Editor's Note: This is the second article in a series about 5G from Richard Crandall. Read the first article, "Will Your Supply Chain Speed Ahead with 5G?"
Like other technologies and practices, 5G mobile communication technology is rolling out at different speeds in different markets around the world. Communities need to invest in both technology and infrastructure upgrades to support this new generation of faster, low-latency broadband data. Whether a community can afford or will prioritize this technology varies by country, which in turn leads to varying speeds of adoption.
Analysts at McKinsey & Company studied how different countries are implementing 5G. They found that the countries that are out in front today can continue to expect superior performance and new capabilities that may remain out of reach for years for those that trail in connectivity today. Furthermore, the countries that stay in the forefront of connectivity could have a first mover’s advantage and position themselves to be the innovators (Grijpink et al. 2020).
The researchers classify four types of countries:
- The pioneers include the United States, Japan and South Korea. These countries have consistently led the pack in connectivity. They already are beginning to deploy high-band 5G networks in cities, taking advantage of a mature fixed infrastructure and the relatively strong capital positions of their providers.
- Leaders, such as France, Germany and the United Kingdom, are consistently close behind the pioneers. However, operator investment may be constrained in these markets because price competition has reduced margins.
- Followers, including Brazil, Poland and Turkey, are starting with less-adept infrastructure, and their providers will find it hard to support the large capital investment needed to build more sophisticated networks.
- Trailing markets, such as Pakistan, Bolivia and many African nations, are unlikely to gain widespread advanced or frontier connectivity in the near term. Although low-orbiting satellites may provide connectivity options in these markets — as well as in the rural areas of follower markets — the cost of deployment and the affordability of user devices will be limiting factors.
In addition to these four groups, China and India have unique characteristics. China has poured huge investment into its fixed and cellular networks within the past several years. It is building out this backbone at a faster rate than any other country and aims to offer 5G in all major cities and switch a quarter of mobile subscriptions to 5G by 2025. India is digitizing faster than any trailing market. Although it is rapidly modernizing its mobile networks, the country probably will run into performance limitations once the technology moves out of urban areas. The country’s connectivity providers have come under pressure from price wars, and it likely will take price increases or government action to spur build-out.
How to stay ahead of 5G technology
Although the United States has been a leader in 4G, its role as the leader in 5G is being challenged. Boston Consulting Group outlines the following capabilities that a country must develop if it wants to be a leader in 5G implementation:
- Spectrum availability: To unlock the full potential of 5G networks, wireless providers need a sufficient mix of low-, mid-, and high-band spectrum, which should be made available through a market-based, transparent set of forward-looking auctions.
- Networks: Capital investments by cellular-service operators have been and will continue to be critical for building the 5G network infrastructure. A reduced regulatory burden at all levels of government will speed infrastructure build-out, which is necessary to increase subscriber penetration, the key measure of network reach.
- Innovation ecosystem: Government policies should encourage ample private-sector research and development spending and provide strong intellectual property protection to nurture a virtuous cycle of innovation and development.
- Business climate: A combination of access to funding, openness to risk and business-friendly policies will create an environment that is conducive to technological innovation.
- Talent: To ensure that the workforce has the skills necessary for future technological changes, tech-related certification and degree training will be critical.
