So What? China's Grip on Telecommunications with Jon Pelson, Author of "Wireless Wars"

Episode 69 • 27th September 2023 • Tech Transformed • Mark & Carolyn

Carolyn Ford:

Welcome to Tech Transforms, sponsored by Dynatrace. I'm Carolyn Ford. Each week, Mark Senell and I talk with top influencers to explore how the U.S. government is harnessing the power of technology to solve complex challenges and improve our lives. Hi, thanks for joining us on Tech Transforms' So What? segment with Tracy Bannon. Hey, Tracy.

Tracy Bannon:

Hola, how are you today?

Carolyn Ford:

I'm great, especially since we're doing this. This is my favorite, favorite part of my day, even my month, so this is good. Today, we get to welcome Jon Pelson. In addition to advising private technology companies and groups in the Pentagon, the Department of Commerce, the State Department, the intelligence community, the pedigree goes on and on, Jon is the author of the bestselling book “Wireless Wars.” He's going to talk to us about the global technology environment, particularly as it relates to U.S. national security and cybersecurity, and relatively recent ban on, FCC ban on Chinese components. Welcome, Jon.

Jon Pelson:

It's so great to be here, Carolyn and Tracy.

Carolyn Ford:

It's really good to have you. Let's just kick it off. You've been tracking China's impact on the telecommunications space, specifically, for a while. What factors drove or are driving that country's success within the industry?

Jon Pelson:

Yeah. Wireless telecom, traditionally, has been driven... Success is driven by scale. If you can get a bigger installed base, if you can get more customers so you can fund more R&D, all of that leads to success. It's why when the U.S., which had always led the world in telecom quality, the best wired networks, the best everything, the gold standard was in the United States. How come Europe and Asia leapt past when cell phones became a deal in the '90s?

The answer, a big part of the answer, is the U.S., in a freewheeling, open market model said, "Use whatever standards you want." There were multiple standards in place. Europe and the rest of the world said, "We're going to GSM," Global Standard for Mobile and that created a scale where America may have been the biggest, but the rest of the world combined was bigger.

You had giants, not just giants like Nokia and Ericsson, and for that matter, Alcatel and Siemens were leaders at the time. But they were able to get their component costs down, get their quality and feature sets up, get the handsets cheaper and better and smaller. At the time, everyone wanted a small phone, now they want big phones. But that was driven by scale, and to a great extent, that was part of China's success, because China, of course, has always been about scale.

It's a billion and a half people. Everything in China is bigger, and there's more of it and there's more people to work on it. That was a key part of it. I will not downplay however, that China, to a great extent, I talked about this a lot in “Wireless Wars,” helped itself to the technology of other companies that were ahead of it.

You can't become the technology leader by stealing, but you can certainly catch up in a mighty short amount of time, and not just by stealing. Now, let's be honest, they said to the Western companies, and it's not just Western, they said to Japanese and Korean companies, "You can come to China, but you got to share your technology." So I don't call that stealing, that's just suckering people that say, "Well, look, China's never going to catch us, so I have no problem sharing how we're doing this type of telecom and wireless technology. China's never going to be a threat."

Tracy Bannon:

That clearly shows the shortsightedness, and I'm sorry to step on you there. It clearly shows a repeatable shortsightedness. I'm not sure if you're familiar with the book, The Kill Chain by, I think it's Cameron Broseman (Christian Brose). It's the same elements. We don't think we've always been the best. A bit of it rests on our laurels. Another aspect of it is we believe that our size and our scale cannot be overcome by anyone else. Heck, I was just having the conversation with my husband about metric. Why are we still using English rulers? Is anybody else doing this? And it would be easier, but we have opted to stay siloed from that perspective.

China has a number of different reasons that they want to compete as well. It's not only financial, by any stretch of the imagination. He who rules in technology, right, has a dominance that should intimidate us all.

Carolyn Ford:

Well, and I was going to ask the question like, okay, so our cell phones, and this is a leading question, Jon, because I know that your book unpacks this. Why do we care so much that they have such a grip specifically on 5G? What does that control for us?

Jon Pelson:

Well, I can tell you why we shouldn't be as concerned, and the thing you hear people say is, "Oh, well, China can spy on us through our telecom networks."

Carolyn Ford:

Yeah.

Jon Pelson:

Well, yes they can, but I got bad news for you. They could spy on us through the networks that Nokia and Ericsson were putting in too. It's easier, for sure, if you put in the system to breach it, because you could build back doors, and so on, but it's a much deeper and more present problem than that. The real issue is a dependency that it creates.

First of all, anytime you're reliant on a vendor, as either a sole source or a primary source for anything, you become beholden to them, and you become vulnerable to them. That's the case, whether it's solar panels, or electric car batteries or whatever. If you rely on them to deliver it, you're at risk. You saw that a generation ago with oil, with energy. Why were there so many wars in the Middle East? It's because we need oil to survive, and our oil was coming from a handful of countries in the Middle East. That led to very bad situations for people in the free world, that you are beholden to non-free countries that could exercise their power over you.

China's doing this in a much bigger way when they become the key supplier, almost, really, they came down to where they were almost the sole supplier of telecom here. Huawei was bigger than Ericsson and Nokia combined, three times over. The problem there is that they can toggle it off and on. They can throttle back your service. And, very important, I've talked about this in the book, 5G is not about talking to people on your phone. It's not about surfing the internet.

One of the reasons I think the carriers have been so disappointed with their 5G results, it's because people really don't care, in that context, so much about 5G. I don't know anyone who's ever been on their phone with a 30 megabit connection speed in 4G and said, "If only I could do 90 megabits, I'd really be able to enjoy this phone much better."

Tracy Bannon:

My text would go that much faster.

Jon Pelson:

I can only stream four HD video shows at once. I need to get eight or 10 onto my little phone screen. That's not what it's about. 5G, when it really takes off, which is in the next coming couple of years, is really about factory automation. It's about municipal city operations. It's about farms, ports-

Carolyn Ford:

Medicine.

Jon Pelson:

It's about controlling drones, medicine, medical hospitals. That's where 5G is going to be deployed and be materially different. The Internet of Things will have to rely on 5G because 4G can't handle it.

Tracy Bannon:

I'm writing things down because there's so many things just bursting from my brain. Ask Carolyn, she's chuckling about it. We can talk a little bit about this idea of are your communications ever private? I would assert, "Well, as long as I have Alexa hanging out beside me, no." Well, she's unplugged now, but as long as Alexa is beside me, no, I don't have that. As long as I am using OpenText, as long as I'm sending emails, then I'm agreeing, are going through different proxies.

Unless I'm truly VPN'd, in a much more intentional way, even then, my communications aren't private. I believe that we are all under some kind of spell, that we think that there is some privacy that's really there, and it's much less than we would believe. The second thing I'd like you to talk about, just a little bit, is other Chinese dependencies that we have, specifically, your view on TikTok.

Jon Pelson:

Sure. Let's jump in on both of these. First of all, the idea that your communications are secure, let me tell you something that I've really learned even more about over the last six months or so. You can use an encrypted app, like WhatsApp and say, "Look, they can't hear what I'm saying. They can't read what I'm saying. I can do a phone call, whatever, and I'm secure," but you're not, and let me tell you why.

There's something called metadata, and here's what you can tell with metadata. You say, "Okay, Jon Pelson is on his phone. He's making phone calls, he's sending text messages, he's doing video, but we can't tell anything that he's saying. So what can we say? What can we learn? Well, we can see who he's talking to." Now you take someone down the street from me, say they work for a government contractor, they work for a tech firm. They're comfortable in their secure communications.

A bad guy, anyone who has access to the network and is blocked by the encryption, because by the way, the AES encryption really does work. It's quantum proof. It's absolutely secure. What can they tell about that guy? Well, they can tell his GPS location information through the network. Okay, he's been visiting a place that we cross reference as a crime frequently showing up in crime reports. It's a brothel, let's say. He's showing up at a place that's known for prostitution arrests.

We know that he's also visiting a medical clinic on weekends. Okay, we think that this guy may have developed a problem visiting this place. And you still don't know what he's saying in any of his messages, but you know that every time he leaves that brothel, he does a non-cash payment over his phone. Okay, now you're starting to figure out something about this person.

You also see that he goes to work at a secure government facility. Maybe you don't know exactly who this person is, but this is someone you're interested in. You know this person has a secret. You know that the person's married and has problems, and you can compromise someone without ever knowing a word that he said or a message he sent, and people don't even think about this.

Tracy Bannon:

What you're really talking about is a flavor of social engineering, of data mining using the metadata, as you've said. I don't need to know your exact conversations, but if I see the two of you meeting, even if it's virtually through an electronic medium, I can deduce a lot from that. Add onto that, how much I can buy about you. The government is even. When the government cannot collect information about you, they can buy data about you from third-party U.S. data collectors who are vendors. There's an amazing amount.

We should all take pause on how much others probably really do know about us. I know that I get education about this all the time, given some of the work that I do. Being on the lookout, even, for somebody reaching out to have a conversation. Imagine we're podcasting and somebody reaches out and says, "Hey, I'm a student. I've been studying your X, Y, Z. I'd love to know more about your book. Can we get together and talk?" Those are even avenues now for getting after who you are, what you're doing and essentially getting in your Wheaties.

Jon Pelson:

There's no question about that. Even if you think you're playing it safe, so you stay off TikTok, which is good, because TikTok is not only a way to learn about you, but it's a way to push information so that you learn about things that someone else wants you to learn about, whether it's true or not. Restricting information or pushing non-relevant information, can shape your worldview, and is absolutely underway right now.

In America, and in free countries all over the world, that information is being pushed to people to shape what they think. I read a story in The New York Times this weekend, of all places, that claimed, with extensive research, that a very wealthy American businessman was funding left-wing groups to come out in support of China. Groups like Code Pink, the article said, were actually funded by this guy to say things like the Uyghur treatment in the northwest regions of China is actually quite fine and it's not mistreating them at all.

I found this extraordinary, especially in The Times, the article went after several prominent liberal or progressive groups as effectively. I think what they were alleging there was at their fronts for China, or at least being tools for the China propaganda machine. I found that the allegations are extraordinary, and very extensively researched by the team at The New York Times.

In a similar vein, I learned about a light bulb that is commonly bought, an Internet of Things light bulb. You can just turn it off and on from your phone. That's all it is. There's no microphones. There's no cameras. What harm can that cause? You're completely safe. It's made in China, supported by a Chinese company and it's sold at prices that don't make a lot of sense. It's really being given away. Even to dump in the market for market share doesn't make sense. Well, what I learned is that this app for this light bulb gets all sorts of information on you through your phone. Permissions, which nobody pays attention to - who you are, where you are at all times, who you're speaking to, who your contacts are.

And think about that. If tens of millions of Americans now have this bulb in their home, it knows that you're meeting with someone else who also has that. You start to build networks through artificial intelligence. This is not sophisticated. This is a basic use of AI. These people are next to each other in a café every Thursday morning. They have a connection.

Okay. That person, though, is an important person. You may say, "Well, no one cares about me. I'm just living my life." But maybe you know somebody, or you know something that's of interest. Suddenly, you become part of a compromise process. It is not safe, even when you think it's completely safe.

Carolyn Ford:

Well, Paul Scharre addresses the race to control AI, to win at AI, however you want to address it. He talks about it in his book Four Battlegrounds, and one of the things he says is the winner is going to be whoever owns the data. What you're talking about here, TikTok, this app, to control this light bulb. This is just one more way to start adding to these massive data lakes, right?

Tracy Bannon:

You're exactly right. We are willing, as a country, to balance our convenience. I could say these exact words to multiple people in my blast zone, close friends, and I can tell you who would say, "Huh. I think I'll get rid of that app." I can also tell you the other ones, "I have nothing to hide."

Carolyn Ford:

Yes, that-

Tracy Bannon:

This is not that you have nothing to hide.

Carolyn Ford:

... drives me nuts. It drives me nuts. You have nothing to hide? Okay. We need Jon to talk. Jon needs to scare the hell out of us a little bit more, so I can share this with my same network.

Jon Pelson:

You're not kidding. By the way, the interview you had with Paul was excellent, the podcast with him. I enjoyed that one, and his book just moved on to my list now.

Carolyn Ford:

Excellent.

Jon Pelson:

I did appreciate that. "People say, "I have nothing to hide," especially the younger generation says, "Look, my privacy, in that regard, is not that important." I was asked at the end of an interview, "What would happen if China got control over us the way they're trying to?" I said, "You don't have to scratch your head and do scenario planning. Look at places where China has control over the population. First of all, in mainland China, better in Hong Kong, because Hong Kong is not just like the free world. They were the number one freest country in the world. What happened when China said, "We can control what you're allowed to read, what you're allowed to say." Well, it turns out-

Carolyn Ford:

What music you're allowed to listen to.

Jon Pelson:

What music-

Carolyn Ford:

Everything.

Jon Pelson:

You could not. If you want to go to a rally for whatever your cause is, and whether you're at a Black Lives Matter rally, whether you're at a Donald Trump rally, whatever it is, people in this country, you want to be able to go and do your thing. Unless you can't. Unless the government, the person that's controlling what information you're fed and what information you're allowed to share, says, "We don't like that. You're not going to be able to do that anymore. That's harmful for the harmony of society." All of a sudden, you can't go to a rally if you didn't know it's happening.

You can't go to a rally if your phone turns code red, says you have COVID, you can't get on that bus. You can't get in a ride-share. You can't drive through a toll plaza, for that matter, because they're tracking you and you're flagged. If you don't think an outside party would do that, just look at what happened to Hong Kong. Look at what's happening all over the world where China's been able to put its claws into the operations of society.

Tracy Bannon:

We are directly enabling this with the propagation of the tools and the technology. We are allowing this to happen by our having those apps on our phones, by us wanting more and more in our pocket, by us wanting to turn off our lights.

Carolyn Ford:

I want to make sure that we get to the FCC ban on Chinese components, and just... What a mess. How is that even possible?

Jon Pelson:

It is dumbfounding. I got to tell you, when I started, I'm a telecom guy. I'm not a policy guy. I was not originally a China or national security-focused person. When I started out writing this book, the book was going to be about my experience, 30 years working for Lucent and British Telecom and Nextel and these companies, and talking about how China beat the U.S. We invented the technology. China manufactured it for us, and then took the whole market away. It was going to be a business book.

When I was introduced to an FBI Counter Intel Section Chief, he said, "Where's Huawei putting its cell towers in the U.S.?" I said, "Nowhere; Montana, North Dakota. They can't put them in with any of the big carriers, like AT&T or Verizon." He said, "Do you think that's why they're in Montana and North Dakota?"

I said, "Yeah." He said, "What else is out there?" I said, "Nothing. I've been there." I'm joking. I just got back from Montana vacation. I love the place. But I said, "Nothing's out there. It's Montana. Big Sky." He said, "Our nuclear missile bases, our special operations command at the nuclear sub base are all served by Huawei cell equipment." I said, "That's impossible. They have like 0.1 percent market share. How could they have every nuclear missile site?" I started looking into it.

The reason I called the book “Wireless Wars” is because it's a war that's being fought through what appears to be business means. This is not business. Huawei is not installing these things to make money, and provide equipment services, and grow their company. They're providing it to compromise the U.S., and to make sure that they have infiltrated us in our most sensitive areas. And they've done it. They are everywhere. By the way, they haven't pulled it out yet. It was funded years ago to be replaced. It's still there.

Tracy Bannon:

That's, I think, one of the things that is a little confusing to most folks. There was a certain murmur that how wonderful it was going to be that this is great, the FCC has banned these components. Well, wait a minute. It's like my conversation about metric and English. Well, if you suddenly say, "We're no longer going to use the English system, but every measure that I have, every tool that I have, every everything is non-metric. I still am going to keep using those things if things are still going to be an inch long."

Point being, the components are still here. We haven't flushed them out. We haven't gone through every military base. We haven't gone through every police station. We haven't gone through every one of the traffic lights, where there are cameras. We haven't ripped those out and made sure that they don't have additional. And some of them do. We know now, from the research, that not every component is secure.

Jon Pelson:

There's no question. China understands our own system problems better than we do. The FCC, Congress slipped into action, funded billions of dollars to rip out and replace the Huawei gear. Okay, that's not quite good enough, it turns out. Because they said, "We don't want you to be upgrading your equipment on our dime," so you can only replace the Huawei gear with stuff from a trusted vendor, like Nokia or Ericsson, with similar gear. You take out 3G or 4G Huawei, you have to put in brand new 3G Ericsson or Nokia, or 4G Ericsson or Nokia gear. Now, the carriers were saying, "No one wants to install brand new 3G or 4G equipment."

Tracy Bannon:

Brand new old tech. There you go.

Jon Pelson:

Brand new old tech. Ironically, the military bases were saying to the local carriers, "You get that Huawei stuff out, but don't put in 4G Nokia. It's not secure enough. We want 5G Nokia because security's better on 5G." The customers were saying they didn't want it, the carriers didn't want to do it. The government said, "We're not going to pay you if you're putting in better equipment than you used to have," so we were paralyzed, for years, and I believe Malmstrom Air Force Base has been replaced. Okay, so that's why the Chinese now have to fly the balloon over Malmstrom Air Force Base. They were trying to make sure they get the-

Carolyn Ford:

That was just a balloon. That was just a weather balloon, Jon.

Jon Pelson:

Weather balloon that was blown over the Air Force Base and loitered for three days. They got that down. But it was remarkable that we were paralyzed, even though we were trying to move on this. You see where else we've been infiltrated. We could say we're not going to buy stuff from China in general. No components coming from China, but our ports in the U.S., the cranes that operate our ports are infiltrated with Huawei and other Chinese software. That's who controls the machines that offload things. We can send it from Los Angeles to Elizabeth, New Jersey, but unless China says so, it's not getting offloaded.

Carolyn Ford:

You promised to scare the hell out of me. You have, and I'll tell you where the real scare for me, going back to the Huawei strategy of placing those cell towers where they have, but the strategy of where Huawei has chosen to place those. You're saying they only have less than 1 percent of the market?

Jon Pelson:

In the U.S., they have minuscule market share for the U.S. cellular network. I don't know the exact number. I would imagine it's a fraction of 1 percent. It's certainly in that region. Yet, all of our sensitive locations are surrounded. You don't put a nuclear missile base in Palm Beach. You stick it 500 miles from the nearest major metropolitan center, which is going to be North Dakota or Nebraska and so on.

That's coincidentally where Huawei has covered the market. That's the only places that are there, and there's no money to be made. They send teams out there. It's a three-day trip to get out to that location. They install the gear, they service it. They're always out there fixing it up and checking on it, Huawei techs are. There's no money to be made. Why are they doing it? Because it's not business, it's war.

Tracy Bannon:

There's the predictability, which is unfortunate, from a psychological perspective, when we think about Americans. And I'm a proud American. I love my freedoms, or at least my perceived freedoms, and yet, with the influence of social media that you brought up earlier, and not just TikTok, but all different types of social media. We've had outside influences pushing all kinds of different messages. It becomes easier to manipulate us, when I think about people actually vandalizing these towers. Not just the posters on it, but vandalizing it.

If we were to start to think about Huawei's towers, and say that they were bad, well, there's another part, a segment that would say, "Well, what we're going to do is we're going to paint it as though these people are crazy, because they think their brains are going to turn to mush because of aliens." All we need to do is to cast some doubt by throwing some stories, that we consume through the media, because it's consumptive.

Instagram is a wonderful, decadent, terrible thing because it feeds me what I want and more of what I want, and I don't even know that I want it. The Chinese and other influencers are doing exactly that. Let's put this technology there. I'm going to call Jon crazy, because he is a little bit of a... He's out there, on the edge, and he's talking about the fact that we're-

Carolyn Ford:

I'm so glad you said that. That's exactly what I think, actually. I'm like, "It's fine," until now.

Jon Pelson:

It is true. Look, there's so much information out there, so much technology, that even a smart educated person can't absorb, and incorporate, and use to make informed decisions. You've got people talking at you, and saying, "Here's the right answer." I heard a funny line the other day. They said, "The problem with the country is that half the country won't wear masks and the other half won't stop wearing masks." People have made their decisions like, "This is what I ought to be doing," and the other half is saying, "No, no, it's the opposite of that."

Both sides can point to information about where it's relevant, where it's necessary. You talk about with technology, if you have a constant drumbeat saying, "This is a problem, this is a problem," and that's your data feed you're getting through TikTok and Instagram and Facebook. If that's the feed you're getting, you're far more likely to make a decision consistent with that. If China, well, if it's Google or Facebook who's controlling that information flow, that's a problem. Sure, that's a problem. We are seeing that, there's hearings going on about that right now. Was information being steered? I don't want to get political here because-

Tracy Bannon:

No, we're going to stay away from that, but your point being?

Jon Pelson:

The book is an-

Tracy Bannon:

... U.S. or not, there's externally to us, the external influences outside of our borders are amazing.

Jon Pelson:

Exactly. If you think it's a problem that Facebook is influencing what you think, let the Chinese Communist Party influence what you're thinking. That should scare the hell out of you because that's not a company that's trying to make a buck. That's a hegemonistic entity that wants to take over the world, and make the world safe for the... I forget the terms that Chairman Xi's using, but the socialist dream that they want to impose on the world because we may not know it's for our own good, but it's for our own good.

Carolyn Ford:

Well, we all want to think, "Yeah, I'm not influenced. I'm stronger than that." There's actually a brilliant movie. It's Will Smith and Margot Robbie. Have you guys seen the movie, Focus?

Tracy Bannon:

No, I don't think so, but it looks like it's going to be added to the list.

Carolyn Ford:

Social engineering at its finest. So, they place things throughout the day to influence people to place bets exactly the way they want them to place the bets. It's fascinating. I thought it was really farfetched, and I'm not sure it's that farfetched. You got to watch it, Tracy. We got to talk about it. I want to circle back to the FCC ban. To me, okay, at least it's a start, right? Or no?

Jon Pelson:

It is. Now, here's the funny thing. The FCC banned sales to certain Chinese entities, and purchases from certain Chinese entities.

Tracy Bannon:

Right.

Jon Pelson:

I mentioned, my book is nonpartisan. I've worked with people from the Trump Administration, people from the Biden Administration. One thing that I love seeing is when I'm working with people in the Biden Administration today, they're at the table with people from the Trump Administration when it comes to China issues. They're cheek by jowl, they're working together. There's mutual respect, there's a common goal. There are not a lot of areas where you can say that this spans politics because it's for America and it's for free countries in general.

But the ban, when it was first imposed on sales to Huawei and certain other companies, you had pushback from the Department of Defense, saying, "Oh, you got to ease that. A FCC, Department of Commerce. No, no, it's too much," and they bailed. They backed off on it. What in the world? Now, I think, and I'd be interested in whether you have a different take here, but I think a key part was that companies in the defense sector were being supported by, let's take Qualcomm.

That's a really important American company, Qualcomm. Great technology, critical to our telecom. They're really the last man standing, as far as wireless leaders that are still based in America. They make the chips that go in every phone and every cell tower, everything. My guess is that the DOD was being told by Qualcomm, "You want us to supply you, for whether it's drones or missiles or whatever, your communication systems. You want a healthy company. You want Qualcomm to be thriving and healthy and investing. You're going to cut off 10 or 20 percent of our market."

Tracy Bannon:

Exactly.

Jon Pelson:

"You're going to cripple us. How does that help you to cripple your best supplier?” I got to believe that's what caused the pressure. I don't know what your take is on why the U.S. first backed off of the bans.

Tracy Bannon:

Part of it was that, and part was also the argument that the policy was written too hastily. This group, it was a number of federal contractors who were using equipment, who had services, because they would start to be pushed away. So, it was not only Qualcomm, but they said it was written too hastily and without enough public comment. And they started pushing out, additionally, an agenda as well. Businesses with international and domestic operations were going to be forced to halt their work on key products right now. There was a work stoppage threat. So there was a lot of a dominance-

Carolyn Ford:

Which was a real threat.

Tracy Bannon:

It was real, and at the same time, sometimes we need to slow down so that we can speed up. Sometimes we need to pivot and renegotiate the contract. Just continuing on for the sake of money is not always the best and right thing for us. That's hard for us in the society that we live in, where we are, I guess we could say capitalist, we're kind of crazy-ist, I think.

Jon Pelson:

Well, that's right. You take the capitalist argument, there's two ways you can look at the way we should be banning, and the FCC should be banning supplies to and from China. Well, I suppose there's three, but I think there's two that are valid. You have the moderate one, which says we shouldn't be doing it because it compromises us. It makes us reliant on a potential rival, at least, for our inputs and we are scrambling to please them as a customer to buy our stuff. Then you have the more strident view, which I think is also legitimate, which is if this is an enemy, forget the rival. If this is an enemy, you shouldn't be buying T-shirts from them. You shouldn't be selling them soybeans. Cut them off.

You go back to World War II, Japan may have had better steel makers than us. They didn't at the time, but suppose they did. You don't want to build your battleships out of Japanese steel, even if you have a reliable supply because you're giving them money. You don't want to buy anything. You want to cripple and hurt your enemy. Now we see China as a business competitor. They see us as an enemy. I think it's time we wake up and say that if that's how they see it, that's how it is.

Tracy Bannon:

We also treated them a little bit differently. I'm tracking back to the Cameron (Christian) Brose book. With Russia, with the fall of Russia, we said, "They want to be just like us, therefore we're going to help them to be like us. You want to be like us? We will help you. We will roll back these protections. We will provide you with these financial incentives. We'll help you from a business perspective." There is also some, some, truth to that.

After Tiananmen, when we thought that there was going to be more of an opening, "The Chinese want to be like us." Guess what? The Chinese, as a nation, they don't want to be like us, yet we have tinkered with our protections. We have opened up doors for all kinds of intellectual trade, goods trades, services trades. We are so enmeshed, we can't imagine now that we can't go get the crayons that we want for a quarter a box from Walmart, which is, and God love Walmart, God love the USA, Amen. If I pick it up and turn it over, it's made in China.

We've backslid as a country on purchasing from the USA. How many things have you seen recently that say, "Designed in the USA, manufactured in China," that's the latest switcheroo on that, so that you can have a flag on it somewhere.

Jon Pelson:

Here's where they caught us on our own system, and I talk about this in the book. Lucent moved its manufacturing. That was 18th... My kids say, you have to tell people who Lucent is. I said, "Well, I'll say Bell Laboratories." Now you have to tell them who Bell Laboratories is too. I'm like, "Okay, well nine Nobel Prize winners. They invented everything from the phone, Alexander Graham Bell, to the laser, the solar panel, they invented stereo." This was a pretty impressive company. It's gone now, effectively, it's part of Alcatel, which is now part of Nokia. But Lucent moved its manufacturing and its R&D into China and compromised itself thoroughly.

I was at the company at the time. But the fact is, if they hadn't done it, if they'd said, "We're keeping our factories in Shreveport, Louisiana and in Nebraska and in Chicago, that's where we're going to make our stuff." But if Ericsson and Nokia had moved into China, then Lucent would've just been put out of business that much faster, because those were trusted vendors. AT&T would've said, "Hey Lucent, you just quoted us $800 million for this network, and Ericsson quoted us $300 million and it's just as good." You had to go. You had to buy stuff from them, you had to sell stuff to them. We were caught on that.

Tracy Bannon:

There are so many different dimensions to this. No part of this conversation is binary. No part of it is black or white. So many shades of gray. Individual decisions, city decisions, state level decisions, federal decisions, different domains and markets, all of these different decisions, and not only U.S. decisions, but other international partners. I would dare to say, if we go and look at our key allies, the top nine to 10 that we share our F-35s with, and we don't share them, they buy them, they are allowed to buy them from us. That's a whole other story.

Are they buying from China in the same ways that we're buying from China? Do they have the same dependencies? Is China putting up the same policies to purchase less from their countries as they are starting to do for us? There's not equi-trade that's going on right now. There's no equality of that trade, at all.

Carolyn Ford:

All right, you two just keep taking me deeper into this horror show. I need you to bring me back to where I like to be, in my wonderland.

Tracy Bannon:

Well, do you have any mimosas handy? That might be the key.

Carolyn Ford:

I feel like day drinking might be in order right now, but come on. I know Jon, you addressed this in your book, that there is hope for America to take back control, at least as far as 5G. So, help me here.

Jon Pelson:

Sure. Here's the trick about innovation. Early on, when I was doing my research, I found an article in the Harvard Business Review called Why China Can't Innovate. I called a friend who's on the faculty over at HBS, and I said, "Can you put me in touch with these professors?" He said, "They don't even believe that anymore. China can innovate. China's a very innovative country and culture."

All right. I agree with that, that's true. However, breakthrough, discontinuous innovation, true disruptive innovation is not in China's wheelhouse still. The reason is not that they're incapable of it. It's because the culture there, imposed by the government, by the Chinese Communist Party, is very strongly biased against that type of innovation. Here's an example. Jack Ma, head of Alibaba, one of the world's great innovators, really breakthrough innovation, technology for finance, digital finance and so on.

He made one comment following a minister's speech, where Jack Ma said, "You can't regulate digital banks the way you regulate bricks and mortar banks. You can't regulate the airlines the way you would regulate the railroads," and that was the end of him. The richest man in the country, the greatest innovator was squashed. He was canceled. His IPO was canceled. His business school for innovation was canceled. He's now off on a beach in Thailand. He's lucky he has his head attached to his shoulders right now.

Every engineer in China knows if they would do that to Jack Ma, what happens if I say, "Hey guys, I just came up with something that's going to totally rock this industry, disrupted those big players here in China. Tencent is going to be put out of business, because I came up with something even better." They do not want to do that. They keep their head down. They say, "How do I make this 5 percent faster, 10 percent cheaper, 2 percent smaller?” in the U.S. and in free countries, it's encouraged.

If you look at the great people like Steve Jobs, Elon Musk, people have done great disruptive innovations. These people would've been out on the Gulag in China. They didn't want people that thumbed their nose at the government, that make off-color jokes about drugs. Elon Musk with his marijuana references, or Steve Jobs, who was a rude, mean-spirited SOB. Those guys would've been out digging ditches. The government would've said, "You're trouble." In America, they've become billionaires.

Carolyn Ford:

Are we bringing them here? Are we bringing China's Einsteins here?

Jon Pelson:

We are. In fact, I had a chapter in the book. I told my editor, "I want to have a chapter on American exceptionalism." She fell out of her chair. She says, "You can't do that. That phrase is fraught with..." I said, "No, no. Look at the people I'm citing as examples of American exceptionalism. I think only about a third of them were born in America. They come to America from all over the world, whether it's China, Germany, South Africa, France." These are my heroes in the book. They're American, but they didn't start in America or some of them did. One's from Idaho. They're immigrants.

Tracy Bannon:

There's that one. There's that one from Idaho.

Jon Pelson:

My Billy Bean character is from Idaho. He's throughout the book. He's a real guy. Jim Brewington, who built the American wireless business for Lucent. But that's our advantages. This permissionless innovation, disruptive, destructive innovation.

Tracy Bannon:

I'm going to push on that just a little bit. I want to cling to that as my safety net. The thing that makes us safer is that amazing individualism, that's almost a spirituality that comes with being those leading edge innovators. And things change. How long until the social studies, how long until the ability to influence China, other countries will start to figure out human centricity, human centered design. They will start to figure out those aspects as well. I don't believe, and I want to believe, I want to believe, I don't know that we can rest on that. It is our saving grace at the minute. I don't know how long that will protect us. What do you think?

Jon Pelson:

I think it's more likely that we lose it than that they gain it. Because China, culturally, the way I describe it is, it's not that they can't do the same, but they won't. They won't because to turn their own people loose, to follow their own vision and be disruptive and destructive, that would shake the grip that the government there has to have on its people. So they squeeze them to keep them from having this breakthrough innovation that they're otherwise capable of. The U.S. is capable of squeezing it out of the people too. That's more of my worry, is we lose it-

Carolyn Ford:

We're willing to outsource our brains for ease. But stop, I'm going back to we need to

Tracy Bannon:

We need to make her happy.

Carolyn Ford:

…embrace the innovators. We're going to switch to the tech talk questions, because I do love these questions, and time is definitely beating us.

Tracy Bannon:

Well, I want to pause, pause, and just say there is gloom and doom that we have to keep in mind. We cannot whitewash it and ignore it. There are things that we can do. I don't want us to enter into this and leave you hanging with this pit in your stomach, as I have a pit in my stomach and a lump in my throat.

Carolyn Ford:

I refuse to join the Borg, Tracy. I refuse.

Tracy Bannon:

I won't make you put on the piece-

Carolyn Ford:

Well, I might do that. That's cool.

Tracy Bannon:

Let's get into these questions, Carolyn.

Carolyn Ford:

Yes. All right. The first one, Jon, I really like this one. "If someone were to write a book about you, what do you think the title would be?"

Jon Pelson:

Okay, not an autobiography or someone else is writing a book about me?

Carolyn Ford:

It can be an autobiography. What do you want it to be, Jon?

Jon Pelson:

I'm having the time in my life right now. After a long career in business, I'm suddenly up to my eyeballs in the policy and politics that I've always had as a passionate advocation. I would go with something like “Jon Pelson, The Unlikely, Inevitable Story.” Everything I've done up to now was leading to this. I just never realized it until it finally happened. It's been just a ball for me.

Tracy Bannon:

I might use the term accidental in there somewhere.

Carolyn Ford:

Mm-hmm. I love it.

Tracy Bannon:

Accidental, because this was not a chosen path, that you were going to suddenly become a policy advocate, and go down this rabbit hole. So, there is a certain amount of accidental. We have to figure out how to work that in. Maybe that'll be the subtitle. The Accidental Journey.

Jon Pelson:

That's why you need editors. That's excellent. I appreciate that.

Carolyn Ford:

All right, Tracy, you get the next.

Tracy Bannon:

Oh, sure. Do you have a productivity hack and what is it? I'm going to plug my ears if you say ChatGPT, but go ahead.

Jon Pelson:

No. You know what? My old school productivity hack was a flight to Atlanta. What I used to do is, based in New Jersey, we had a lot of meetings in Atlanta. I wouldn't go because it's like a three-hour flight. When I needed to clear out my email basket, I would say to my secretary, "Book me on the next meeting that we have to Atlanta." I'd get on the plane, and no one bothered me in three hours, no interruptions. It was so good. I always landed feeling so good. Then I'd go to whatever meeting I had to do.

Carolyn Ford:

You had to force productivity time.

Jon Pelson:

Yup.

Tracy Bannon:

You had to lock him in a cave and-

Carolyn Ford:

You had to fishbowl yourself.

Jon Pelson:

That's right. That's before they had Wi-Fi in the planes, the worst invention ever.

Tracy Bannon:

Even though they have Wi-Fi, it's spotty. I love it when I lose connection because it justifies. I cue them up. I'm not getting them while I'm in flight. I can agree with that. I can get behind it. Thank you for not using AI as part of your-

Jon Pelson:

No. Nope.

Carolyn Ford:

Last question. Give me a favorite, it doesn't need to be work related. In fact, my brain explodes, I call it the trash novels and stuff. They're not really, but a book, a podcast, a TV show that you watch for fun and maybe inspires you.

Tracy Bannon:

Movie, doesn't matter.

Jon Pelson:

Well, on TV, I thought Breaking Bad was the best show that was ever made. It was a little tough to take sometimes.

Carolyn Ford:

Really tough to take show. Yeah.

Tracy Bannon:

There was that one episode with a fly. If you know what I'm talking about, Jon. I can't watch it a second time.

Carolyn Ford:

I had to bail, it was too much for me. I couldn't, it was way too much for me. But I agree. Great show.

Jon Pelson:

Yep. But I would say on the book side, two books that have always stood out for me. One of them is called Boyd, about John Boyd, the inventor of the OODA loop and Energy-maneuverability theory. The other one was a book called Undaunted Courage by Stephen Ambrose, about Lewis and Clark, which are both just remarkable books about people that are enormous capability.

Carolyn Ford:

Awesome. Two books just added to my reading list, and we're going to end it there. Thank you so much, Jon, for joining us.

Tracy Bannon:

It was wonderful to get a chance to meet you.

Jon Pelson:

Good talking to you both, Carolyn and Tracy, and I enjoyed it. I'll look forward to your next podcast.

Carolyn Ford:

Well, thank you, and thanks listeners for joining. Smash that Like button, share this with your friends, and we'll see you next time on Tech Transforms. Thanks for joining Tech Transforms, sponsored by Dynatrace. For more Tech Transforms, follow us on LinkedIn, Twitter and Instagram.

Share Episode

Shownotes

Key Topics

Quotable Quotes

About Our Guest

Episode Links

Transcripts

Follow

Links

Chapters

Video

More from YouTube