, complete with autonomous cars, 3D athlete tracking, and a virtual stadium—plans that have also been shelved for now. Yet the holdup is temporary. While the global pandemic has delayed Japan’s 5G rollout, the virus will likely lead to increased demand for 5G over time. After all, social distancing is much easier to manage with a reliable, high-speed internet connection.

The Olympics might be postponed, but international 5G competition is ramping up. The coronavirus is spreading amid intensified technological competition between the United States and China, which is creating new opportunities for European, Japanese, and U.S. companies to collaborate. Meanwhile, governments are continuing to work together in multilateral forums, even as the leading Chinese 5G vendor Huawei gains market share. To establish a competitive edge, policymakers in Tokyo and Washington should focus on a few priority areas. They should also depoliticize the introduction of this new technology as much as possible.

U.S.-JAPAN 5G COOPERATION IS A WORK IN PROGRESS


U.S.-Japan collaboration on 5G will be complicated by the fact that the two countries have different telecommunications market structures for their 5G rollouts. In general, the United States has fewer telecom regulations than Japan does, and Washington promotes a market-driven 5G deployment led by the private sector. In contrast, Japan’s central government is much more involved in supporting the 5G rollout by private companies, and overall Japan’s rollout resembles more of a public-private partnership. The two countries’ 5G investment strategies reflect their different approaches.

Schoff is a senior fellow in the Carnegie Asia Program. His research focuses on U.S.-Japan relations and regional engagement, Japanese technology innovation, and regional trade and security dynamics.

In September 2018, the U.S. Federal Communications Commission established a “5G FAST Plan” for the country’s domestic rollout. It entails pushing more radio spectrum into the marketplace, reducing regulations for infrastructure investment, and updating other regulations to reduce costs for private companies and speed up the deployment of 5G. The plan tries to support private companies’ rollout of 5G indirectly by removing obstacles. More broadly, Washington is also intently focused on the national security concerns surrounding China’s ongoing foray into 5G.

The Japanese government, however, has supported the country’s 5G rollout more directly, in part by establishing the Beyond 5G promotion strategy in June 2020 through the Cabinet Office’s Future Investment Committee (Mirai Tōshi Kaigi). Like the U.S. plan, Japan’s strategy recommends fewer regulations. But it also includes other forms of support like a government initiative for promoting research and offering financial support for 5G investments to make Japanese telecom companies more competitive in the global market. In May 2020, the Diet of Japan enacted a new bill to help domestic companies develop reliable 5G mobile networks by offering tax reductions tied to improvements in the network’s security. Many of these stricter criteria are based on proposals developed through multilateral forums such as the Prague 5G Security Conference, highlighting the benefits of countries collectively making rules and setting standards.

Each country has slightly different priorities and approaches. Washington is focused on national security concerns vis-à-vis China’s 5G entry, while Tokyo aims to strengthen its telecom business competitiveness in the global market from an economic perspective. Still, the allies are actively coordinating on 5G policy issues and agreed at their October 2019 U.S.-Japan Policy Cooperation Dialogue on the Internet Economy to promote “open, interoperable, reliable, and secure . . . [5G] networks and services.” How might U.S.-Japan collaboration fit into this context of national strategy and fierce international competition on 5G? There are a few areas worth highlighting.

Rika Kamijima-Tsunoda

Rika Kamijima-Tsunoda is a visiting research fellow in the Asia Program at the Carnegie Endowment for International Peace and a master’s degree candidate at the Harvard Kennedy School of Government.

A RECIPE FOR INTERNATIONAL PRIVATE SECTOR COOPERATION ON 5G

The first area for collaboration leverages the private sector, as U.S. and Japanese companies are jointly promoting a promising approach involving Open Radio Access Network (Open RAN) equipment. Radio Access Network (RAN) is the part of a wireless telecommunications network that connects individual devices to the core network through base stations and antennas. Traditional RAN equipment usually comes with supplier-specific software and hardware pairings so those of different vendors are not interoperable, but Open RAN allows multiple operators and vendors to share a network through an open interface.

The major Japanese e-commerce conglomerate Rakuten, for example, has recently entered into the mobile carrier business. It created a new mobile network company that assembled the first end-to-end fully virtualized network, launched entirely on the cloud for an Open RAN platform. The virtual network allows for Open RAN and requires less hardware investment. Without it, it is hard to avoid a lock-in system of company specific hardware and software. Rakuten invested in Altiostar Networks, a U.S. mobile network builder, to construct its 5G-ready virtualized RAN software. Rakuten also partnered with Mavenir, a U.S.-based, virtualized, cloud-native network software provider (designed for cloud computing) for Rakuten’s 5G voice and messaging service. In addition, U.S. broadcast satellite provider DISH Network is partnering with Japan’s Fujitsu, Altiostar, and Mavenir on its own Open RAN virtualized network.

This Open RAN model contrasts with Chinese vendors’ models, which generally seek to lock telecom carriers into using only one company’s (for example, Huawei’s) hardware and software. By promoting Open RAN, companies and countries can benefit from new opportunities to compete and partner in flexible ways, taking advantage of the best they have to offer. It can also lower the stakes of the initial decision on a 5G provider and encourage companies to be more accountable. As a result, it can dial down the geopolitical tension surrounding this technology.

A BLUEPRINT FOR HOW GOVERNMENTS CAN HELP

Given the regulatory issues involved with 5G networksnd the high economic and geopolitical stakes, governments will have to coordinate closely with the private sector. In May 2020, a group of thirty-one tech companies led by U.S. firms created the Open RAN policy coalition to encourage countries to adopt open and interoperable RAN solutions (meaning they work across different software). The U.S. government was instrumental in getting Japanese companies on board as founding members of the coalition. A similar initiative, the O-RAN Alliance, was started two years earlier by a group of mobile phone carriers including AT&T, Deutsche Telekom, NTT Docomo, and China Mobile. This group is also pushing for open interfaces and multi-vendor options for network building. The Open RAN policy coalition and the O-RAN Alliance are promoting similar policy measures and technical approaches, even if their specific preferences differ slightly, based on where they sit in the 5G value chain.

The governments of Japan, the United States, and other countries are working with these coalitions to help make sure that increased interoperability does not compromise network security or vice versa. Each country has its own set of commercial and security priorities, so it will take a lot of back and forth between governments and the private sector to bridge the technical and policy challenges and broker conversations among the governments themselves to agree on the rules of the game.

HOW MULTILATERAL ORGANIZATIONS CAN BE USEFUL

5G is also ripe for multilateral collaboration. Both dialogue and cooperation have been critical for establishing practical 5G standards globally, especially when it comes to the technical aspects of 5G. In 2015, the International Telecommunication Union Radiocommunication Sector (ITU-R), a specialized agency for information and communication technologies affiliated with the UN, set some minimum requirements for 5G technical performance and a framework for the technology’s development. Within this framework, a private consortium of standards-setting organizations from around the world—known as the Third Generation Partnership Project (3GPP)—has been developing 5G technology standard specifications based on the ITU-R’s recommendations. Huawei has been a leader in contributing to end-to-end technical 5G standards within the 3GPP, with additional input by Nokia and Ericsson. Earlier on, U.S. government export controls had limited the extent to which U.S. firms could participate in this forum, but concerns about lagging behind China in 5G standard setting pushed the U.S. Department of Commerce to revise the controls and allow U.S. companies to participate more fully.

This kind of multilateral engagement is vital. Currently, the ITU-R is finalizing its recommendations for 5G wireless interfaces, which it plans to release later in 2020. Common standards of wireless interface—the technical processes through which different countries and systems communicate between networks—are necessary for promoting Open RAN. It is important for countries like Japan and the United States to be involved as much as possible if they want to have a say in how the global 5G system operates, now and in the future.

In addition to collaborating through established multilateral forums, a new framework for cooperation among countries concerned about 5G network security and limited procurement options has also emerged. In May 2020, the UK proposed the so-called D10 alliance—made up of ten democracies—as a pool of suppliers of 5G technology and equipment designed to serve as an alternative to Huawei. As proposed, D10 members would consist of the G7 member states plus Australia, India, and South Korea. In a related move, two months later the UK government tightened its previous stance on Huawei. Originally London had decided to allow the company to provide certain “noncritical” components for the country’s 5G network, but since then, the UK government has shifted gears to effectively ban Huawei equipment over time. This change of heart was due in part to actions by the U.S. government on export controls that would make it harder for the Chinese giant to get U.S.-made semiconductor chips, which it needs to build its network equipment.

Thus, government policy choices are having an impact on the 5G playing field and affecting the emerging contest. Combined with actions by private companies, industry associations, and multilateral forums, the time between now and the rescheduled Tokyo Olympics in 2021 is shaping up to be one of heightened and vitally important international competition.

HOW THE FUTURE OF 5G COLLABORATION MIGHT LOOK

The future success of 5G mobile services is not guaranteed. For example, some specialists doubt that telecom companies will be able to find enough 5G services to generate the profits needed to fund their investment to deploy 5G widely. It might be easier to implement high-speed and low-latency internet by fixed lines instead of 5G mobile. A fragmented 5G marketplace could make this scenario more likely. Still, many expect that 5G will be a vital high-speed network infrastructure component that supports people’s modern lives and enables the full exploitation of other technologies such as artificial intelligence, the Internet of Things, and autonomous vehicles.

As people worldwide have been hunkered down inside during the coronavirus pandemic, online activity has been increasing and the world’s digital transformation has become more important than ever. For example, average daily traffic for video chat, remote work services, streaming services, and online media has increased by double digits for many websites and services, and in some cases by 80 to 100 percent.

The pandemic has accelerated this digital transformation, and 5G is likely to be the backbone of the infrastructure that supports this shift. A global approach to developing 5G networks will be more efficient and productive than splintering the marketplace with exclusive vendor arrangements. This global approach will also limit the ability of countries to pressure others economically, because of how much sunk costs in a particular company’s equipment already exists in their networks. In this context, openness is a way to depoliticize the current competition and let it play out more like other industries do. Accomplishing this will require countries to work together at various levels. Close coordination between the United States and Japan will be a useful way to make sure that this collaboration is as productive as possible.

James L. Schoff is a senior fellow in the Asia Program at the Carnegie Endowment for International Peace and author of “U.S.-Japan Technology Policy Coordination: Balancing Technonationalism With a Globalized World.”

Rika Kamijima-Tsunoda is a visiting research fellow in the Asia Program at the Carnegie Endowment for International Peace and a master’s degree candidate at the Harvard Kennedy School of Government.

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