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5G is coming. Who will be the winners and losers?

By Yulia Korbleva | August 21, 2018



Next generation wireless technology could be the force that will help repair a global ecosystem fractured by populism and political tensions. It could also create clear geopolitical winners and losers. The endless potential of 5G technology is sure to change every aspect of our lives in the near future, from the way we commute to the way we interact with the surrounding environment.


Imagine sending an email to a colleague on your way to work in a self-driving car on a street lined with multiple other self-driving cars. Imagine arriving at work and engaging in a virtual teleconference with people from different time zones, all in the same room. Or, returning home and watching your favorite sports team in an immersive 360-degree experience that makes you feel like a physical spectator in the bleachers. Imagine being a surgeon in San Diego, performing a complicated operation on a patient but the patient is in India and the surgeon is using a special remote robotic arm to perform the operation. Is this starting to sound like a sci-fi movie? These are just a few of the realities that will become possible with the advent of 5G.[1] 


The commercialization of the mobile phone and pagers in the 1980s brought us the first ‘G’, or generation, of wireless connectivity.  The second generation became available in the 1990s with the switch from analogue to digital technology, allowing us to send text. The 2000s delivered 3G service, which enhanced the user experience with new data services featuring multimedia, internet access, and allowing us to share photos instantly. 4G, which we enjoy today, made the mobile phone an indispensable, convenient companion to our daily lives.[2] Now, 5G is on the horizon.


5G technology will introduce a faster, more intense level of low-latency interconnectivity from human-to-human, machine-to-human and machine-to-machine. It will rely on millimeter wave bands (high-band spectrum above 24 GHz) previously considered unusable. Signals in this frequency range are easily obstructed by buildings and trees and other objects found in urban topography and thus cannot travel long distances. To streamline the passage of high-band spectrum waves, small cells and advanced antenna technology are needed to deliver signals across shorter distances. A technique known as Multiple Input Multiple Output (MIMO), allows for an information stream to be separated into parts and efficiently transmitted through more than one antenna so that it won’t be stopped by buildings and trees along the way. This new advancement makes 5G technology will serve as a platform for the invention of other new, exciting technologies, from self-driving cars to remote robots and augmented reality applications.


Being at the forefront of development reaps significant political and economic advantages, such as new jobs, a boost in GDP, and improved living standards. Globally, it is estimated that 5G will generate at least $12 trillion (USD) in economic benefits by the beginning of 2035.[3] Europe led the way in the 2G era, Japan emerged as a leader in the 3G race, and more recently, the U.S. was at the forefront of the 4G market.[4] So far, no country has been able to consistently maintain inter-generational leadership in wireless connectivity. The country that wins this fifth round will likely be equipped with extensive public-private cooperation, sound policy that supports innovation, and intense investment in the wireless technology sector.


According to a report published by Analysys Mason, China has placed first, South Korea second, the U.S. third and Japan fourth in 5G readiness.[5] Though all of these top-ranking countries have invested in R&D and conducted frequent trials, China has allocated the most licensed spectrum for private development. The State Radio Regulation of China (SRRC), a branch of the Ministry of Industry and Information Technology (MIIT), has been responsible for drafting strategies to propel China to the forefront of 5G competition. In May 2015, Premier Li Keqiang’s cabinet created one such strategy, the Made in China 2025 plan, with the aim of transforming the country from a lower manufacturing-based economy into a high-tech economy specializing in higher value chain production processes. The Council on Foreign Relations (CFR) has described the plan as a “real existential threat to U.S. technological leadership.”[6]


The Trump administration’s trade war could slow China’s 5G progress: it has been slapping tariffs on products from the IT sector that are critical for 5G development. However, this is by no means a one-way street: when the U.S. ousts Chinese companies from conducting business in its market, U.S. companies relying on Chinese supplies lose out as well.[7] In the end, it is difficult to determine to what extent the trade wars will negatively affect China’s progress on 5G because the U.S. cannot prevent China from continuing rigorous R&D. As a centrally planned economy, China can mobilize resources more quickly than the U.S. while enjoying the advantage of a much larger labor market.


Meanwhile, the U.S. government is pursuing a completely different strategy.  In a hands-off, free market approach, the U.S. is hedging on intense competition in the private sector to yield high-quality innovation that will provide a competitive edge. The Federal Communications Commission (FCC), the arm of the U.S. government that is most closely involved with national 5G strategy, has focused its efforts on removing regulatory barriers to commercial development. Will this be enough? Some industry experts argue that it is not.[8]


And then there is South Korea. Top mobile carriers SK Telecom, KT and LG Uplus have decided to avoid the high costs of competition between themselves and cooperate on designing a common 5G infrastructure. They have agreed to launch 5G services at the same time in March 2019, with commercialization trials commencing as early as December. This move is estimated to save the mobile carriers $938 million (USD) over the span of 10 years. To further strengthen South Korea’s position in the global 5G race, the Ministry of Science and ICT has announced that it will issue unlimited tax and security benefits to its top-performing national carriers.[9] 


Each competing country differs in its vision and approach to 5G commercialization, but each has its own distinct advantages. Will the U.S. be able to hold on to its generational leadership, or will a new global champion emerge from Asia?


The intangible prize waiting at the end of the 5G race is tantalizing: economic growth from job expansion in the wireless tech sector and a head-start on innovative programs relying on well-developed 5G infrastructure. For international consumers, the winning country is perhaps not as much a concern. When 5G does arrive, people worldwide will benefit from innovation through lower prices and improved standards of living. So, regardless of the results of the 5G race, the consumer wins.



Yulia Korableva is a Master of International Affairs student at the School of Global Policy and Strategy, studying international economics and management. Prior to GPS, she worked in Japan as an English teacher. Currently, she is a data analysis intern at an organization that does international development work in Africa. Her research interests include innovation and technology policy, experimental design and economic development. She is a Board member of JIPS and Asameshikai.      








References

[1] "5G Is Coming." The NY Times. https://paidpost.nytimes.com/qualcomm/5g-is-coming.html?tbs_nyt=2018--nytnative_hpmod&cpv_dsm_id=189626559.


[2] Brake, Doug. 5G and Next Generation Wireless: Implications for Policy and Competition. Report. June 2016.


[3] Rosenberg, Don. WE Forum. Proceedings of World Economic Forum Annual Meeting, Switzerland, Davos. Accessed January 18, 2018.


[4] How America's 4G Leadership Propelled the U.S. Economy.Report. April 16, 2018.

[5] Abecassis, David, Chris Nickerson, and Janette Stewart. Global Race to 5G - Spectrum and Infrastructure Plans and Priorities. Report. April 2018.


[6] Laskai, Lorand. "Why Does Everyone Hate Made in China 2025?" Council on Foreign Relations (blog), March 28, 2018.


[7] Middleton, Chris. "Will 5G Be the Big Casualty of China-US Trade War?" Internet of Business, April 18, 2018.


[8] PANEL: The Progress of 5G Spectrum and Regulatory Policy. May 23, 2018. https://www.youtube.com/watch?v=VrY3QsV0Gc4.


[9] Horwitz, Jeremy. "South Korean Carriers Agree to Build Single 5G Network, Saving Money and Time." Venture Beat, April 11, 2018. https://venturebeat.com/2018/04/11/korean-carriers-agree-to-build-single-5g-network-saving

-money-and-time.