We are in one of those rare periods when a new telecom technology is at the center of global attention. Yet there is a big disconnect between the 5G "debate" and what the industry is actually doing.
5G is invariably cast as a "race" between the US and China, usually as one that China is "winning."
That's not totally false, and we might also acknowledge that one thing they agree on is that 5G is a huge deal.
Both sides embraced the maximalist view that 5G is going to transform industry, modernize the economy and ensure military ascendancy.
Some of those predictions also turn up on the slide packs of industry executives, but those with actual P&L responsibility for 5G are the first to acknowledge these are just assumptions.
Anyone who remembers the ridiculous 3G valuations will be cautious about these aggressive 5G forecasts, especially from those with a political interest in talking them up.
The "race" that is commonly spoken of is the vendor/technology/network deployment race, which tends to get conflated into one thing. Just framing it that way puts Huawei and China in the lead thanks to volume.
But this discussion misses services and applications, which is the largest part. To the extent it is acknowledged, dominance in network kit is assumed to guarantee services success – but that doesn't follow any more than building airports ensures aviation "dominance."
We are so early into 5G that we still know very little about how this is going to play out.
In pioneering South Korea, people are using more data, and some of the AR and streaming services seem promising, but it is hard to identify compelling new apps or changed consumer behavior. After 12 months, SK Telecom's ARPU has moved by just 1.9%.
In raw numbers China is certainly winning the "race." Operators have deployed more than 250,000 basestations and are claiming some hefty subs numbers. But a huge slice of these – perhaps two-fifths – are 4G users with 4G devices on 5G packages. (See China's 5G subs may be overstated by 40%.)
Operators gain nothing financially from these customers, learn nothing from their behavior, and clog up their 4G networks with users on outsize data plans. That's not winning any kind of race.
Equally unsurprising, despite the rich new network functionality available to them, operators have already resorted to price competition. China Mobile has just trimmed its basic package from 139 yuan ($19.70) to 99 yuan ($14).
China's state monopolies and micro-management may yield impressive supply side results, but they are hopeless at creating bold new services. Competition between operators is so stunted that regulators now set them mandatory annual targets for price and network performance.
China's 5G doesn't have the additional competitive impetus and innovation that Europe and the US will see from CBRS or private networking. As in 4G, the government and the operators will rule the airwaves.
This will be even more true on the enterprise side. China is a low-productivity economy that doesn't know how to take advantage of new technology. In 2018, the China cloud market was just 8% that of the US.
Next time you see someone talking about the 5G "race," it's worth figuring out just which race they mean.
— Robert Clark, contributing editor, special to Light Reading