Huawei and 5G NetworksHuawei is now the world’s biggest telecommunication equipment maker, with a 28 per cent market share and more 5G contracts around the world than any other company.  Its closest rivals are Ericsson and Nokia, the European companies.  In US, Verizon is just beginning developing 5G networks (Kalyanaram 2019.) To maintain its market leadership and to increase its autonomy in 5G market, Huawei has released a series of 5G based chipsets designed to compete with U.S. and Korean competitors. These chipsets cover most of the telecom field: Kirin 980 chipset for smartphones; Balong 5000 chipset for modems; Tiangong 5G base station; and Kunpeng 920 chipset for the Taishan cloud server (Kalyanaram 2019.) FairPay Architecture What should be the Pricing Strategy for 5G offerings and services?  As proposed by Bertini and Reisman (2013), the customer should determine the value of the service and determine the price.  This is an iterative process, where the price is set on relational basis and not on transactional basis.  If the customer-determined price is not viable for the offering the service, then the firm can withdraw the offering.  Called as FairPay architecture, Bertini and Reisman describe the approach as follows (Reisman and Bertini 2018.)  As described below, there are three major elements to this pricing approach (this is abstracted from Reisman and Bertini 2018.) 1.      Empowerment of the customers by delegating to them the responsibility and opportunity to define value and set a price.  The customers are allowed to experience the offering without any pre-conditions and then set the price.2.      Dialog between the firm and the customers about value of the offering, the benefits, and the level of enrichment of the customer.  Firms suggest reference prices to anchor a customer’s price offer and can provide reports to remind people of the value received. Customers are asked to justify the prices paid by indicating their reasons. Firms respond with counterarguments. Importantly, this dialog is structured for scalability and personalization through the use of modern choice architectures.3.      Reputation measures a customer’s use of her/his responsibility. Fairness rating.  Choice architectures are then applied to segment customers in terms of fairness (and other attributes) and apply “carrots” (relating to product tiers, perks, etc.) to improve profitability or “sticks” (the threat to remove a customer’s price-setting privilege) to at least sustain it.” Reference Price and Latitude of Price AcceptanceThe FairPay architecture recognized the existence of a Reference Price.  Reference Price is the internal mental price which forms the basis for comparison with the observed price (Kalyanaram and Winer 1995).  Accordingly, a customer’s ask price in the FairPay architecture will be dependent on her/his framing and reference price.   Reference price has multiple conceptualizations. The most common conceptualization models reference price as a predictive price expectation that is shaped by consumers’ prior experience and current purchase environment (Kalyanaram and Winer 1995.)  The theoretical basis comes from adaptation-level theory which holds that people judge a stimulus relative to the level to which they have become adapted.  Thus, in a pricing context, the expectation-based reference price is the adaptation level against which other price stimuli are judged ( Mazumdar et. al. 2005.)  There are many internal and external cues that determine the reference price of a customer.  A customer’s personal experience, word-of-mouth, advertisement, promotion and other instruments play a critical role.  Reference price varies across consumers and groups of consumers.  There is individual and group heterogeneity.  The type of reference price a consumer uses and the effect of the reference price have been shown to vary across consumers, creating an opportunity for segmenting and targeting consumers on the basis of reference price (Mazumdar et. al. 2005).  Firms can manage and impact the reference price on a customer or a segment by direct and indirect suggestions, advertisement, promotions and other marketing instruments. Research also shows that around the reference price, there is a region of price insensitivity.  That is small changes in price around the reference price are not noticed, and do not impact the probability of purchase.  This is also referred to as latitude of price acceptance (Kalyanaram and Little 1994.)  In their work, Kalyanaram and Little have shown that many factors impact the width of the latitude of acceptance, including reference price level, knowledge level and brand loyalty.  For instance, consumers with higher reference level demonstrate a wider width of latitude.  On the other hand, consumers with higher level of knowledge and interest in the service demonstrate a smaller width.  Finally, brand loyal consumers as expected tolerate a wider latitude. Accordingly, firm that wants to increase the price should “nibble” at price increases.  That is, the increases must be small.  Preferably, small enough to be within the latitude of price acceptance which will mean that there will be no impact on the probability of purchase.  With the increase price, the reference price will also increase in the adaptive model.  As the reference price increases, price latitude will increase.  So, there is much benefit in small increments of price increases.
Fifth Generation (5G) network represents a new generation network able to transmit data with a speed higher than 1 gigabit per second and with much lower latency – the time that it takes to move data back and forth. 5G network will be about 20 times faster than the current 4G networks, and latency could be as low as 1 ms compared to 50 ms for the 4G networks \cite{Liu_2016}.  Accordingly, fifth generation (5G) networks will enhance the productivity of are critical to the infrastructure.    5G Network Market LeadershipHuawei is the major global supplier of effective but low-cost wireless equipment.  It is now the world’s biggest telecommunication equipment maker, with a 28 per cent market share and a pioneer in 5G network market.  Its closest rivals are Ericsson and Nokia, the European companies.  In US, the big four carriers – Verizon, AT&T, Mobile and Sprint – are beginning developing 5G networks.   To maintain its market leadership and to increase its autonomy in 5G market, Huawei has released a series of 5G based chipsets designed to compete with U.S. and Korean competitors. These chipsets cover most of the telecom field: Kirin 980 chipset for smartphones; Balong 5000 chipset for modems; Tiangong 5G base station; and Kunpeng 920 chipset for the Taishan cloud server \cite{2019a}. Of course, Huawei is facing serious impediments in the US.  Setting this aside, we can compute Huawei’s market share in the 5G network market.   Quantifying Market Share AdvantageThere is extensive research that has established the following two empirical facts \cite{Kalyanaram_1995}.  1.      One, the pioneer/first-mover enjoys a sustained market share advantage.  Early entrants to a market enjoy a sustained market share advantage \cite{Kalyanaram_2013} .2.      Two, this advantage can be quantified.  In a two-players market, the market share advantage of the pioneer is 58 percent (vs 42 percent for the second entrant).  In a four-players market, the market shares are 36, 25, 21 and 18 percent respectively for the first, second, third and fourth entrants. In a five-players market, the respective market shares of the entrants are 31, 22, 18, 16, and 13 percent \cite{Robinson_1994} . Applying these well-established facts, Huawei’s market share can be forecast to be about 31 percent, even four other viable competitors – Ericsson, Nokia, Verizon, and AT&T – emerge.  This has serious implications to commerce, economy and society, because the applications of 5G networks are pervasive.  Therefore, Huawei now stands as a potential significant global contributor to increased economic growth and productivity through its enabling technologies. Applications of 5G NetworksIn general, virtual and augmented reality experience and implementation will be richer, personalized and more complete.Reordering monetary worldOne of the important developments that is likely to dramatically alter our society, commerce and economy, and polity is the conceptualization, design and increasing rise of crypto-currencies and block chains in economy and commerce. With a clever application of cryptography, we will be able to secure the transfer of money and payment without needing a trusted third party.  No central banks, no clearing houses.  Per most technology and policy experts , the role of traditional currency will diminish in the next decade or two and even disappear \cite{2018}.  Obviously, this will change the optics and substance of commerce and conduct. Experts are already discussing regulatory mechanisms for the new world order \cite{2018a}.  The crypto-currency and block-chain efficiencies and effectiveness will depend much on the speed of the networks, and the 5G networks will be crucial in this context. Accordingly, Huawei will have a big role to play in the design of new global economic and market ecology and order.Remaking the medical world5G will make an enormous difference in providing health care to millions of people in remote locations, as well as training doctors in surgical specialties \cite{Borgstrom_2011}.  Telecom equipment maker Ericsson is already working with doctors at King's College in London to test 5G-compatible prototypes of touch-sensitive gloves connected to robots. Reimagining mobility and transportation5G will accelerate the adoption of self-driving cars and vehicle-to-vehicle communication — where cars exchange their location, speed, acceleration, and direction.The vehicles will know before their drivers do when a truck five vehicles ahead suddenly brakes or another car turns into your blind spot .  These changes will evidently recast mobility and safety.  As with land vehicles, technology will enable communication between drones, and enhance their precision and safety. The US ConcernsWith such ubiquitous application of 5G technology, and Huawei’s leadership in 5G market place, the US administration must weigh the concerns about security \cite{2019} with the enormous benefits that Huawei participation is likely to bring and the injury that Huawei’s ban is likely to cause. What are the likely adverse consequences of ban on Huawei?  The rural America is likely to suffer in productivity and prosperity.  We may unwittingly create a urban-rural digital and prosperity divide.  The roll-out of 5G networks is likely to be delayed, and the quality may suffer without direct competitive pressure.  Most importantly, continued future innovations will suffer.  The question, therefore, is this: Can US protect its national security interests, and yet permit Huawei’s participation?   The answer is Yes, the US can.  If Europeans can do it , why not the US which is the most innovative society in the world?