Who’s Winning the 5G Race?

The fifth generation of mobile technologies comes in a very different international environment than previous ones:

• 2G emerged in the late 1980s when the Cold War was ending;
• 3G in the early 2000s as China entered the world trade system, becoming a member of the World Trade Organization (WTO);
• By 2010, these events enabled 4G to be (for the first time) a single technical standard for a new generation of wireless technology;
• 5G emerges now while political tensions in the international system are rising with the U.S., China and Russia contending for global influence.

5G brings connectivity to critical infrastructure in transportation, utilities and manufacturing.  Protection from cyber-attacks is the top national security concern of the U.S., making 5G part of a broader consideration that might shape the deployment of the new technology. Market-access restrictions to Chinese telecom equipment vendors (e.g. Huawei and ZTE) in the U.S. and other markets are important signs in that direction.

I am frequently asked a question which carries a geopolitical tone: Who’s winning the 5G race? There’s no doubt that China and the United States are the two countries leading the deployment of 5G, but in different ways.  

China has placed 5G within a broad program—Made in China 2025—designed to establish leadership over future technologies, including Artificial Intelligence (AI).  My colleague Adam Rosenberg has discussed the unique meaning of 5G in China.   The Chinese government’s direct influence on the economy permits it to stimulate demand for 5G with programs related to the industrial Internet of Things (IoT) and smart cities.  China has also filed a large number of patents for 5G. It will implement first massive machine-type communications (MTC), one of the features of 5G.

By choice, the U.S. rejects this type of industrial policy. Instead, it has used regulatory tools such as spectrum releases and rules to facilitate small-cell densification to pave the way for 5G.  On spectrum, the U.S. has released to the market through auctions and private transactions a fair amount of so-called millimeter wave (mmWave) frequencies in bands such as 24 GHz, 28 GHz, 39 GHz and more to come, adding up to 750 MHz of total new bandwidth in the next few years. The challenge for the Federal Communications Commission (FCC) is mid-band spectrum bands as in 3.4 GHz through 4.2 GHz where creativity is needed, for example by allowing satellite companies to sell spectrum in 3.7 GHz to 4.2 GHz directly to cell-phone operators, as the C-Band Alliance advocates.  Ultra-wideband connectivity with Gigabit speeds is likely to be the first 5G service provided in the U.S., coming later this year.

The European Union is leading in digital services regulation.  However, EU mobile telecommunications policy is trapped in transition, with both EU region-wide and national regulators coexisting. Some EU regulations have been taxing to the mobile industry, for example ending roaming fees across the 27 member states, while spectrum auctions are still country-by-country.  Europe desires to lead in more than regulation; however with a dearth of policy support its mobile operators are having a difficult time investing in 5G, whose business model is uncertain and experimental in this first phase of deployment.