Google’s former CEO said that “the United States lags behind China in the 5G competition”, but don’t ignore the United States’ latecomer advantage!

Recently, former Google CEO Eric Schmidt and Harvard University professor Graham Allison jointly published an article in the Wall Street Journal, stating that the United States has fallen far behind China in the 5G race, and called for "the Biden administration to make 5G a national priority and take the lead in building digital highways across the country."

In the past few years, China has indeed taken a leading position in 5G construction and application, but in my opinion, the United States may still catch up in 5G application through its latecomer advantage. The application of 5G in various industries is a systematic project that requires joint efforts in multiple technical fields.

The development of 5G in the United States is slow due to various constraints

Schmidt and Allison pointed out in a joint article that the US government's "indecision" will cause the country to lag far behind China in the race to build 5G technology. The article cited third-party data that the US 5G speed is much lower than that of China. The average speed of US 5G is about 75Mbs, while in China's urban centers, this data is 300Mbs. Moreover, 5G in some US cities is even slower than 4G. For example, in Boston, Chicago and New York, AT&T's 5G speed is at least 10% slower than 4G; in Washington, Los Angeles and Austin, Verizon's 5G speed is at least 20% slower than the company's 4G.

In addition to his dissatisfaction with network speeds, Schmidt also believes that the United States lags behind China in 5G in terms of global markets, industry investment, and resource allocation. For example, in terms of investment, the American Innovation and Competitiveness Act of 2021 introduced by the U.S. Senate claims that it is "key to maintaining the United States' position on the world stage as a current and future technological leader in the 21st century," but the bill only authorizes an investment of $1.5 billion in 5G mobile networks by 2026, which is tantamount to a drop in the bucket for 5G construction.

Schmidt is the former CEO of Google and has a strong influence in the US technology circle. This is not the first time he has warned about the construction of 5G in the United States. In March last year, Schmidt publicly stated that China is 10 times ahead of the United States in the field of 5G, and the United States may have "lost this game". What's worse, if the United States does not take action, it is likely to be overtaken by China in the next 10 years and lose its leading position in the high-end technology field of artificial intelligence.

Of course, Schmidt’s remarks may be suspected of being "the butt determines the head". At that time, Schmidt served as the chairman of the US National Security Commission on Artificial Intelligence. In order to obtain more government budget investment in scientific research, he may have magnified some issues and claimed that the Biden administration should make 5G a national priority.

However, judging from the current data, the United States is indeed slow in developing 5G. Data shows that as of October 2021, the number of 5G base stations in the United States was only 100,000, while China, which has a land area not much different from the United States, has opened more than 1.15 million 5G base stations during the same period, and even South Korea has opened 250,000 5G base stations.

The construction of 5G infrastructure in the United States is slow, and there are many constraints behind it. On the one hand, the high price of radio spectrum has overwhelmed the operators in the United States. For example, in January last year, the Federal Communications Commission auctioned a total of 280MHz frequency in the C-band 3.70GHz-3.98GHz band, and finally sold it at a sky-high price of US$80.9 billion, of which Verizon and AT&T paid US$45.45 billion and US$23.4 billion respectively, and subsequently paid frequency clearance fees to satellite operators occupying the band. On the other hand, even if the radio spectrum is obtained at a sky-high price, it is still obstructed in many aspects. The most typical one is that the 5G network deployed in the C-band proposed by the Federal Aviation Administration (FAA) may interfere with the aircraft's autopilot cabin system, causing the deployment of the US mid-band 5G network to be repeatedly postponed.

Radio spectrum is only one of the factors. There are other factors, such as the lack of leading 5G communication equipment manufacturers and the small number of terminal manufacturers in the United States. With these factors blocking it, is the US 5G industry really lagging behind China? Not really. The author believes that the commercial use of 5G is a long-term process, and its ultimate goal is to apply it, that is, to allow all walks of life in the national economy to adopt 5G technology to achieve digital upgrades and enhance the strength of various industries. The lagging construction of 5G infrastructure does not mean that 5G applications will lag behind in the future. We might as well explore this issue from the development history of China's 4G.

4G in China: Late-mover advantage drives industry prosperity

Looking back at the development of 4G in China, it is well known that the commercialization of 4G in China was 3-4 years later than that of the overseas mainstream market. At that time, there were also some constraints that delayed the commercialization of 4G, such as the short commercialization time of 3G and the need to ensure the recovery of 3G investment and the maturity of the industrial chain. However, the development of China's 4G industry has a latecomer advantage to a large extent, and has made full use of the favorable factors of the latecomer advantage to quickly promote China's 4G to become the most successful mobile communication ecosystem.

China officially issued 4G licenses in December 2013. However, as early as December 2009, Nordic operators built the world's first 4G network in Sweden and Norway, and operators in many countries quickly followed suit. The United States and Japan both officially commercialized 4G in December 2010, and South Korea officially commercialized 4G in July 2011. As of mid-October 2013, 83 countries around the world had commercialized LTE networks, with a total of 222 commercial networks. In other words, when China officially commercialized 4G, there were already 222 4G commercial networks in the world, and many operators' networks had been operating for several years.

Although China's 4G commercialization is at least three years later than some developed regions, the extensive experience gained from overseas commercialization and China's related accumulation have given China 4G a latecomer advantage. In terms of experience, the first commercialization brought China the following:

First, in terms of technology, 4G technology has reached a high level of maturity. In December 2013, LTE had been in commercial use for four years. The technology no longer had many problems like in the early days of commercial use. Many deficiencies have been improved, and domestic operators no longer need to make mistakes. It is worth noting that in June 2013, South Korean operators launched the first LTE-Advanced network. LTE-Advanced greatly improved the data rate, spectrum efficiency and user performance of 4G, making 4.5G a reality.

Second, in terms of cost, the cost of 4G deployment and application has been greatly reduced. After four years of practice with more than 80 operators around the world, 4G network equipment has been shipped on a large scale, and the cost of infrastructure has been greatly reduced; the number of 4G terminals around the world has also begun to increase, and the cost of terminals has been greatly reduced.

Third, in terms of operations, many operators already have a lot of user operation experience. For example, by the end of 2013, the 4G user penetration rate of Verizon in the United States exceeded 44%, and the 4G user penetration rate of SK in South Korea reached about 50%. Such high user penetration rates have enabled operators to form mature experience in tariff formulation, marketing, user management, etc.

Fourth, in terms of applications, a large number of scenarios and mature business models have been formed around the world, which is the most important aspect. According to the Internet Trends Report 2014 released by "Internet Queen" Mary Meeker, from August 2012 to early 2014, the scale of mobile data traffic is soaring at an astonishing rate of 81%. Multiple mobile applications are occupying all aspects of people's daily lives at an unprecedented speed, including WhatsApp, WeChat and other global OTT communication services, which have gained more than 1 billion users. The growth of picture and video sharing services such as Pinterest, Instagram and Snapchat has greatly promoted the growth of network traffic. Content distribution channels are growing rapidly, and APP applications for food, clothing, housing, transportation and entertainment are emerging rapidly. The combination of mobile terminals and these applications has made data traffic exceed 4ZB in 2013. These application scenarios and the business models formed on this basis highly overlap with the time period of 4G commercial use, and many applications can only be formed with the help of 4G networks, providing a large number of reference templates for the innovation of China's mobile Internet after 4G commercial use.

Of course, just having the experience of these overseas pioneers is not enough to form a latecomer advantage. China still needs to have the soil to utilize these experiences to transform them into a driving force for development and form a real latecomer advantage. At the time when 4G licenses were issued, China not only had the conditions for 4G infrastructure construction, but more importantly, the conditions for 4G applications.

First, China has the largest number of mobile Internet users in the world. Since China issued 3G licenses at the end of 2008, mobile Internet has taken root and grown in China, and the number of users accessing the Internet through mobile phones has continued to grow. By the end of 2013, China had 500 million mobile Internet users. This largest group of mobile Internet users in the world can be quickly converted into 4G-based users.

Secondly, China's mobile Internet is in a period of innovation explosion. Driven by 3G, domestic Internet companies started the process of mobileization. However, due to the limitations of 3G network speed and experience, many innovations were suppressed and the network infrastructure upgrade was urgently needed. Before 2013, mobile payment, mobile video, shared travel, local life and other industries had already appeared, but they achieved rapid development after the commercial use of 4G.

At present, my country's mobile Internet has changed people's food, clothing, housing, transportation, entertainment and other aspects, and these industries are inseparable from the improvement of 4G network infrastructure, which can be said to be the embodiment of "4G changes life". The development process of 4G in my country has, to a certain extent, fully exerted the latecomer advantage, especially in achieving global leadership in application.

With various conditions in place, will the United States take advantage of its latecomer advantage to take the lead in 5G application?

Data from the Ministry of Industry and Information Technology shows that as of the end of 2021, my country has built and opened a total of 1.425 million 5G base stations, accounting for more than 60% of the world's total base stations. The number of 5G users has reached 355 million, and there are more than 10,000 5G industry application innovation cases, covering more than 20 national economic sectors such as industry and medical care. The application links have penetrated from the auxiliary links of production to the core links.

There is no doubt that my country is in a leading position in the world in terms of 5G construction and application. In many aspects, we are exploring in "no man's land", and the results of the exploration will form early experience, so that later generations can avoid detours. These explorations not only verify the technology, but also reduce costs through large-scale deployment, and form replicable models for applications in various industries.

Currently, the construction of 5G infrastructure in the United States is in a slow development state due to various factors, but in the future, after these obstacles are eliminated, 5G applications in various industries are likely to take advantage of the latecomer advantage and form a leading position in 5G applications. In my opinion, the application of 5G in various industries is not only achieved by the 5G technology and infrastructure itself, but also involves many factors. The United States has already met certain conditions in other aspects, that is, it has the conditions to take advantage of the latecomer advantage, mainly including:

First, in terms of technology, the application of 5G in various industries is actually a process of diversified technology integration and application. 5G must be combined with various ICT technologies such as artificial intelligence, cloud computing, big data, and blockchain to achieve industry application. In terms of comprehensive technical strength, the United States has an absolute advantage, with artificial intelligence, cloud computing, big data, and blockchain in a leading position. Although 5G infrastructure is a shortcoming at present, it will quickly form a comprehensive technology integration application in the future with reference to existing experience, reflecting its latecomer advantage.

Second, in terms of industrial foundation, the application of 5G in various industries requires that each industry has a good foundation. The effectiveness of 5G applications in the industry is determined by the technical foundation of each industry itself, the existing level of digitalization and other conditions. The "2021 Global Digital Economy White Paper" released by the China Academy of Information and Communications Technology shows that the scale of the US digital economy reached 13.6 trillion US dollars in 2020, ranking first in the world, of which industrial digitalization accounted for more than 80%. It can be seen that the breadth and depth of application of core technologies of the digital economy in various industries in the United States are leading, and the level of digitalization of various industries is also in a leading position. With this foundation, if various industries have application needs for 5G, they can be quickly implemented, so they can give play to the latecomer advantage of 5G.

Third, the U.S. industry has also promoted the progress of 5G technology and deployment through a variety of other means. U.S. 5G-related industry chain companies did not wait for the slow 5G deployment of operators, but actively promoted it through a variety of means, mainly in the following ways: First, under the condition of limited authorized spectrum and public network, they actively promoted CBRS shared frequency bands, provided enterprise private network frequency band authorization, and promoted the implementation of private networks. For example, Amazon launched the Private5G solution, which can help enterprises build a 5G private network in a few days. Second, major Internet manufacturers continue to innovate and launch 5G cloud core networks and edge computing solutions to assist operators and enterprises in quickly realizing 5G applications. Third, promote the research and development and ecological construction of open source wireless access networks (Opne Ran) to reduce the cost of 5G deployment.

Although the construction of 5G infrastructure in the United States seems to be lagging behind at present, based on the above accumulation, various industries in the United States have many conditions for 5G applications. In the future, after the obstacles of its 5G infrastructure are removed, it can leverage the experience formed by 5G pioneers, especially some replicable models of industry applications, to quickly realize the implementation of industry applications and form a leading position with latecomer advantages.

Therefore, the competition in 5G is not just a competition in 5G technology and infrastructure construction in the short term of a few years. 5G is an enabling technology, and its ultimate goal is to achieve digital upgrading and enhanced competitiveness of various industries in the national economy based on 5G.