The 5G Race has begun

 

By Barry Lau, Managing Partner & CIO (Private Investments)
June 2019

 

Arguably one of the most topical issues of 2019, 5G dominance is no longer a race for technological advancements but has become a geopolitical issue. The money behind this new technological build up is in the trillions of dollar range and possibly more.  A perfect disharmony between big governments, big businesses, big money and big technology.  In this issue of Adamas’ Clarity, we shall have a cursory assessment of 5G.

The world today largely utilizes 4G technology, with some base stations still catering for 2G and 3G, although such technology will likely be out-phased when 5G arrives.  5G wireless is a key enabling technology which could be 100 times faster than 4G LTE network, connects individuals or devices through the Internet of Things and supports applications that are much more advanced than the ones we use today. With faster transmission speed, increased total bandwidth, higher security and enhanced reliability, the delivery of low-cost 5G sets the foundation for new products, new services and new industries that could disrupt many business models.

China is about 12 months ahead of the curve in 5G land and is positioned to potentially lead the world in 5G wireless. The Ministry of Industry and Information Technology granted 5G licenses to three major domestic telecom operators as well as to China Broadcasting Network Corp for commercial use on 6 June 2019, which is ahead of the original timeline that targeted 2020. In addition, China expects a total investment of RMB 2.8 trillion (US$411 billion) in 5G mobile networks between 2020 and 2030 (2). Concern is growing in the U.S. that China may have a first mover advantage to experiment with latest disruptive technologies and be the new tech hub of the world replacing Silicon Valley. China’s aspiration to further develop the Greater Bay Area around the Guangdong province, with Hong Kong – an international financial center, Shenzhen –an already established tech hub with leading tech companies including but not limited to Huawei and Tencent, DJI. Additionally, together with Macau, a leading destination in gaming and entertainment, this sub-block of the Greater Bay Area has sufficient foundation to provide a good alternative to rival any bay areas of the world from a standard of living standpoint. The connectivity between these three locations has been dramatically improved with Hong Kong-Zhuhai-Macau bridge, which is now in full operation. It has a RMB 128 billion (US$18.8 billion)(3) price tag on it. It now provides a third way to reach Macau by road in addition to by air or by sea. The time required is around 20 minutes. The high-speed rail from Hong Kong to Shenzhen is 14 minutes ride, straight into the heart of the business district Futian.

Chinese companies as of March 2019 owned 34% of key 5G standard-essential patents, followed by South Korea (25%), Finland (14%) and the U.S. (14%), according to patent analytics firm IPlytics(4). China’s 5G patent filings have picked up sharply from the 4G era and is expected to grow at an increasing pace. The world may be heading towards being powered by Chinese technology in the next few years as the Chinese firms will continue to receive patent revenue, even if they might be banned from selling products in countries where the patents are being used.

In response to China’s leading role, American operators are expected to spend approximately US$275 billion on 5G infrastructure and network upgrades over the next seven years, according to Accenture estimates(5). The global research firm 13D(6) points out that the launch of 5G has become a threat to the US$120 billion cable TV industry as it provides greater coverage and consistency of service and allowing 1 gigabit per-second speeds at 1-kilometer coverage - 10 times faster than the average download speed of 95.25Mbps for fixed broadband in the U.S. This trend will be a global one and many new winners and losers will follow as the global 5G competition intensifies, however, for now, China seems to be leading the way.

(1) Bhuma Shrivastava and Ian King. Where Are We on the Road to 5G Mobile Service? (2018, September 19), Bloomberg

(2) Bien Perez. Why China is set to spend US$411 billion on 5G mobile networks. (2017, June 19), South China Morning Post. Retrieved from https://www.scmp.com/tech/china-tech/article/2098948/china-plans-28-trillion-yuan-capital-expenditure-create-worlds

(3) Wikipedia. Retrieved from: https://en.wikipedia.org/wiki/Hong_Kong–Zhuhai–Macau_Bridge

(4) Who is leading the 5G patent race?, Retrieved from IPlytics Website: https://www.iplytics.com/wp-content/uploads/2019/01/Who-Leads-the-5G-Patent-Race_2019.pdf

(5) How 5G can help municipalities become vibrant smart cities. Retrieved from Accenture Website: https://www.accenture.com/_acnmedia/PDF-43/Accenture-5G-Municipalities-Become-Smart-Cities.pdf

(6) 5G in a nutshell. Retrieved from 13D Website: https://www.13d.com/landing-pages/fiveg/

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