The global 5G race

Major economies around the world—particularly those in Asia—are working aggressively to develop 5G networks. The Chinese government, for example, is actively pushing for 5G amid a broader effort to strengthen its digital economy, including through its “Made in China 2025” initiative. South Korea used the occasion of the 2018 Olympics to demonstrate its 5G prowess. A drone connected to a 5G network even carried the Olympic torch. And Japan is expected to use the 2020 Olympic Games to do the same. Australia, the United Kingdom, and others will also test 5G networks in the coming months and years.

CTIA forecasts that US telecoms will invest $275 billion in 5G technology, including fiber-optic cables, small cells, and other 5G network infrastructure. All the major US telecoms are planning 5G trials in 2018 and 2019 across dozens of cities—with 2020 as the consensus tipping point for 5G across major urban centers—fostered by strong competition among them to be the first to deliver 5G to customers. Indeed, a key stated goal of the proposed merger between T-Mobile and Sprint is to utilize their combined assets to become the first nationwide 5G carrier. Such a development would push other telecoms to accelerate their 5G rollouts in order to compete in the marketplace, improving mobile access for consumers and businesses throughout the country. For their part, AT&T and Verizon have both discussed how 5G is creating new opportunities for all the top US telecoms, with each one implementing a different strategy to develop and deploy its capabilities. At the same time, the rollout of 5G will allow telecoms to retire some of the capacity dedicated to 2G and 3G networks, enabling important cost savings and reinvestment of resources, as well.

US telecoms may also use the deployment of 5G to capture a previously untapped and underserved customer base—rural America. In this effort, public and private sector interests would be aligned. The US Federal Communications Commission has identified 5G investment as integral to closing the digital divide that still persists today. Opportunities may therefore emerge for public-private partnerships between telecoms and governments at the local, state, and federal levels to roll out 5G coverage, particularly to underserved areas. This is important, as concerns regarding the social impact of technology are growing, including whether the 4IR will reduce or exacerbate inequality. Such questions will in large part determine the long-term outlook for the United States, as explored in our America@250 effort to assess the outlook for the country our to its 250^th anniversary in 2026 and beyond.

What will it take to win the 5G race?

The future center of global technological change will shift as a result of who wins the 5G race. To be sure, not every country is a perfect candidate for aggressive 5G investments given variations in market size, level of technological penetration, the size of the rural market, and other factors. Additionally, questions remain regarding the business case for large-scale 5G investments, as the average consumer may yet be unwilling to pay a premium for low latency or high-speed connections.

But national competitiveness, particularly for the world’s major economies, will increasingly be determined by the level of 4IR technological adoption and innovation, which in turn will depend on the quality of national 5G wireless networks. Winning the 5G race requires ensuring that coverage is both broad and deep across a given market. Only then will the impacts of massive infrastructure investments, job creation, and broader economic growth be realized.

To upgrade its digital infrastructure quickly and efficiently, the United States must ensure that the proper incentives are in place to foster massive investments by—and healthy competition among—the country’s telecom companies. These companies also need the space to innovate and experiment with new business models in collaboration with the wide variety of industries expected to leverage 5G. America’s future competitiveness depends on it.

This piece is part of a series focused on the development and rollout of 5G technology.