NBN a reminder of why Turnbull's 5G plan is flawed

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Malcolm Turnbull has suggested Western nations should develop independent 5G networks, forgetting the failure of our NBN as an example of Government intervention, writes Paul Budde.

IT WAS WITH GREAT INTEREST that I read about Malcolm Turnbull’s New York speech where he called for the Anglo-Saxon group of countries known as the Five Eyes to develop their own 5G networks.

While cyber security is most certainly a very important issue, his idea is flawed on many levels.

Over the last 20 years, the economic forces within our capitalist economic system have done their job and, through competition, the American telecoms vendors lost the game in favour of their Scandinavian and Chinese opponents. Within a short period of one decade, most of the traditional telecoms manufacturing industry of America had been wiped out (this also included, for example, the Canadian telecommunications manufacturer Nortel and the British company GEC Plessey).

This had partly to do with the arrogant stand of the Americans. They thought that the proprietary CDMA mobile technology that they had developed would win the 3G mobile standard battle from the Europeans. They had developed an open GSM system. The Chinese abandoned their own flavour of a 3G standard and embraced the open GSM standard and thus cleverly used the gap left by the Americans. As a result, we saw the rapid rise of the Chinese telecoms vendors.

The European countries, under the leadership of the EU, created a regulatory regime that supported a very competitive market. They did this through regulations based on cost-based interconnection, unbundling and roaming policies. The American vendors totally miscalculated the market and, as mentioned, went under within a very short period. Market forces as the fundamentals of our capitalistic economy model did their job.

What the Liberal Malcolm Turnbull now suggests is that, in one way or another, the Anglo-Saxon countries should rebuild their own telecommunication manufacturing capabilities. Without any Government intervention, there won’t be any company willing to make the large investments needed to build up such capability. According to his own Liberal mantra, Government intervention in a free market is frowned upon. We all see what happens if governments start interfering in telecoms — look at the mess of the NBN in Australia. So much for Liberal policies that so fiercely defend the mantra that market forces should be left free to sort out who is the best.

Malcolm Turnbull tried to convince President Trump to take leadership here, but taking such action in America would be total heresy and would be seen as bringing a communist regime into their country — this will never happen.

The demise of the telecoms manufacturing industry can indeed be seen as a strategic loss for the Anglo-Saxon countries. However, the industry has changed beyond recognition over the last few decades. It would lake a long time and a lot of Government money (directly or indirectly) to bring that capability back in-house.

It is also interesting to contrast this call for Government intervention with Malcolm Turnbull’s earlier stand on the NBN, as he was totally against Government intervention in the telecoms market at that stage and blamed the Labor Government for the legacy of that decision. He indicated that while he was against the policy, he had no other choice than to accept this Government initiative.

I never received any support from him for my argument that the NBN needed to be seen as a national asset in the sense that this was not just a commercial venture that needed to make a profit. The reason being that it will deliver very significant national social and economic benefits. I am still arguing about the fact that part of the current $50 billion investment in the NBN should be written off for that very reason. Also, here cyber security can be added as an additional reason why this should be done.

Another observation is that the core of the telecoms network has been hollowed out over the last few decades with organisations such as Google, Facebook, Amazon and the thousands of others using cloud computing. They are only using the good old telecoms network to provide the access.

In addressing the security issue, how will Malcolm Turnbull and his Anglo-Saxon comrades address the technology issues such as cloud computing, data centres, AI and blockchain? These have become the core of the network and they have become far more important and critical elements than the traditional telecom network itself.

I am certainly not saying that the security issues are not a problem and yes, we should address this. But before yet another set of short-term bandage policies are implemented, let’s sit back and look at the overall picture. What is needed is a good international look at how we are going to manage the risks of our future telecoms networks.

First, let’s relax on the issue of 5G. The fact that there is so much focus on 5G is because politicians have very little understanding of telecoms technologies. Despite their panic reactions, nothing serious is going to happen in the mobile market for at least the next five years. The question remains — where is the business model from the telcos that would warrant massive investments in 5G technology? For the foreseeable future, 4G will be the mobile network that will be used. Furthermore, 5G will only be an add-on to the existing infrastructure. In relation to security, what do the politicians think what we should do with the existing networks?

As we have indicated before, look how the various governments have used the existing fixed and mobile networks for their own spying purposes. Hardly anything on the technical side is stopping them from doing so. After the revelations of Edward Snowden, it is clear that if governments want, they can tap into any telecoms network from any telecommunications vendor. There is plenty of evidence that they are doing so on a continuous basis.

There is no way that the telecoms networks can simply be made much safer by equipment from an Anglo-Saxon company. Governments and criminals will be able to tap into any network. One solution would be to play the cat-and-mouse game and make interference increasingly more difficult (and expensive) to do so. Another alternative would be to copy the Chinese and Russians and just create a telecoms island around, for example, the Five Eyes countries, but the damage to their digital economies would be severe.

The only real solution – to at least limit the security risk – is for all countries to sit together and address these issues through international treaties; for example, the nuclear treaty. But as we all know, President Trump hates international treaties even with his democratic allies in Europe and elsewhere. We will never be able to make the telecoms networks 100% safe. What we can do is limit the risk and damage as much as possible, but this requires collaboration from all parties involved: governments, businesses and the users.

Paul Budde is managing director of Paul Budde Communication, an independent telecommunications research and consultancy organisation. You can follow Paul on Twitter @PaulBudde

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