The Standards Cartel #NeoColonialism

Chandramouli Soorian

A lot of Indian intellectuals including respected engineers seem to have a naive belief in the global “technology free market”. This will hopefully be an assertion of the gut feeling you might have always had, if not an eye opener.

War was on in early 2000s

It was just after the Y2K bust and in 2002 I had just started my bachelors in communication engineering, which at that time was considered a career path with great prospects and considering the current state of things that has become very true. However, it has come to represent the new cold war.

The US in 2005 had already had a hearing [1] on how China was using standards as a non-trade barrier to protect its market from foreign competition. China had the scale and cost advantage not only at home but increasingly in emerging markets to outdo western dominance.

This is however not something unique to China. Welcome to the technology cartel, in particular the telecom standards cartel. China in 2002-03 was trying to promote a standard that deviated from that agreed to by the international standards discussions, with EU warning against it [2]. The reason being China was then not part of the cartel. By 2008 when I started my Masters in communication engineering, Huawei had grown into a respectable competitor to the champion Ericsson. The EU by now was issuing sterner warnings discouraging China from trying to diverge from the standards. China prevailed and now it was part of the cartel. In 2020, Trump realising the kind of foothold that China has in the telecom sector, goes on an all out war. 

I, like many of my fellow Indian engineers after putting in well over a decade chasing an engineering career, realized that the pipeline ends after graduation. A large majority of us work in putting together solutions for the “global masters” in one of the many IT services companies.

Understanding the telecom standards cartel

When you buy an iPhone in the US/Europe, travel to India, you would still expect it to work. Perhaps with a plug adapter to fit Indian sockets. Here we can draw an analogy, it makes sense for the whole world to use one standard electrical socket.

Imagine Acme inc, proposed the American standard and threw the American might to make this a global standard. However, there is a catch, Acme has patented the design. This means you need to pay Acme a royalty for every appliance ever made. Not that Acme’s design is superior in any way, it might in fact be inferior in every possible way.

The 5G standard works similarly, it doesn’t matter if your phone runs ios or Android, it doesn’t matter if the cell towers use fiber, microwave, copper cables or satellite communication. What matters is the interface between the mobile and the tower called the physical layer and the protocols that govern this interface. 

We might be oversimplifying it with an electrical socket, the technologies that go into 5G are quite cutting edge but there is a good possibility that what goes into the standard is not necessarily the best. The cartel consists of big players like Nokia, Huawei, Ericsson as well as pools of smaller players often backed by their countries. There are a lot of negotiations and compromises before deciding on a standard.

India clearly seems to be missing at this table. Not only is India a big market and contributes substantially to the royalty, it also has a large pool of engineers whose decades of training atrophy like yours truly.

India has a measly 2% (est.) of the patent share, it is not entirely clear if they even make it to “essential patents” [4]. Essential patents is simply neocolonialism, because, by making your patent part of the standard you can start collecting royalties from around the world, as mobile communication is now a necessity.

Low hanging fruits

Usually R&D costs billions because of the large labs, expensive equipment and experiments which require material and real estate, for example, projects on nuclear fusion like ITER. Some like semiconductors, require experience with and availability of actual production fabs.

5G standards however are mostly developed using computer simulations, they require a lot of creative thinking, mathematics, programming skills and innovation. This is a huge opportunity for India that it has missed. India has all of the ingredients to have been a champion, including big home grown telecom operators. The only missing component is an actual R&D ecosystem that can pool innovation from operators, universities, companies, startups and individual innovators.

Bound by borders

There is the naive belief among the policy makers about the global technology free market. Nothing can be far from the truth. R&D on technologies like Core 5G require at least 10 years before they can be standardised.

Champions such as Ericsson has had labs all over Europe, USA, Japan and China for decades. It does have an “R&D” facility in India working on back office work and billing software. The real gold mine is the Core 5G physical layer standard which is missing. Is Ericsson really committed to India, with its large pool of young graduates and huge potential? The lowest hanging fruit is tying up with universities, Ericsson has tied up with IIT Delhi only in 2018-19 just in time for 5G roll outs [3].

We are yet to see a serious and sustained discussion in India on getting into semiconductor manufacturing. However, US private interests groups have had discussions on (to put it politely) prevent competition from India five years ago [5].

Possible Solutions

German research organizations like the Fraunhofer institute form so called non-profit organisations, whose job is to pool together German innovation and patents that can then be licensed as a package to individual companies or even countries. This creates an ecosystem on which even individual innovators can depend. DAB – Digital Audio Broadcast is one such ecosystem successfully created by Germany.

The Indian government along with operators, technology providers, universities need to provide such a pool/ecosystem. They should provide open access to the required test setup, which is mostly software, test areas requiring actual hardware and measurements, engaging universities, discussion forums and training opportunities for those willing to participate in R&D in 5G and beyond.

This is not capital intensive, and could be extended to other areas like smart meters, smart homes, connected cars, smart cities, IOT etc.

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References: –

1. China, Europe, and the Use of Standards as Trade Barriers [Book]
2. EU official tells China to drop own 3G standard, says report [Article]
3. Ericsson center for excellence in IIT Delhi [News]
4. Who Owns Core 5G Patents [Article]
5. Silicon Globalization and Its Constraints: The Rise of China’s and India’s Semiconductor Industries [video]

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