|Deloitte: China Is Winning the Race to Build 5G Wireless Networks|
|Author: CSEBA / Fortune|
|7th August 2018|
|NEW YORK - China is winning the race against the United States to build a faster nationwide wireless network that uses 5G technology, billed as the mobile industry’s future. Unless the U.S. moves more quickly, it will be at a major disadvantage when comes to creating dominant new companies in the emerging space.|
That’s the conclusion of Deloitte Consulting, a top industry consulting firm that released a report about 5G on Tuesday. It cited the benefits of what it called the “data-network effect,” in which early leadership in new markets translates into more users who generate more data that, in turn, helps improve services and attracts more users.
“Accordingly, countries that adopt 5G first are expected to experience disproportionate gains in macroeconomic impact compared to those that lag,” the report’s authors said.
It’s not clear how closely the claim matches history. The United States led in the development of the Internet and 4G wireless but Google is matched by Alibaba, Uber faces Didi Chuxing, and so on.
U.S. companies have been sounding the alarm over a purported race against China over 5G, perhaps playing to the fears and strategic desires of the Trump White House. Their hope is to get the federal government to speed things up by cutting local and state regulatory hurdles to getting approval for the hundreds of thousands of new, smaller cellular transmission stations that are necessary for 5G.
The mobile carriers’ industry association, CTIA, estimates the number of cell sites must more than double from about 325,000 to 800,000. In another sign of how important 5G is to businesses, T-Mobile and Sprint cited the need to speed up 5G deployment as a major rationale for merging.
But the industry also doesn’t want to oversell the stakes in the race to 5G because that might trigger more government intervention. For example, in February, Trump administration national security staffers proposed nationalizing wireless networks and building a federal 5G system that carriers could lease.
In fact, companies like AT&T and Verizon through their trade association have strongly opposed nationalization. All four major carriers are rolling out their own 5G pilot programs, with 5G compatible phones arriving on the market as soon as next year.
The evidence Deloitte used to back up its claim of Chinese leadership in 5G is greater infrastructure spending resulting in more cell sites. China has about three times as many sites per person and 13 times the coverage calculated by sites per square mile, Deloitte said, noting lower equipment costs in China and easier permitting.
Deloitte towed the U.S. industry’s line when it came to concerns about excessive government intervention. Other countries may subsidize or nationalize their wireless networks, but “such interventions in the United States could risk disrupting a communications and technology ecosystem that has proven symbiotic and resilient over the past decade,” the authors wrote.
In what could be read as a warning sign for some of the U.S. industry’s 5G business promises, however, the consultants noted the history of current 4G LTE networks. Although widely used, it hasn’t been as big a profit center for mobile carriers as expected.
“Released commercially in the United States in 2010, carriers expected LTE to provide an immediate boost to smart cities, asset tracking, retail, manufacturing, health care, and many other industries,” the consultants said. “Many assumed that if carriers played an integral role shaping the ecosystems that comprised these use cases, then profits would follow. However, the promise of new revenue streams for carriers enabled by LTE has remained largely unfulfilled.”
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