A few weeks back, Mobile World Live’s Michael Carroll penned a blog entitled: Does it matter which region wins the 5G race? It’s an important question and worth revisiting in light of new developments on this front.
To that end, this blog represents some additional views on the topic and what will be a continuing series of posts aimed at sharing insights from the GSMA Intelligence team – from its analysts and economists, to its forecast specialists and data scientists, and every now and then from the person lucky enough to lead them (me).
Peter Jarich, Head of GSMA Intelligence
The ‘Race to 5G’ concept is far from new.
Often, it’s been treated as nothing more than an abstract concept – a finish line that everyone is trying to reach. Just as often, however, 5G has been positioned as a competition between nations. We’ve heard about an EU 5G agenda vs. a Chinese national agenda vs. a lagging US agenda. Then we heard about increasing US momentum in the face of Korean launches around the Winter Olympic Games. Most recently, we’ve all heard about a CTIA-sponsored study warning of the US falling behind China on the 5G front and FCC Commissioner O’Reilly explaining to the American Enterprise Institute the importance of beating the rest of the world to 5G.
In an effort to drive national regulatory reform (particularly around freeing up spectrum and easing the burden on cell site deployment) this type of country-vs-country rhetoric is understandable. And against the backdrop of rising global tensions around tariffs, immigration, trade sanctions and even espionage, it’s probably not surprising that some degree of international ‘us vs. them’ would eventually creep into telecom. Telecom doesn’t exist in a vacuum.
But at a very fundamental level, the notion that one country or region being first with 5G would irreparably damage another falls flat on a few fronts.
Where Operators Compete: Multi-national operators may compete across borders, sure, but most competition takes place inside national boundaries. China Unicom competes against China Mobile. It does not compete, directly, against Telefonica or MTN or AT&T. If 5G comes early, or late, to one market, it won’t change this dynamic.
Where Suppliers Sell: Absent trade embargos or super-onerous tariffs, the software and hardware suppliers that benefit from new wireless technologies sell their wares globally. Samsung sells phones in Korea and the US. Apple sells phones in the US and China. Europe might have lagged on 4G, but two of the three largest LTE infrastructure vendors live there. Even if one country or region wins the race to 5G, that doesn’t mean companies on the outside can’t benefit.
Finishers vs. Winners: The late, great US NASCAR racer Dale Earnhardt is often credited with popularising the saying, “2nd place is just the first place loser.” But even the first loser gets to finish the race. In this case, they’d still come away with a 5G network; their citizens would still benefit from everything 5G can deliver, even if they aren’t among the first to do so.
The last point is particularly important.
It’s important because, ultimately, there is a kernel of truth to the notion of national winners and losers in the Race to 5G. Imagine the theoretical case of Country A and Country B. ‘A’ is quick out of the gate with 5G and after a few years has multiple, national 5G networks delivering on the mind-blowing eMBB, IoT and Critical Communications capabilities we’ve all been promised. Meanwhile, ‘B’ can’t seem to build the same momentum. Whether due to strained operator spending, a lack of spectrum, disruptive small cell policies or an inability of operators to fully monetise 5G (or any number of other things) years go by and B struggles with building significant 5G momentum.
Here, we could rightly expect A to benefit from 5G innovations to the detriment of B. Leveraging the capabilities of 5G, A would see the development of innovative services, applications and devices that simply couldn’t exist in B. Think new IoT devices, new consumer apps, new specialists in industrial automation. And as 5G does develop elsewhere, these companies can take the learnings and scale and be successful globally, with a massive (potentially insurmountable) lead over B. Meanwhile, yep, the race to 5G is about more than 5G; it’s about everything 5G will enable, the benefits it will being, and who will be able to best exploit them in their own country and beyond.
Putting aside the fact that companies are, generally, allowed to operate globally (companies from B could do business in A if they want to take advantage of 5G’s capabilities), the major problem here is that the scenario I outlined assumes a massive lag in 5G deployment. One of the competitors needs to win the race by a wide margin. Would a five year gap be enough to irreparably harm B? One year? Two years? Six months?
It’s not clear that there is a solid answer. Here, recent comments out of Huawei may be worth noting. A belief that 5G has been over-hyped and that, early on, 5G won’t deliver much that LTE cannot, has real implications for handicapping the race. It suggests that losing the race by a somewhat narrow margin might not matter much at all.
The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.