Issue Briefs

How A Dangerous Court Ruling Could Give China The Lead In 5G Technology

How A Dangerous Court Ruling Could Give China The Lead In 5G Technology

December 12, 2019

By Loren Thompson

Despite a chronic trade deficit in advanced technology products, the United States remains a global trendsetter for networking and telecommunications. U.S. companies are currently in a battle with Chinese state-influenced enterprises like Huawei that will determine whether American dominance continues into the era of 5G communications.

5G is the next big leap in mobile networking, a cluster of technologies that will deliver greatly increased speed, bandwidth and reliability to users. The U.S. Department of Defense has said that 5G is critical to future military applications such as autonomous vehicles, multispectral sensor fusion and battlefield robots.

But whether America’s economy and warfighters will benefit fully from 5G depends in large part on who sets the standards and provides key technology. U.S. companies largely wrote the book for how 3G and 4G mobile technologies were introduced, but 5G is shaping up to be a zero-sum game between American tech companies and their Chinese rivals.

Against that backdrop, a federal district court decision in May is threatening to undercut the advantages that U.S. companies have in the 5G race, delivering an early victory to China. The decision found that the current U.S. leader in 5G technology, a company called Qualcomm, was violating antitrust law, and directed it to offer its portfolio of intellectual property to rivals at concessionary prices.

Judge Lucy Koh, who wrote the decision, did not dispute Qualcomm’s ownership of the technologies in question. Licensing patented technology to smartphone producers and other tech companies has long been a core feature of the company’s business model. But she found that Qualcomm’s failure to share it at subjectively “fairer” prices was tantamount to anti-competitive behavior—banned by the Sherman Antitrust Act of 1890 and subsequent federal standards.

The district court ruling was rendered pursuant to a case brought by the Federal Trade Commission during the waning days of the Obama Administration. But other federal agencies were aghast at the breadth and implications of Judge Koh’s decision, which in effect required Qualcomm to offer its technologies to Chinese competitors at fire-sale prices. The case was immediately appealed with complaints questioning the ruling filed by three heavy-weight government entities.

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The views and opinions expressed in this issue brief are those of the author.

Loren B. Thompson is a Senior Adviser at GPI, Chief Operating Officer of the non-profit Lexington Institute and Chief Executive Officer of Source Associates, a for-profit consultancy. Prior to holding his present positions, he was Deputy Director of the Security Studies Program at Georgetown University and taught graduate-level courses in strategy, technology and media affairs at Georgetown. He has also taught at Harvard University’s Kennedy School of Government. Mr. Thompson holds doctoral and masters degrees in government from Georgetown University and a bachelor of science degree in political science from Northeastern University.