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How Will America Compete in the Race for 5G?

With the advent of mobile phones and networks, each generation of wireless standard and technology (2G, 3G, 4G, etc.) has brought different capabilities that have provided a platform for operators and developers to create services -- and revenue. These services helped to drive the technology and the use of mobile communications deeper and deeper into all aspects of our daily lives.

Each wave of technology has led to a redistribution within the value chain. 2G networks and devices centered on voice and SMS. 3G helped to cement the viability of smartphones and the app ecosystems. 4G enhanced the smartphone experience with faster speeds and performance, enabling use of personal devices for consuming and creating content (like video), banking, and ordering all manner goods and services from anywhere.

The 4G platform has moved profits from operators and equipment vendors to the operating systems vendors (i.e., Apple and Google) and application providers that have been able to scale to unprecedented levels. Applications like Facebook, Twitter, Instagram, and WeChat exist at their current scales because they are versatile among operating system vendor platforms and are widely adopted for consumer use across operators' 4G networks.

Where Is the Value in 5G?

Like most wireless networks and technology today, much of the value created by 5G won't exist in the networks, but rather in the software and applications that ride on top of the networks. 5G is defined by three general, non-mutually exclusive, use cases:

  1. Massive machine-type communications, aka the Internet of Things (IoT)
  2. Ultra broadband, which is similar to today's mobile broadband services but with higher capacity, speed, and latency to support virtual reality and augmented reality
  3. Ultra-low-latency services, to support applications such as autonomous vehicles, robotics, and drones

Above and beyond 5G infrastructure and smartphones, the determining factor for which entities most benefit from 5G will be the technology use cases -- that is, which use cases arise to leverage 5G networks to transform industries and generate value. Governments can support the early development and adoption of these services by assuring availability of ample spectrum in various bands.

The Race for 5G

Even though standards bodies are still working to finalize the technical standards for the next generation of wireless services, the U.S. and China are already locked in a crucial race to establish the best position for capturing the most long-term value from 5G networks.

With aggressive deployment timelines and extensive commercial trials, the top U.S. carriers remain competitive with each other and globally. However, the U.S. lacks in the spectrum market, whereas China (and South Korea) has the lead in establishing a clear spectrum pipeline.

With the government's support and as such not having to deal with red tape, mobile operators in China are able to expedite deployment to meet the country's aggressive timeline for 5G. As part of a five-year plan to deploy 5G by 2020, China's advanced wireless networks are aiming to reach 428 million people by 2025, adding more than $6.3 trillion to the economy and creating more than eight million jobs. A 5G-ready China is striving to be global leader in product delivery, but also in technical patents, usability testing, and industry certifications.

The Chinese government and service providers have been pushing for 5G-readiness with large-scale trials, many involving industrial use cases for automotive, transport, logistics, and other vertical markets. For example, China Mobile announced a 5G automotive use case, called "5G Unmanned Aerial Vehicle," that utilizes the high-reliability, ultra-low latency and high bandwidth of 5G networks to improve terrain survey and mapping. It works by transmitting HD images to the cloud for generation of topographic maps in seconds -- and demonstrates the power of the 5G network.

Beyond 5G

Beyond 5G, artificial intelligence (AI) and machine learning (ML) will be even more transformative facilitated by the breadth of applications built on top of 5G networks. With AI and ML, soon the value will shift to how best to leverage the oceans of data being generated by networks, devices, applications, and software in order to solve problems and identify new business opportunities -- and it's a similar race for which country will take advantage of it first.

Ultimately, what determines the winners and losers in any technology-related race are the decisions of consumers and tech businesses/vendors that best leverage a particular technology platform (e.g. 3G, 4G). For example, when Apple created the first mainstream smartphone and app ecosystem that took advantage of 3G technology, it helped the U.S., and other U.S.-based vendors, gain an economic advantage over vendors from Japan and Europe, which at the time still relied on 2G technologies. Similarly, the concern in the U.S. is that if China delivers widespread access to 5G first, its companies will get a head start on creating the next generation of high-tech products and services that leverage it.

To combat China's aggressiveness on 5G, U.S. companies will need to invest in research and development and push for federal government support so that operators can deploy the technology on a commercial scale.

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