The U.S Must Win the 5G Race by Any Means Necessary

July 5, 2019
Paul Vancea

Insights into Investment Strategies and Opportunities

This entry stresses the strategic importance of 5G technology to national security and economic competitiveness. It argues that the United States must prioritize and lead in the deployment of 5G infrastructure to maintain technological superiority. The blog discusses the geopolitical implications of 5G, particularly in relation to China, and the need for robust policy and investment to secure a leading position in the global technology landscape.

WHAT IS 5G?

5G stands for fifth generation cellular wireless. 5G will introduce three new revolutionary features in our world: exponentially greater wireless Internet speed (up to 100x faster than the current 4G), lower latency (will be more responsive), and the ability to connect lots of devices at once (for sensors and smart devices). To give an example, with 4G it would take 6 minutes to download a 2-hour movie. With 5G, it will take all of 3.6 seconds.

The race to 5G is a race that will dictate the world leaders of the next decade. For example, when US won the race to 4G in 2010, US experienced tremendous economic and job growth. 4G technology allowed the US wireless industry to increase related jobs by 84% from 2011 to 2014, which added $125 billion in revenue to American companies, with $40 billion coming from app stores. The first 4G phones in the US appeared in 2010, which enabled 4G applications that changed our world, such as Snapchat, Uber, AirBnB, video calls, etc. If the US would’ve lost this race, these industries, advances in technologies and revenues would have gone to other countries.

As the world’s long-time leader, the US wireless technology industry employs almost five million professionals and contributes $475 billion per year to the American economy. Winning the 5G race could cause those numbers to explode in the near future. Studies show that 5G has is likely to create almost three million new jobs— and add $500 billion to US economic growth. It is a big deal.

5G IMPORTANCE ON ECONOMY/WORLD/COMPETITION

As our world turns digital, wireless technology becomes the most important competitive advantage between nations. The race to 5G is the most important thus far because our essential infrastructure in this country will be built using wireless technology. Our civic, commercial and military life depends on it.

100x faster wireless speed than 4G and reduced latency, will allow us to exponentially improve our connection with all devices. This will create new opportunities in manufacturing, transportation, health care, education, agriculture, and more. 5G will enable new services that will drive economic growth and job creation for years to come.

Historically, Europe won the 2G era, Japan won the 3G era, and of course, the US won the 4G era. But now, China poses a severe threat to winning the 5G era, which will have countless negative implications for the U.S. At a hearing before the Senate Committee on Commerce, Science, and Transportation in 2018, Mississippi Sen. Roger Wicker stated that “failing to win the race to 5G would not only materially delay the benefits of 5G for the American people, it would forever reduce the economic and societal gains that come from leading the world in technology.”

5G-CURRENT AFFAIRS-CHINA-TRUMP-HUAWEI:

Although US has a great reputation for its mobile technologies, Asia is dominantly leading the way regarding 5G. Four of the world’s five most 5G advanced nations are China, South Korea, Japan, and India.

However, no one can tell with certainty who will win the 5G race. A 2018 Cellular Telecommunications Industry Association (CTIA) report claimed that US was in third place in the 5G race, behind China and South Korea, while a 2019 CTIA report claimed that U.S. now shares the number one spot with China. Other reports put China as the clear winner, with functional 5G technology by 2020, while they claim that the U.S. is 5 years behind. AT&T Chief Executive Officer Randall Stephenson declared in March 2019 that China isn’t beating the United States on 5G – but then again, AT&T deceptively branded their new 5G E network pretending it uses 5G technology, when it used the regular 4G technology.

While these reports do not provide any clarity, these investments will. Starting in 2015, China has doubled down on investments in 5G technology, and has outspent the US by $24 billion to construct 350,000 new, 5G-compatible cell towers. During the same time, the US has built only 30,000 towers.

The reason China has prioritized development of 5G is because they understand that the race for 5G is a race for world-wide control. Michael Wessel, a member of the U.S.-China Economic and Security Review Commission, explained that China’s goal is to become the global innovation leader, and will do everything in its power to achieve this goal, legally or illegally.

One of the most important weapons for China to win the 5G race is the Chinese company Huawei. Currently, Huawei is spending a tremendous amount of resources on R&D (almost 40% of their workforce), most of which is dedicated to 5G. This is more than Microsoft, Intel or Apple’s R&D efforts.

In addition to superior dedicated resources, Huawei has a long negative history of operating outside the international law and order. Huawei currently faces bans in Japan, Australia, New Zealand and the U.S. over fears that China’s government could use its systems to spy on their countries. The CIA, FBI and NSA publicly warned against Huawei. The Pentagon banned Huawei and its products. Huawei has long been accused of espionage, and for doing illegal business with Iran. Most recently, Canada helped the U.S. arrest Huawei’s CFO Meng Wanzhou, and President Trump signed an executive order banning any US company from doing business with Huawei.

It is extremely important that President Trump, the U.S. and its allies stop or slow down Huawei’s influence and operational capabilities throughout the world. As stated earlier, winning the 5G race will allow the development of exponential technology and booming economic growth for those who employ this technology first.

CONCLUSION:

If Huawei and China win the 5G race, they will undoubtedly use this technology to win over allies and dominate the world for a long time to come. They will offer this technology to other countries in exchange for trade deals, military partnerships, and economic prosperity. They could also choose to offer this technology to all US enemies, except for the U.S., leaving our country unable to compete. Thus, it is of the utmost importance that the United States wins the race to 5G.

President Trump must continue to put pressure of China and Huawei, in an intelligent way. There is no easy answer to do so, especially with the US and China locked in a tariffs war. All trade talks between the two countries will definitely include Huawei as a bargaining chip.

The Trump administration, US industry and government leaders, and allies must work in concert to win this race, by any means necessary, and make sure that all (or most) other countries will receive the 5G technology from the US, rather than from China.

SOURCES:

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