America is becoming more joined up in its pursuit of global 5G leadership, with presidential vision and objectives, complementary corporate strategies and the FCC’s plans to Facilitate America’s Superiority in 5G Technology (the 5G FAST Plan).
In the interests of maximising international competitiveness and national security, public policy makers and enforcers should do more to help and not hinder American success.
Ambitious goals
The comprehensive pursuit of a clear mission is the most effective path to ambitious success. There is no better example of this at the national level than in realizing the vision President John F. Kennedy articulated to a joint session of Congress in May 1961: Land a man on the moon, before this decade is out, and return him safely to Earth. As Forbes magazine eloquently put it “A bold vision inspires the best in us. It mobilizes our resources and aspirations and set ideas in motion. Most important, it inspires evangelists to take up the cause. At the time Kennedy presented his vision few scientists thought a moon landing could be accomplished, especially in less than ten years.” What spurred him to do this? Kennedy felt great pressure to have the US “catch up to and overtake” the Soviet Union in the “space race.”
President Emmanuel Macron’s goal of restoring Notre-Dame cathedral in five years following its recent devastating fire will focus France on a common cause and distract from the discontent and civil unrest characterized by the gilets jaunes protesters.
In global technology development and leadership, “Made in China 2025” is shifting China from being a low-end manufacturer to a high-end producer with emphasis on technological innovation and major domestic investments including R&D and with extensive state support. MIC 2025 sought to raise the domestic content of core components and materials to 40 percent by 2020 and 70 percent by 2025. The plan dictated the proportion of China’s technology markets and product components that need to be made in China. MIC 2025 aimed for Chinese technological self-sufficiency enabling its companies to compete most effectively abroad.
Pushing back against China
Some of MIC 2025’s stated objectives above been toned down or eliminated, at least publicly and in the international eye, to calm tensions in a trade war with the US and others, but common cause and coherent policies to achieve China’s technological self-sufficiency and leadership remain. Forced technology transfers to Chinese partners (as the price for market access), which were allegedly central to MIC 2025, have been fiercely resisted by America in President Trump’s trade war with China. Nevertheless, the existence of MIC 2025, even in a toned-down form, should be a wake-up call to America and others. This is no time to snooze, because those that establish leadership now in emerging technologies including 5G, IoT and AI will most likely retain those positions for many years. The implications for international trade and national security are obvious and profound.
Back on the ranch in 5G
The US has all the key ingredients for leadership in the technological development and implementation of 5G, as well as for the applications and services that will ride on top with the inevitable innovations that will follow from Silicon Valley in general.
At a White House press conference last week, President Trump described “winning the race to be the world’s leader in providing 5G” a “critical issue for our country’s future,” He said we “cannot allow any other country to out-compete the United States in this powerful industry of the future.” Trump evidently views 5G as a key component in his geopolitical and technological battle with China.
Apple remains, by far, the world’s leading smartphone vendor in terms of revenues and profits with its high-end devices. With its recent litigation settlement with Qualcomm, it will, once again, have its modem chips, probably together with many of its RF chips including mmWave, supplied by Qualcomm, which is clearly the world’s leading and most innovative supplier of these components. This makes great strategic sense because Apple’s current modem supplier Intel was a year behind in 5G and struggling to stay in the modem chip game.
Notwithstanding rumors that Apple might have developed its own modem chips, with a saturating smartphone device market Apple is wisely prioritising horizontal diversifications into services over vertical integration into self-supply of more components. Qualcomm has modem design wins with numerous OEMs for more than 30 5G devices including virtually all scheduled for launch in the first half of 2019, except for those captively supplied by Huawei and Samsung.
While the end of litigation between Apple and Qualcomm is a welcome relief to both parties, the patent-licensing business model, that has enabled Qualcomm to fund its large technology developments enabling supply of the most advanced technologies and chips to numerous different implementers, remains threatened rather than assisted by some government agency actions. It makes no sense that US FTC has been so hostile to Qualcomm’s highly successful business model and in face of dissent by a commissioner within the same agency, criticism by the leader of the US’s other antitrust agency and with foreign competition agencies being used by their governments (e.g. in Korea) to pursue industrial polices that erode or would gut Qualcomm’s business model. As a result, OEMs end up paying a lot less in licensing fees for the essential technologies they enthusiastically implement to continuously improve their devices. And yet, only one device licensee of any significance is an American company.
While no major cellular network equipment vendor is headquartered in the US, both Nokia and Ericsson have numerous employees and plenty of legacy including extensive development facilities, such as Bell Labs, here in the US.
Strong financial performance of US wireless carriers and favourable regulatory conditions including new spectrum licensing and measures to speed deployment of infrastructure, including small cell sites, has led to US carriers to being front-runners in 5G deployments with major capital commitments. Carriers in other regions including Europe have various impediments including weaker financials and regulatory constraints.
The FCC has just announced its plans to auction later this year another 3,400 megahertz of total bandwidth in the 37 GHz, 39 GHz and 47 GHz bands. The release of this staggeringly large amount of spectrum is without precedent anywhere. These and other high bands are most strategic for 5G. While there is justified criticism that America also needs to release more mid-band spectrum – particularly to reach those who are poorly served in rural communities — the US’s strong and exceptional focus on mmWave will surely entrench its leadership in development and supply of all the associated technologies and services.
In addition, the FCC’s Rural Digital Opportunity Fund will invest $20.4 billion into high-speed broadband networks in rural America over the next decade.
