China's Rise To 5G Dominance: How China's Tech Giants Are Driving Geopolitical Ambitions With Jon Pelson

Speaker A: Welcome to Take the lead radio with Dr. Diane Hamilton, where she interviews some of the most successful leaders, entrepreneurs, authors, speakers and other individuals who will inspire you to take the lead in your career and personal life. And now, here is Dr. Diane Hamilton.

Speaker B: Welcome to Take the Lead radio. This is Dr. Diane Hamilton. And I'm sorry, so glad you joined us today because our guest is John Pelson. After an early career on Wall street and Madison Avenue, John Pelson spent nearly 25 years working as an executive at some of the world's largest telecom equipment makers and service providers, including Lucent and British Telecom, helping create and market wireless products and solutions. During this time, Pelson traveled to China and watched that country's fledgling, uh, telecommunications company grow and eventually the Seize the World lead. His observation on China's use of homegrown business giants to advance geopolitical goals form the basis for his new book, Wireless China's dangerous domination of 5G and how we're Fighting Back. It's so nice to have you here, John.

Speaker A: It's so good to be joining you here, Diane.

Speaker B: Well, I was looking forward to this. We've had a chance to meet. We, uh, serve on a board together and, uh, was fortunate to get, uh, a copy of your book. When you, when I first met you and I thought it was wonderful. And, um, what I liked about it was I am not the biggest tech person, uh, in the world. I mean, I used to sell system 36 and 38s in the 80s. It's been a while since I've sold equipment. And I thought, you know, this is a really good educational journey for me to see what happened with everything. Because back then there was, I mean, certain things AT and T was huge. Things were big. Things have changed now. And I think a lot of people kind of need a background on, um, what was Lucent, where did it come from? And some people don't even know that much. And so I want to just get a background from you, uh, where you started, how you got to this level of success. And if you want to throw in what happened to AT&T along the way, that would be helpful for a lot of people.

Speaker A: You know, it's such an important point. I was giving a talk to a college group, uh, I think it was down at Duke. And my kids said, when you talk about how you worked at Lucent and how Lucent was, you know, taken out of business, people won't know what you're talking about. I said, do I have to explain it was Bell Laboratories? They said, no, nope, they won't know what you're talking about there either. So I opened the talks, especially to the younger people, by explaining that AT&T's equipment division, Lucent Technologies, which included Bell Laboratories, uh, there were nine Nobel laureates that worked there. They invented the transistor, the silicon chip. Bell Labs invented radar, they invented communication satellites and lasers, they invented stereo. I mean this was the world's greatest technology innovation company. And uh, you know, I point out that, uh, in the book that for the less than the cost of an aircraft carrier, China was able to destroy America's number one technology innovator. And this is a company that invented our wartime technology as well as the peace technology. So that was a company that after the spinoff they had a great run. And then in the dot com crash, which really coincided with the telecom crash, not company was effectively wiped out. We went from over a hundred thousand employees to about 20,000 and then were sold off to Alcatel, who was sold off to Nokia. And that's where what's left of Bell Labs is now.

Speaker B: Yeah, it's interesting to see the progress of where things went. And it's just as interesting how you see the uh, decline of some of our industries and then the growth of the Huawei. And some people may not even be familiar with Huawei, which is spelled H U A W E I for people listening. It's one of those words that, you know, that maybe you haven't heard of. And I know anybody in the tech industry of course is very familiar. But uh, can you just give a little backstory on Huawei and what it was when you got in and what it is now in the China telecommunications, uh, industry.

Speaker A: Huawei is an equipment maker. And the, the kind of things that they make are the things that run a telecom network, not the things that you typically interface with. Although they have had until very recently a, uh, mobile phone, a smartphone business too. But what they make is things that enable the phone network to work. So when you're driving down the highway and your cell phone is connected to a cell tower that you go by on the side of the road or on the top of a building, all the equipment there is coming from a company like Huawei or Nokia or Ericsson. It's the antenna on the top of the tower, the cabling, the radios that are transmitting through the antenna, the switches, the routers, all sorts of telecom equipment that then connects off to the main wired telephone network to put your call through to whoever you're talking to. Now that may seem like kind of a, uh, side business. But Huawei was doing about $120 billion a year with that kind of equipment. And just understand the size. They did that between 1990, I'd say the late 90s really started growing. And by 2015, within 20 years, they had added 100 billion in business. Uh, this is not a hyperscaler like a Google or Facebook. They have to bend metal, they have to attach circuit boards, they have to ship equipment and install it. Companies don't grow that fast, uh, that big, that fast. And they did, which was an extraordinary story. And in the process, they became bigger than everyone else put together. Bigger than Ericsson plus Nokia, plus what was left of, uh, the other companies, uh, three or four times bigger, in fact.

Speaker B: And it's interesting, when I read your book, one of the stories I really found fascinating was you trying to get business in, uh, this other country where they didn't value the same things, that maybe you couldn't necessarily go by their code of ethics, let's say. I teach a lot of ethics courses and one of the questions I ask a lot is when you do business in another country and you have another branch or something like that, whose code of ethics do you use and why? And I make students give me this whole talk, so I'm going to put this in my classes. Uh, we're done. Because I think this is a really good discussion that you didn't, and your company didn't really go for the code of ethics going on at the time. And you came up with a really unique solution that maybe worked out well at the time, but then maybe you might have regretted later. And I want to hear that story.

Speaker A: In fact, the book opens with the statement that I was, you know, as I was trying to sell into Beijing in the 90s, I wasn't able to bribe my customers. And my publisher was very concerned about that sentence. And I said no, let me be clear. I'm not suggesting I wanted to or that I would. What I'm saying is everyone around me was bribing their customers. But in the United States, you had something called the Foreign Corrupt Practices Act. And, uh, I'm not saying no. American companies do it, but when they do it and get caught, they go to prison. When you do it in Germany or Sweden or France, it's a line item on your tax filings as a deduct, as a deduction.

Speaker B: Wow.

Speaker A: Now that's somewhat changing. Now it's not treated, uh, the same, but, uh, we were, we were competing. We would win a big account selling into a Chinese operator. And then we'd find just before it was announced that they suddenly were, uh, presenting the award to Ericsson, uh, or, uh, Nokia. And suddenly all the executives at the company would be driving Mercedes or Volvos, and, uh, the fix was in. So I did not have any intention of, uh, entering that kind of a morass. So what I ended up doing, I knew that first of all, the telecom executives at the service providers, that's the companies out in the US are like Verizon or AT&T or T Mobile. They buy the equipment and run the network. They were, uh, not that sophisticated in how to make these purchases. They were making bad decisions. But I also knew that the Chinese culture values education and really values brand. Uh, and so what I arranged was for the Harvard Business School to come on to, uh, come into the city there and teach a class on telecom and business to the executives. And this was not illegal. This is corporate education. It's above board, it's proper, it's ethical. But what it did was it first of all brought them up to speed and how they should be doing it. But second, they all went home with the certificate that had the Lucent logo on one side and the Harvard Business School logo on the other and their name in the middle. And we got some real friends and loyal, uh, customers out of that. And it was a pretty good move. I, uh, do understand that, uh, when I moved on to another role, one of my successors decided this was all too much trouble and decided to give the corporate jet for use to any of these executives who wanted to fly their families around. And, uh, I think he may have ended up doing time or getting fired or something. I'm not sure how that one turned out.

Speaker B: That wasn't in the book, was it? I don't remember that.

Speaker A: No, that was not in the book.

Speaker B: That's funny. Well, do you regret having educated people? Uh, did they take that information and use it against you ever, any of these people?

Speaker A: They sure did. Uh, this was, uh, in fact, one of the people I, I spoke with. I had met briefly back in the day, but interviewed him extensively for the book. Guy named Colin Golder. And he, uh, was the guy who taught Huawei how to do an international bid, how to respond to a request for proposal in rfp. And he said they were green as grass, had no idea what they were doing. They were, they had never sold anything outside of China. And I think his line to me was, whoops, you know, I showed them how to bid. They bid. It was for the Saudi Arabia contract, ironically, because while we just last month won a Saudi Arabia contract, finally, after 25 years. But he taught them how to do a proposal. They bid, they lost. And there's some consolation in knowing that in the following two decades, they would win $300 billion of other international business.

Speaker B: You know, I found that really fascinating because you had such a great idea. But, you know, with other countries, the way they do business, educating them, um, probably would have still been a great idea. Right. Uh, what was different about this group?

Speaker A: Well, the funny thing is I was in there with the same view that the politicians in power at the time, the World Trade Organization all had, which is, look, you have this liberal worldview. We're all in this together. America is a rich country, China is a poor country, and you want to get rich. And if China gets rich, that means we have more customers, means we have more sophisticated vendors to sell us good products. The assumption was we're all just trying to be better and have a higher quality of life. Uh, and I never hesitated to try and lift up our customers or even our partners in country through the joint ventures. But I think everyone was wrong on the intentions. Ah, Deng Xiaoping had liberalized the country and brought in. But I think in retrospect, there was always the same end goal, which was more for a power, uh, uh, uh, ascension in the geopolitical power role that China had more than raising the economic status of the people.

Speaker B: Well, you know, they, they took, uh, loss leader to a whole new level in this industry. I teach so many courses where we talk about, you know, decreasing the cost of one product. You think you get a lot in pharmacies, they give you your drugs for less, so you'll get through the pharmacy, get that, and then you'll buy 10 things coming out. But they were. The price slashing and all the things that you wrote about was very fascinating. You want to talk about how that went?

Speaker A: Yeah. You know, it's funny. There were two people that completely flipped my thesis on its head for the book. And there were. They couldn't be more different. One of them was an economics professor down at Duke, and the other one was an FBI counterintelligence officer. And they each told me their own stories, uh, in response to my questions. And it. And kind of the pieces all fit together. What, what the, um, economics professor explained was you have loss leaders and you can dump into a market to try and gain share. But basically, when you're doing. If you put, as China did, according to the Wall Street Journal, if you put $75 billion into a company to help them gain share in the world. And it takes 10, 20 years for them to finally hit that pinnacle. You will never get that money back. It's not, in that case, it can't be a loss leader because the time value of the money, 20 years later, at 75 billion, you can start making $10 billion a year forever, and you'll never make it back. And you can't raise your prices through the roof because competitors will come back in and substitutes will take hold. So it didn't make economic sense. And the economic studies.

Speaker B: Right.

Speaker A: For, for a company compared to a country.

Speaker B: Right. Okay.

Speaker A: For a country, it became clear that it was the same economic logic as building a tank or a bomb. When, when you build a, uh, $10,000 bomb, you're not hoping to make a profit, you're hoping that it'll destroy a $10 million tank. And if you lose value, but they lose more value, you win. And business would be very ugly if that's how it was done, where everyone was trying to get the other guy even poorer than they got themselves. And it was the FBI officer who started to give me insight about why in the world would a country pour more money into a company than they could ever get back. It didn't make economic sense. He explained that Huawei had deployed its cell towers in the US around all of our nuclear missile bases and Special Operations Command. That didn't make a lot of sense either. Why would you want to put in 12 towers in coda instead of, you know, getting 112 in San Francisco? And it became clear this was a, uh, conflict based business strategy.

Speaker B: Yeah, yeah. That was really interesting to me because I had. There's so many things that you talk about that were out of anything I would have ever considered, uh, as uh, in terms of the 5G, for example, and where that was more military use and the higher numbers of the G. And can you explain that? Because I don't think a lot of people really know what 5G is. I remember when I went to speak for Verizon, uh, they had me talk about curiosity and then they were talking about how they had to do certain things because it was very, uh, busy time because of switching to 5G of all the legalities and all the different issues. But I think a lot of people think of 5G as faster speeds or uh, just, you know, cooler phone does more things. But I, I didn't realize that there were these different areas of where the data went across. Can you talk about that a little bit?

Speaker A: Sure. I can tell you first, what 5G is not. 5G is not faster. 4G.

Speaker B: Yeah.

Speaker A: And if you look at each of the, that's, that's not only do people think it, but the companies tell them that. And it's, and it's nonsense. It's, it's marketing nonsense. Uh, I guess I understand why they want to do that, but it's um, for the consumer, it's a very different solution. So just to very briefly explain, 1G was the first analog car phones. Those went in the trunk of your car. It was high, uh, powered, barely, uh, portable. The brick handphones were 1G. Uh, 2G was digital. That was really the only difference. And you can send a text message, although you had to type it in on your, uh, a numeric keyboard on your phone. You know, that was an old trick that, that old timers know. Uh, 3G, you could start to send emails and you had real texting, uh, with the keyboard and rudimentary, uh, Internet access. Uh, but it was really slow. And 4G was what most people today have, which is you can do video, you can do broadband, you have always on phones. Uh, it's, it's more secure and, and much faster. 5G is not the next step there. Uh, in fact, they ask anyone with a 4G phone, if you've got a good connection, you're getting 30Mbps. And who has ever said, Geez, I really need 90Mbps for what I'm doing on my phone right now? It's just not a thing. But what 5G does do is it's really behind the scenes. Uh, the Chairwoman of the FCC, Jessica Rosenworld, said if we get 5G right, what people do with their mobile phones will be the least interesting thing about it. And she's correct there. So what 5G is, is it's first, uh, of all, it's more secure. But what it allows is, uh, where a 4G cell site might allow perhaps 1,000, uh, simultaneous connections to it, which in a traffic jam starts to get loaded up on the highway, 5G isn't a thousand. It might be 50,000 or 30,000. Now where does that matter? Uh, where it really matters is if you're in a place like a factory where people are replacing all their wired sensors in factories and farms and ports with wireless sensors so they can reconfigure things better. And you can't really do with WI Fi. It's uh, it's as people know it, you get interference, it drops out. It's not licensed spectrum, you can't guarantee that you're going to have a signal. Someone else can turn on a microwave oven and start jamming your signal by accident. So what 5G is, is it's allows far, far more devices to enable this Internet of things to really start happening. Which, uh, all these interconnected devices and it's got low, what's called low latency, which means when you send a signal from a device and it has to go out to the Internet and then get a response, instead of taking half a second, which 4G might take a hundredth of a second. Where does that matter? If you're in an assembly line in a, say a medical equipment factory and there's these uh, syringes flying down the line and you're doing optical testing, you're looking at them to see if they're made to according to spec. You need a camera that can send a broadband image of that device into the cloud, of the cloud, compare it against normal spec, make a decision about whether that is okay or whether it needs to be rejected and send a response back to that device to say, flick that thing off the assembly line or allow it to go on. If it's half a second a device, uh, you don't have a solution if it's a hundredth or a thousandth of a second. Now you can start automating your factory. And these and these with farms where the factory where the tractors uh, are controlled with 5G or uh, wireless devices, there's soil moisture sensors, uh, pesticides, where you can have a drone that looks at a bug, decides if it's beneficial or harmful, and it may have a hundredth of a second to make that decision before it flies by, and then sprays a pesticide or keeps going. Instead of dumping 10,000 gallons of pesticide, you dump a gallon on every one of the bugs you're aiming at. This is pretty cool stuff.

Speaker B: Yeah, medical too, I thought was interesting medical.

Speaker A: There's applications where you can have field medical work in the military, this is particularly important where you have expensive equipment, but you can't have a surgeon on site. You can start doing things, uh, with diagnostics and even with robotics for surgeries. Uh, you can't have a half second round trip for a doctor's gesture who's trying to do remote surgery. So there's all sorts of interesting applications here. And you see why China would want to have a hand in this. Because whoever controls 5G controls farms, the ports and the factories, the hospitals of the world. And this is a worry. It doesn't affect the individual in their day to day life, unless they want to get food at the supermarket and then suddenly it's affecting them.

Speaker B: It kind of brings to mind the, um, Bruce Willis movie when he had the fire sale. Everything Must Go. I'm sure you've probably seen the, that Die Hard, uh, where they just took control over everything and we're kind of at the mercy of who's in control of all this. And I think that it's, it's interesting. Now we're at 5G. You mentioned that the progression to get to 5G. How many more GS are there? I mean, what's next? It's. This was originally the space for military, wasn't it? The 5G spot. Did I, did you say that in the book? I thought you did. Okay.

Speaker A: There's a lot of it, a lot of interest by the military because autonomous vehicles, drones and so on, you can't use WI fi, you can't use 4G. It's not, not enough bandwidth and not enough, you know, as I call it twitchiness. It doesn't respond as fast. Um, so the military cares a lot about it. Um, you know, I was talking with a group from Commerce, Department of Commerce, and they'd said, well, is it too late for, for 5G? Should we be looking how we beat China on 6G? And I said, ape, uh, aside, my industry has a lot of BS in it. I said, not only is it not too late for 5G, but we're debating whether 5G is finally going to happen in two years or four or five years. Uh, it's not here. Forget the T mobile commercials. It's just, you know, they're marketing for consumers. But the actual architecture of 5G, how it's designed, how you push servers, not in the cloud, but all the way out to the edge of the network next to the factory or the farm, so that they get, uh, an even faster response. They're still figuring that out, so. So 5G is a couple years off. I think it's three or four years off. Some experts I talked to say it's within a year or two. But it's not here yet.

Speaker B: It's hard to predict, I would imagine. You know, I remember Murph. Is it Murphy's, what's the law? Moore's, uh, law you would, you know, you double and double and double how much space you had. And there was all these different things that we knew certain things were coming. You kind of predict this doesn't seem as easy to predict, is it?

Speaker A: No, it's not. And some things like something called fixed wireless, that was actually the first thing I worked on in telecom 1996. It was going to be the next big thing. Well, it went zero. We shut down our entire division, 1500 people. And, uh, fixed wireless didn't happen. The funny thing is, it's happening now with 5G. And fixed wireless is the idea that at a home or a business, you don't even run fiber at all to the location. You just put a 5G antenna on the building and you're getting 100Mbps to each one of these. So that was. The technology did happen, but if it happens 25 years too late, uh, you know, it wipes out the investors. And that's, uh, happening.

Speaker B: How I felt about QR codes, I thought QR codes were going to be everywhere. And then it took Covid to me. Maybe it's just my perception, but it seemed like before COVID you hardly saw them. But then everybody didn't want to touch anything. And suddenly they're everywhere.

Speaker A: Uh, that's right. Even something like a zoom conference that we're doing, uh, right now in addition to the audio, and takes a, an event or a step change for any of these major technologies to happen. And that's, uh, I think, you know, the cameras on everyone's phones were basically useless until social media caught up. Said, now I've got something to take a picture of. You know, I've got avocado toast in front of me, and people need to see it. The world must know what it looks like.

Speaker B: You must. They must. Well, you know, I think this is a really interesting subject to talk about just because I talk to organizations so much about building Curiosity. And a lot of the people I talk to, these leaders, they want to see data. Show me data that proves that curiosity impacts engagement. Show me data that curiosity impacts innovation. And it's intuitive. But a lot of people haven't done the research. And I love your part in the book where you talk about McKinsey's research for the, uh, cell phone. Can you share how important research is and sometimes isn't in that story?

Speaker A: You know, I've had a lot of companies bring me in to talk to their partners or talk to their clients. I have not received a call yet from McKinsey, and I'm not expecting one anytime soon. Uh, the first chapter, in fact, is called the Study. And people in the wireless industry had heard this legend of a McKinsey presentation to AT&T their president saying there's no future in its mobile phone business. And I was able to get a hold of the deck and I actually have it here in my, in my Office. It's about 75 page PowerPoint. At the time it wasn't even. There was, this was before PowerPoint. This was 1980 or so 1985. And uh, Jim Brewington, who I interviewed extensively in the book, I asked him, do you have the deck? He said, you know what, I do. He was sitting in the back of the room. He was the guy, you, young junior executive. And McKinsey said, We've surveyed thousands and thousands of businessmen. And Diane, there were businessmen they were surveying because, you know, it wasn't businessmen and business women. I'm sure that's, you know, that was their focus. Uh, and we surveyed consumers and there's no desire for this mobile phone thing that you guys have invented. And, and this was, you know, they say Henry Ford. There's a quote that I don't believe he actually said, which is if I asked my customers what they wanted, they would have said, I want a faster horse. He probably didn't say it, but the idea is so powerful, uh, that when you've invented something people can't conceive of, you can't ask them what they think of it. You have to look at their underlying need. Uh, the response to the McKinsey survey, uh, was that people preferred using payphones and beepers, pagers, and they had no desire to carry a phone with them. And the maximum penetration globally would be 0.5% of the M market, uh, about 900,000 users globally, worldwide, which I point out within about five or ten years they were adding around 900,000 customers a day into the mobile market. They got it wrong.

Speaker B: Yeah. And you know, they have such a great reputation. So it just shows you that even great research, it's, you can't rely 100% on some of this stuff. And I think we've got a lot of people looking right now to, to find the next big thing to do the next big thing. I mean everybody must be relevant, everybody wants to be innovative. And you and I have met because we're part of the, the Kroc Institute for Techniformacy at Purdue. And their mission, I want to make sure I say it properly. Let me read this. The mission is to advance freedom through trusted technology. They do this by creating a new category, tech Statecraft, that blends high tech sector strategies with foreign policy tools and builds out a technology trust network. So they're relying on allies, uh, leveraging private sector innovation and operating based on trusted democratic values. So what I know you and I both have served with Keith Kroc, who is the brainchild behind this, who's the former, uh, chairman, CEO of, um, DocuSign, and former undersecretary, Economic Growth, Energy and Environment. And they're trying to ensure that we stay ahead in this technological realm. Right. So what I guess I want to know, what can people do? I know Keith wrote a piece for fortune about what CEOs should have as a backup plan in case something happens that China, uh, gets into any kind of conflict the way that we had with Russia. Um, what do you think people need to know? What can we do as part of this group to help educate people?

Speaker A: This is one of the things that amazes me the most. Companies bring me in some big companies I've talked with that have no China plan or a very rudimentary idea that we've got to have, uh, some kind of a plan. And. And some of them think, well, we'll just relocate a factory or something like that. And they don't realize that the supply chain, uh, the penetration into the supply chain is so comprehensive that you say, we're gonna. We're gonna make these things here and not in China. You say, okay, where are you gonna get the components for it? Uh, well, actually, those are all gonna come from China. You can make the components here, right? Yeah. Where do you get the raw materials to make the components? Uh, I see where you're going with this. So you really need to create this global supply chain. Doesn't have to exclude China, but you better not rely on them, because we've seen that Chairman Xi can be petulant. When Australia said we should do an investigation into how Covid originated, doesn't the world want to all know that China said, okay, we're breaking our contracts to buy coal and beef and wine from you? Uh, purely petulant. It wasn't a diplomatic response. And by the way, it crushed China because Australia ended up saying, well, we're still making coal at the lowest cost in the world, because that's what China drove, and now we'll just sell it to everyone else in the world. And meanwhile, China went to rolling blackouts. So, in a way, the joke was on them. But you do not want to be reliant on a government that's not transparent and where there's no recourse or predictability. Uh, and right now, that's what China looks like. So companies have to think first, um, where are we going to get our stuff? And make it so you have to have supply chains that you follow all the way back to the origin and make sure that there's no choke point that entirely relies on China. Maybe there's a significant flow through there, but you need some backup. You also need to know that if you're making a product competing against China, uh, don't try to beat them at their own game. I've seen people at one point, uh, administration, and this is funny, the, both the Trump and Biden administration pretty much have had continuity on this, which is fantastic. I've worked across both sides of the aisle. It's, it's so refreshing as a Washingtonian to not have to deal with the politics of this. The politics are America, not, uh, R and D, red and blue.

Speaker B: Right.

Speaker A: Uh, but, but it's, if you're competing against China, uh, with your own products, uh, it's, it's essential that you don't try to take on China by being like China. Let's not just write a big check and get the government to direct an initiative. And that's what everyone's going to fall in line and do. China owns that. They wrote that book. What we need to rely on is trust, trusted networks. And this is really a key thing of Keith Kroc's, uh, organization that we're both part of. Diane. If, uh, if trust can become a competitive advantage, you can't fake that. China can't say, well, we'll just buy trust. Then you, you can buy some fealty or some loyalty. But they're never going to trust you if they know that. There's no recourse, there's no transparency.

Speaker B: It's, it's an interesting discussion to have with certain younger generations. I've noticed when we talk about, um, just why you need this. And I think there's some idealism that, you know, we, that we're going to all get this great Star Trek future and everybody's gonna get along wonderfully and everybody wants that. Right? I, I don't think anybody wants to say we don't like a particular country or that somebody's. We don't, you know, it's, it, it sounds negative at one point to say, you know, we're doing this kind of thing to raise awareness because I think people are thinking that you, you have some political agenda or something else. What you're trying to, to talk about here is, you know, we've always had some conflict going on in the past. Whether we were worried about post Vietnam in my lifetime. I mean, it was, you know, Cuban missiles are hiding under our desks for Russians and whatever kind of get you. And so a lot of people just go, oh, well, uh, there's always going to be something I'm not going to worry about. You know, you guys, nothing, uh, none of this has really ever led to anything that impacted me is what I hear, some of that. So how do you get them to take this as something that we really need to do for our future, for our kids future, to keep, uh, our country, you know, strong and yet not be like, we, it's us against them, we don't like them kind of thing? That's what I think a lot of people don't like to hear.

Speaker A: Well, so, you know, it's funny, I'd say about a third of the people I'm working with in these types of issues are of Chinese descent. Uh, and it couldn't be happier to be in the United States in a free society. Uh, and anytime I've heard someone say, what do you have against the Chinese? You say, well, I'm fighting on behalf of the Chinese who live in Taiwan, the Chinese who live in Hong Kong, the Chinese in mainland China who are in the Uyghur regions, the Chinese who are holding up the blank sheets of white paper and hoping that the ccp, the Chinese Communist Party, doesn't open fire on them the way they did in Tiananmen Square. So this is a pro freedom. Pro is definitely not west against China or the US Against China. I've made that point often that it's not the west because Korea, Japan, Taiwan, Vietnam, Indonesia, these are all our allies in, in the struggle. And the people inside China, uh, their lifestyle has gotten better than it was 40 years ago when there was mass starvation. Uh, the, the GDP in China in 1980 was lower than Sudan. That's how far they've come. Today it's not, not $300 per person per year. It's about 12,000. Uh, so, you know, it's about fighting the authoritarianism and totalitarianism of the government. People say, why do we care for our children or our grandchildren? Someone said, what do you think, uh, would happen if China got the upper hand and really could call the shots in the US the way they do in so much of the world? So we don't have to wonder. We can look at what it's like to be in China today? If you're educated, uh, and you have ideas you want to share, you will be squelched. If you're lucky, you'll just be blocked. You can't Do Internet searches, you can't post your opinions. If you're unlucky, your career is ended, your education is terminated. And if you're really unluckily, you're disappeared or executed. Uh, China does not have patience for that.

Speaker B: It's a scary prospect. And I think that a lot of people don't feel comfortable, um, even talking, ah, anything negative about what's happening because what if they end up in more power? Do you worry about that at all, that you wrote this book? I know you said, I think it was in the epilogue about around that time frame that you wanted to keep it on a flash drive and not have it, you know, out there. Well, are you worried about that?

Speaker A: Yeah, that was, you know, when I started writing the book. I was, uh, you know, I had had a fine career in telecom, but I was not an entity of, of interest to China. I had done work there, but I had never been based. I hadn't spent years, you know, operating the Chinese office, uh, or anything. And yet about two or three months into my research working on the manuscript, I got that contact from a senior officer at a top recruiting firm. M asking if I was interested in a job on the board of China Unicom. And, uh, this is a state owned Chinese service provider, bigger than AT&T and Verizon combined. So they had found out I was working on this. They knew about it. And I asked people said how in the world. And they said they got very wide reach. And perhaps because I was talking to and interviewing people that were being tracked by the Chinese, uh, Communist Party, people on the National Security Council, people in the law enforcement and counterintel that they said, who's this, who's this guy? Never heard of him. He's not on any of our lists. And perhaps he took a peek at my manuscript, which is only protected by a 16 digit alphanumeric password. And from what I understand, don't count on that. Don't expect that you're against a state hack or you're secure, you're just not. But, uh, I really felt this is a story, it had to be told. And, uh, there's too much at stake. So, um, you know, there's people that are doing things that put themselves in true, personal, physical risk. People in the military that I've worked with on the book, I have enormous respect and admiration for that. I'm willing to, uh, my neck out with a monograph in a book that has my name on it and uh, just take a stand there. There's an awful lot of Americans that are doing that right now.

Speaker B: Well, I think that it's a really positive thing that a lot of countries want to be in the lead in innovation. I mean, this is not unusual in that respect. And the problem is you're up against somebody or, uh, a country that doesn't want that, of course, but we're at point where people don't really know what they need to do. I mean, we talked about having a plan, uh, in case something happens in China where you're going to get your parts and your supply chain and that type of thing. What else do we need to be doing? I mean, I read a book and I can't remember the book off the top of my head, but it was saying we're never going to have it the way we had it. It's never going to be as good because we're going to each be separate countries having to rely on ourselves because we can't get along and everybody's going to have to make their own and nobody will be able to do it nearly as well. Do you think that we're headed towards that, or do you think that there'll be either the US or China or somebody will end up winning and that'll be the end of that.

Speaker A: Well, if someone ends up winning, you got to hope it's not going to be China. And the whole world should hope that, because China's made it clear they want to export their collectivism and model of surveillance and social harmony as they call it, where everyone in the society gets along with the same set of ideas. That's not some caricature of, uh, Chinese Communist Party. It's how they want the world to look. Uh, and America may not be beloved all over the world, and we've certainly done things that aren't worthy, uh, of that. But, uh, the model of democracy and independence and self determination may, uh, not be perfect, but it's a heck of a lot better than the authoritarian model in China. Uh, the funny thing is global trade is supposed to lead to peace. Uh, interdependency reduces the risk of war. You don't bomb a country that's making all your insulin. Yeah, you can't destroy a steel factory if that's the place that's making your cars or making your bombs for that matter. You know, it's uh, you build the national defense, but by trading you're supposed to all be in this together. Uh, the problem is it appears that China really does have a different view from Europe. You know, we competed against Japan 35 years ago. They were such a threat to us, but it was a commercial threat. We worried that they were going to take over the car industry, not they were going to take over the country or seize uh, Latin America or Africa and uh, subjugate the people to their philosophy. And that all looks so pleasant now in comparison to what we're confronting with China, which is not a business competition, it really is political.

Speaker B: Ah, well, you give some ideas of things that could happen as potentials, uh, for innovation. You talked about permissionless innovation, which I found interesting. Um, there's so much out there about open source and all this kind of to explain a little bit about permissionless innovation.

Speaker A: Yeah, that was a concept that I found with the Institute at George Mason. Uh, other named Adam Fear had written about this. And here's the idea. The great breakthroughs, you just take something that even the, the college kids will recognize. The big commercial value creation of the last 10, 20 years were companies that not only were not backed by the government, but the government tried hard to stop them. Things like Uber, Airbnb, Spotify, uh, Amazon, Google, these are companies that were doing things that was, it was socially, uh, unacceptable. In many cases it was illegal. You know, you cannot use your private home as a hotel. It's not zoned as a hotel. So you can't have strangers staying there for money. Uh, Uber, you can't have a stranger pick you up in a car. Socially, it runs counter to everything you've been taught. And it's unsafe to get into a car with a non licensed taxi driver. Now I've lived in New York for many years and I have no great confidence in the skill and training of your typical taxi driver. Um, I take the random guy pulling up in a Camry any day of the week. But this was illegal. They didn't have taxi medallions and so the government stopped them. They sued them, they made him face them in court. And in the United States the companies won. Not every time, but in general. They were able to say this wasn't legal, but it should be. And in the end it was, uh, you know, Google, Amazon wasn't paying tax. They say we don't have any base of location for the company was built on the idea that they were selling without having to add a tax on and that some of those you lose some and you win some. But nobody was disappeared, nobody was uh, executed, uh, for violating the law. With their innovative company, this kind of permissionless innovation has created literally trillions of dollars of value. Diane, in just the last 10, 15 years, almost all come out of the U.S. i think Spotify is the only company I just named that's not US Based. And I will point out, though, and when I talked to my editor about talking about, uh, American exceptionalism, and she, I think, fell out of her chair, I said, no, most of the examples I give weren't even born in America. The exceptionalism isn't that these are Americans doing it. The thing is the system. So I had people from France, from Nigeria, from, uh, South Africa, from Japan, from Korea. These are the people that had come here and created companies because our system welcomed it and gave them the opportunity. That's the exceptional part. China cannot allow this. They cannot tell their innovators, and there's, you know, so many that are so competent in their engineering and technical community, go nuts, break the rules, do something no one's ever thought of. Disrupt a, uh, venerable, uh, industry. If you bet in China, Jack Ma did that in China. He's out golfing in Thailand now. He's lucky, by the way. He's lucky he's golfing in Thailand. And I found one, uh, CEO of a major Chinese financial services company who was arrested for illegal fundraising. He was doing things that were outside the norm, and I looked him up. Arrested on January 7, executed two weeks later, CEO of a big company.

Speaker B: Well, you know, speaking of big companies, do we have to worry about some of the big companies like TikTok? You hear a lot of, uh, about them were taking them off phones or taking it off, you know, different devices. Why. Why should the average person think about that?

Speaker A: You know, TikTok is awesome. You know, it's. It's. It's very entertaining. They've developed an algorithm that no one in the world has been able to replicate. Uh, I had someone, a kid, telling me that. He said, I had a video pushed to me that I thought was hysterical. I loved it, and I looked and had about a hundred views. So there was almost nothing to go on to predict that I would love it. And yet they figured it out and they pushed it. To me, this is really powerful. Uh, but as we also know, uh, they will because it's controlled by the Chinese government. Ultimately, the CCP controls what. What goes out on, on TikTok, because, you know, they. The laws there say everyone has to cooperate with the government and the intelligence agencies. You don't need a warrant, you don't need to build a case. You just do what the government says. Uh, these things should be very worrisome because they can steer the content you're getting. They can make you See, kids were out there, they're all stealing Hyundai's. That was the tick tock challenge. They were doing dangerous things with fire kids that were, you know, setting themselves on fire. Uh, challenge. I think sometimes they're just saying, let's see just how far we can push these kids.

Speaker B: Awful. And you know, well, even confirmation bias alone, I mean, if they don't even go that far. Right. I mean, we get that in social media in general, don't we?

Speaker A: We do. And, and it's a worry, you know, the US it's been obviously a topic with, uh, Twitter and Facebook and uh, for some reason the, the free speech issue is a political. And I haven't understood that. That seems about as American as it gets. But, uh, as bad as it is here, people say I'm being restricted from seeing things I want to see. Well, you know, that's a problem. But there's far more transparency and there's recourse here. People, you know, you can have some crazy rocket guy buy out Twitter saying, I'm going to flip this on its head. Now you may think that's terrible, you may think it's great, but there's movement, there's, there's change. This isn't stuck wherever the government put it. And if he did bad things, Twitter will crash and burn and someone else will have to rise. And that's. And if he did good things, it'll thrive. So it's China. There is no one shaking it up and saying, let's fix this.

Speaker B: I'm curious about um, the edge computing. And you talked about this in the book or wrote about, I should say, um, uh, because I worked with some M companies that saying how much faster things are if you, uh, get, you know, work on the edge and you don't have to go all the way up to cloud. And it's for those of us who don't have that kind of a background. Why is you talked about the edge being a, ah, little bit, um, tricky in terms of what they can do, uh, in access. Can you touch on that for a minute?

Speaker A: Well, sure. You know, there's a couple of elements to that. One of the things I talk about, you know, Wireless wars was not written for technology people or policy wonks. It really was written for regular people. And so I try to describe something like that. You know, at the, it used to be where you had these antennas out at the cell tower and they would lead all the way back into some big brick building somewhere where all the computers and switches and routers were. And that's where all the intelligence sat in the network. And so you didn't even care who built that antenna. And that cell site, it could be China, it could be Huawei, because all the, all the thinking was going on inside. With 5G, they push the software that you're using. If you're looking at a cell site, if you're, if you're downloading Netflix, this is a good example. They've already pushed out popular TV shows and movies, uh, not, they're not sitting in Netflix server somewhere in California. They're pushed out because they know what people are going to download and there's no point in trucking it all the way across the country's fiber optics every time someone downloads it. So they'll push some out to New York and Washington and Boston out to the edge of the network. They would, they would call that.

Speaker B: Mhm.

Speaker A: So that's simple caching. It's called with, with 5G, like a corporate application. You know, I talked about the factory. Take a pharmaceutical factory where they're looking at temperatures of a mixture that's being made into a drug. You have some software package that says what's the right combination of heat and pressure and, and uh, other, you know, time that needs to be happening to make this drug properly. That software can't sit in a server in San Jose if they need to be making split second decisions in New Jersey where the factory is. So they start pushing not just the antennas out to the edge there. They push that software package right out next to the factory so that it can happen without making the round trip. And this is all getting back to this industrial process which is so different with wireless now. And they want to have the edge being an intelligent part of the network. You know, your car, if you've got an autonomous car and it's going to swerve to avoid another car, you want that processing to be done maybe right at the cell tower that you're driving past, not somewhere in Indiana where they have a server farm.

Speaker B: Well, it is, ah, a time where it's hard to know what to read, what to um, look at in terms of, I mean you never know what news station to watch, you never know where to get information about this stuff. And your book was really interesting to me. It was very well researched and I appreciate that as a researcher of how much you did. I don't even know how long that took you, but it was really well done. Are there other things other than your book? Of course. I hope everybody reads your book because I highly recommend it And I have it, um, uh, for those who can see it. I get my hands out of the way. Uh, but it's called, of course, wireless wars. Uh, but are there other courses, uh, are there other, um, things that people could be doing to learn more about what we need to do to stay in the lead in this whole high tech, you call it a war, uh, whatever you want to call this, um, how can we learn more and have a higher level of education about all this?

Speaker A: Tell you, one thing people should be doing is making sure they're personally secure. And people talk about passwords and so on. I think, uh, sure, that's all really important. I can't tell you it's not. But, you know, I hear stories about people buying Internet of things like a light bulb you can turn off and on, say, well, I don't care where that's made. I don't care if that's American or Chinese. It's a light bulb. It's not a indoor, uh, video camera. But what I learned is that some of these light bulbs coming out of China, the app that you control it from your smartphone tracks your personal identification information, your location at all times, perhaps your directory and other information on your phone. So suddenly, even though you think it's just a light bulb, someone in Shenzhen knows who you are and where you are at all times. Uh, you know, and they can use artificial intelligence to say, well, you just traveled to a known drug den. And, uh, when we cross reference and see that you're also an employee of a, uh, technology firm or defense contractor, this is someone we're going to take a look at now because we think we now know that this guy whose light bulb turns on when he pulls into the driveway is going to a crack house on the edge of town and then going to his job at, uh, International Dynamics and building missiles. Uh, now you may not be an executive at one of those companies, but if you're just a regular person, they can also be saying, you know, when you try to see what this Tiananmen Square thing is, or about what's happening in Ukraine, we're going to push that away from you. Now, we're not going to let you see that. You're not going to get the TikTok videos and we're going to steer. You'll never know what happened, but we're going to steer you away and you're going to have a different set of information to make your decisions on without knowing that that's what happened. That would worry me. If you just want to Be an informed person living your life to know that someone with interests that are not aligned with yours is now directing what you can know and what you don't know.

Speaker B: And, um, for leaders of companies, other than having a contingency plan in case of, uh, any burst happening from China, what else should they be m doing?

Speaker A: Here's what they need to know. This is different. When I called the book Wireless wars, it's not because this was a business competition that was almost as fierce as a war. The title means this is a war that's being waged without the kinetics, without the missiles and, and bullets. This is China taking on these companies not to make more money than them, but to achieve geopolitical advantage for the ccp, for the Chinese Communist Party. And these companies better realize this is not business. Not, not to China it isn't. This is not like trying to beat, uh, Samsung or Sony. This is a, this is a political and geopolitical struggle where cost. They want to, you know, avoid losing money. They want to make money, but that's secondary. And businesses better realize that they're playing a different game. It's not a chess and checkers. This is like, you know, we're playing checkers and they're setting up mortars to aim at our positions. Forget the chessboard, you know. And until companies realize that there's a different game being played here, uh, they're not going to be equipped to respond to the China threat.

Speaker B: So how do they get educated? We're doing things with the Kroc Institute and any other things that you suggest, any specific degrees that people should be looking at for, uh, their managers, any kind of education in that respect.

Speaker A: I think first of all, they can't simply look to their finance and, uh, operations leadership to make the decisions, as has always been the case. And you know, every once in a great while you get your government affairs person to weigh in and even cybersecurity is, uh, not sufficient. I think what you have to look to is groups. Kroc Institute is doing training on this. Various think tanks are really engaged. Department of Commerce is working this right now. There's groups, uh, I've been working with a group called Business Executives for National Security bens and these are organizations where they talk about the issues and you can come together around experts that, that can speak about the issues. I talk to people from think tanks that are China experts and they're now starting to make the rounds. I'm starting to do this to companies and boards and saying this is what you actually have to look at, and you'll get aid. The State Department. Department has a new cyber security ambassador at large who's excellent. Uh, Department of Commerce has a new cyber person just, uh, funded in the last couple months, who's excellent. Government does have resources that can help. Uh, outside of the normal things like CFIUS, you know, Committee on Foreign Investment in the U.S. those are all great and useful, but there's new groups that have been stood up. I think businesses need to work with government and with, uh, experts at various, you know, I call them think tanks. Just people that focus on this and get some insight from them.

Speaker B: Yeah. And we're seeing, uh, universities like Purdue have such a focus on this, which is really a, uh, good foundation. And I think that everything you wrote about in the book is so enlightening that I think, uh, I've recommended your book to so many people. I go, you got to read this book because appreciate it in a way. It kind of. This is a strange comparison, but it reminded me. I love a Neil DeGrasse Tyson book. It's called, um, Death by Black Hole. And it's all astrophysics stuff. And if you just don't know anything about astrophysics and you just come anywhere in the book, you go, oh, that's a really interesting story. Or, that's a really interesting story. And I listen to it all the time. Audiobook. And I listened to your audiobook as well. I love your guy who did the audio version, by the way. He was terrific. And I have both your audio and your book. But I get the same feeling with your book that I get with that one that I could just jump into it and hear a really interesting. Oh, that about McKinsey or that about, you know, permissionless wireless innovation or that. And I think it's very good because you get this like, oh, I forgot about that. And I could come back to it and update myself and really learn what it is. And you do such a good job of helping somebody who really doesn't have this as their background and have them come up to speed and go, oh, that's what that is. I've always heard about Loose and I never really knew or whatever it is that people don't know. And I think it's really, uh, a great foundation. So thank you so much, John, for being on the show. I just want to make sure. Is there anything I didn't ask you that you want to share that we can finish with?

Speaker A: I don't think so. This is a terrific conversation. This is one of my favorite interviews. I've done so far, Diane, I really appreciated it. And, uh, yeah, you. I think you covered everything that's important. Now. This was a book written for people that aren't the policy wonks or technologists. Although I've been surprised at how many of those people have, uh, have picked it up and read it, too. I think they appreciate not having to wade through, uh, you know, a dense discussion of market share changes and technology, uh, standards.

Speaker B: Yes, it is. It's a. It's an. It's very interesting. And I think that it's. It really is educational while, um, you don't. It doesn't lose your interest at all. And I love that. So thank you so much, John, and this has been wonderful having on your show. And, uh, we will be back.