From IT Security Law 2.0 to Open RAN: Germany’s 5G Strategy Evolves beyond the Huawei Debate
China Fellow; Program Officer, Geoeconomics
Yixiang Xu is the China Fellow, and Program Officer, Geoeconomics at AICGS, leading the Institute’s work on U.S. and German relations with China. He has written extensively on Sino-EU and Sino-German relations, transatlantic cooperation on China policy, Sino-U.S. great power competition, China's Belt-and-Road Initiative and its implications for Germany and the U.S., Chinese engagement in Central and Eastern Europe, foreign investment screening, EU and U.S. strategies for global infrastructure investment, 5G supply chain and infrastructure security, and the future of Artificial Intelligence. His written contributions have been published by institutes including The Chinese Academy of Social Sciences, The United States Institute of Peace, and The Asia Society's Center for U.S.-China Relations. He has spoken on China's role in transatlantic relations at various seminars and international conferences in China, Germany, and the U.S.
Mr. Xu received his MA in International Political Economy from The Josef Korbel School of International Studies at The University of Denver and his BA in Linguistics and Classics from The University of Pittsburgh. He is an alumnus of the Bucerius Summer School on Global Governance and the Global Bridges European-American Young Leaders Conference. Mr. Xu also studied in China, Germany, Israel, Italy, and the UK and speaks Mandarin Chinese, German, and Russian.
On January 27, the German federal government presented the draft IT Security Act 2.0 (IT-Sicherheitsgesezt 2.0) to the German Bundestag, pushing ahead a reform that is seen by some as a crucial step to effectively bar the Chinese telecommunications equipment vendor Huawei from Germany’s nascent 5G network infrastructures. Besides a technical evaluation, 5G equipment suppliers for critical components will have to go through a political risk assessment process. A consensus by a group of federal ministries, including the foreign office, will allow the federal government to exclude high-risk vendors from Germany’s 5G networks.
Despite its high bar, the new law doesn’t explicitly ban any company. Moreover, its government dispute settlement procedure affords the chancellor final authority over the political decision, a move hailed by Chinese state media Global Times as a win for Huawei. Ultimately, it is far too early to reach a verdict on the new IT security law. The Trump administration’s persistent anti-Huawei campaign in Europe did not persuade the Berlin to pick a side and Angela Merkel’s government has tried to strike a balance between allaying security concerns regarding Huawei and preserving its extensive economic ties with China.
The federal government now wants to support the development of Open Radio Access Network (Open RAN or O-RAN).
There are signs, however, that Germany is shifting its 5G strategy away from this difficult binary choice. The federal government now wants to support the development of Open Radio Access Network (Open RAN or O-RAN). It is reported to have included €2 billion in the latest stimulus package to encourage soft- and hardware development for O-RAN technologies. This funding will be split among federal ministries of research, transport, economy, and interior to support research facilities, start-ups, and small- and mid-sized companies that aim to “develop and test software-driven network technologies.”
Berlin’s new approach comes at a time when German and other European telecommunications service providers (TSPs) look to push ahead with 5G rollouts as Huawei continues to face security scrutiny in Europe and stakeholders are exploring policy options to soften the blow of phasing out the company. Four of Europe’s largest TSPs, Deutsche Telekom, Telefónica, Vodafone, and Orange, recently published a joint MOU pledging to prioritize the development of O-RAN technology.
In theory, the Open RAN architecture picks apart the 5G supply chain into various components, thus providing more choices and flexibility for network setup. It would allow TSPs to diversify their network infrastructure away from the integrated, proprietary technologies of the hitherto dominant “end-to-end” vendors such as Huawei, Ericsson, and Nokia amid political uncertainties surrounding Huawei’s future in European 5G networks and cost concerns from a potential Ericsson-Nokia duopoly in Europe.
The German government now sees O-RAN as an opportunity to reenter the 5G technology competition, which it had largely observed from the sideline. Federal minister of transport Andreas Scheuer has spoken of the government’s aspiration to recapture technology and digital sovereignty and build up a new industry based on O-RAN’s business model.
Berlin’s changing 5G strategy shows the German government’s flexibility to adapt to the reality of a prolonged clash between two technospheres led by the United States and China while trying to carve out a share for Germany in a technology that promises to reshape the global economy.
But significant hurdles remain. Common standards that would enable equipment compatibility are still lacking and cost and system integration issues present major concerns about a technology that is yet to mature. The two billion euros earmarked for supporting O-RAN development in Germany is almost certainly not enough. And it is unclear how German companies could jump ahead of the competition in the new O-RAN ecosystem that includes hardware manufacturers, cloud service providers, and specialized software companies, in which either the United States or China hold the lead.
Nevertheless, Berlin’s changing 5G strategy shows the German government’s flexibility to adapt to the reality of a prolonged clash between two technospheres led by the United States and China while trying to carve out a share for Germany in a technology that promises to reshape the global economy. To that end, a transatlantic 5G partnership could be highly beneficial.
The United States has taken big steps to support O-RAN development. In December 2020, the House of Representatives unanimously passed the Utilizing Strategic Allied (USA) Telecommunications Act, approving $750 million in public funding to develop O-RAN technologies that capitalize on U.S. software advantages and promote competition from alternative vendors of 5G network components. The 2021 National Defense Authorization Act (NDAA) establishes a Public Wireless Supply Chain Innovation Fund and allocates $50 million for O-RAN research and development. Another $25 million is made available through the Open Technology Fund for international development of open standards.
Additionally, The U.S. Department of Defense (DoD) plans to expand its activities in standards-setting organizations including the 3rd Generation Partnership Project (3GPP), the primary global technology-development association for 5G whose membership also includes the Federal Communication Commission (FCC), the National Telecommunications and Information Administration (NTIA), the National Institute of Standards and Technology (NIST), and the US Department of Transportation.
Transatlantic cooperation to encourage competition in an open 5G architecture would also hand the United States, Germany, and the EU a positive agenda that is based on their shared commitment to open markets and free trade.
The United States, Germany, and the EU can work together to promote the development of O-RAN standards and protocols at international bodies. These coordinated efforts could speed up domestic implementation of common standards through close consultations between relevant agencies such as the NIST and the German federal network agency (Bundesnetzagentur). In turn, they could generate greater flows of transatlantic trade in 5G network components and services, providing secure and, in time, cost-effective alternatives to traditional proprietary technologies and high-risk vendors. Thus, transatlantic cooperation to encourage competition in an open 5G architecture would also hand the United States, Germany, and the EU a positive agenda that is based on their shared commitment to open markets and free trade.
Huawei’s entrenched position in the existing German telecommunications networks and Beijing’s persistent efforts to support its tech champions mean the debate surrounding the company will likely continue in Berlin. Weighing its current options for 5G rollouts, Germany’s new IT security law is a labored compromise that attempts to balance the country’s security concerns and its economic interests. By pushing for an Open RAN solution, the German government is simultaneously taking its 5G strategy beyond the Huawei debate and seeking to join the competition. A transatlantic partnership could lend it a strong hand.