How China leaped ahead of the US in the 5G race

5G is critical for a lot of exciting new tech applications, including driverless vehicles - but the US is lagging behind. Can it catch up?
14 August 2018 | 26 Shares

Driverless cars and high quality VR and AR experiences all need 5G. Source: Angelo Merendino / AFP

The world is excited about 5G because it’ll change the digital ecosystem forever.

On traditional networks, high(er) latency causes a delay from the time a device ‘pings’ the network for information to the time it receives it. With 5G, that’s set to reduce several times over, translating into better and faster connectivity.

5G seems to be the network that will help people drive sports cars at high speeds, via VR headsets in real-time. No exaggeration.

One of the emerging trends in retail is the need for personalized retail experiences. While augmented reality (AR) and virtual reality (VR) technologies can support it, 5G is what will ultimately provide it with the necessary infrastructure.

The network provides high-speed in-store connectivity for rich content delivery, low latency enabling mobile AR/VR applications that do not cause nausea and motion sickness, and a continuously secure and reliable connection for a seamless shopping experience.

The fact is, the world will be a more exciting place with 5G networks up and running. However, according to Deloitte, the network doesn’t seem as much of a priority to the US as it should.

The race to 5G: China leaps ahead of the US

Countries who are first to adopt 5G will likely see greater and more sustained macroeconomic benefits, given the network effects associated with adding billions of devices to the 5G network.

However, a Deloitte report released recently notes that other countries are outspending the US in both relative and absolute terms, with China being a clear early mover.

The report notes the US risks losing its technology leadership position unless swift action is taken to help unlock industrywide investment in the country’s underlying communications infrastructure.

While the US, Japan, and South Korea have all made significant strides toward 5G readiness, the study found that since 2015 China has outspent the US by US$24 billion in wireless communications infrastructure and built 350,000 new cell sites, while the US has built fewer than 30,000 in the same timeframe.

Even with this estimate normalized to account for the population to wireless subscriber ratio, the study concludes that the US has underspent China in wireless infrastructure by US$8 to US$10 billion per year since 2015.

Furthermore, the report notes China’s five-year economic investment plan projects a total of US$400 billion in 5G related investment.

In addition, Deloitte estimates that the equipment necessary to add a carrier in China is about 35 percent less than the US, suggesting the country will need to spend 2.67 times the amount that China spends to generate an equivalent amount of wireless network capacity.

In 2017, the US tower companies and carriers added fewer sites in the last three years than China added in three months. China now has 1.9 million sites, 10 times more than the US, which yields almost 40 times the tower density per square mile, and three times the density on a per capita basis.

Fortunately, there’s renewed interest in 5G in America and larger companies like Verizon and Ericsson are plowing in funds to accelerate the growth of the network in the country.

To support the accelerated build-out of 5G in the United States, Ericsson has just announced an increase in its investment in the market.

“This series of strategic initiatives will allow Ericsson to operate even closer to its customers, meeting the growing demand for 5G globally and in the region,” said the company in a recent press release.

The investments will fall into two categories: 1) increase research and development work done close to customers in the US, and 2) increase flexibility to shorten the timeline for new product introduction and product delivery to customers.

Ericsson’s renewed interest is rational given the gap uncovered in the US market, and reinforces the company’s prediction that 5G subscriptions will reach the 150 million-mark, accounting for 48 percent of all mobile subscriptions in North America by the end of 2023.