5G industry or value of 12 trillion US dollars, both China and the United States are vying for leade

Issuing time:2019-03-20 00:00

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July 9th news, according to foreign media reports, one of the main reasons for the trade war between China and the United States is to compete for the 5G dominance. Since 5G is seen as a technology pillar from driverless cars to smart cities in the future, both China and the United States are striving to become leaders of 5G and expect to be able to define this new generation of mobile Internet standards.


As trade tensions between China and the US escalate on Friday, products from soybeans to cars may be affected, but the key technology of 5G may actually be the reason for the beginning of a trade war between the world's largest economies. One.


5G technology is the next generation mobile Internet. It allows people to download movies in seconds, which can bring a good mobile Internet experience. However, 5G is far more than a high-speed mobile Internet.


In the eyes of the industry, 5G is an advanced technology that can support the next generation of infrastructure, which will be the technical support for billions of Internet devices, smart cities and driverless cars that will be launched in the next few years.


5G technology may be the key to US President Donald Trump's promise to "make America America great again" and the key to China's ambition to become the world leader in artificial intelligence in 2030.


Stakes


The mobile Internet needs to reach a consistent "standard" on a global scale, so that companies that manufacture telecommunication equipment and mobile operators can promote the technology globally. The 5G technical specification was agreed in December last year.


However, with ZTE, Huawei and other Chinese telecom equipment companies as well as European companies such as Nokia and Ericsson investing more manpower and resources in the 5G field, real competition is unfolding.


US chip makers and operators such as Qualcomm and Intel are also involved. Declan Ganley, chief executive of communications company Rivada Networks, said it was part of the trade war.


Earlier this week, Ganley said in an interview with CNBC:




“The key to the problem is who defines and controls the 5G model, architecture, and agenda. The importance of this is that 5G is the deep blue ocean in the network space.”


“So this is an important strategy game. It is more important than the route. Controlling 5G technology means controlling your own airspace. It is one of the most important areas and is related to the ultimate development goal.”




What is at stake is the economic value of trillions of dollars. According to IHS Markit, it is estimated that by 2035, 5G's global economic output will reach 12.3 trillion US dollars.


The United States needs to "turn over the table"


For Ganley, the current model of how to allocate radio bands to mobile operators has been broken.


Currently, American telecommunications companies bid for so-called radio spectrum through an auction program conducted by the Federal Communications Commission (FCC). In other countries, appropriate regulators also control spectrum auctions. This usually leads to large players with more capital occupying market dominance.


The CEO said that this has killed innovation, especially those European companies that have led previous generations of mobile technology.


“Because of the way the radio spectrum is distributed, we have rebuilt a top-down model that is now an absolutely critical part of our economy,” Ganley said.


He added that in the auction model, US companies compete with each other in order to win customers, which affects their profits and thus the ability to invest in innovation.


However, in China, only two or three major state-owned network operators dominate the market. With the support of the Chinese government, they can continue to carry out large-scale operations and investment, which is conducive to the improvement of innovation capabilities, so that they are ahead of the US telecommunications company, which may be difficult to compete with when launching 5G.


Ganley said that although many European and American telecommunications companies are likely to die, China can support its domestic companies. That's why he and his company, Rivada Networks, advocate a wholesale model for allocating spectrum, similar to how the electricity market works.


In theory, the model allows more participants to bid on the spectrum when it meets demand, which will lead to more dynamic pricing of the radio spectrum.


"What we need to do is completely overturn the existing model," Ganley said, adding that it will make the US ahead of China at 5G.


Interestingly, the Trump administration hinted at this policy. Kelsey Guyselman, policy adviser at the White House Office of Technology Policy, said in a recent event that the government recognizes that "shared" spectrum may be a way to introduce the next generation of mobile networks, suggesting a wholesale model.


It is clear that the top management of the Trump administration is considering the 5G wholesale market model. Trump's 2020 campaign manager, Brad Parscale, said on Twitter last month that he thought it was the way forward.


Ganli said that 5G competition is rapidly increasing, and the United States needs to quickly introduce a wholesale model, otherwise it may lose to China.


"We still have 13 months from the real failure," Ganley told CNBC.


However, not all experts believe that the wholesale spectrum model can achieve the desired effect in the United States.


“I think that although this is a good idea, it is still open to question whether the jury will achieve the stated goals. And many of the major companies involved in the 5G competition are looking for real profitable 5G business cases in the future.” Technology Shaun Collins, chief executive of CCS Insight, a media and telecommunications analyst firm, told CNBC by phone earlier this week.


What is China doing?


Even the most intimate ally of the United States has realized the threat posed by China in the field of technology. British Foreign Minister Boris Johnson said in a recent event that Chinese technology companies may surpass the United States.


"The Chinese are about to win. They have already won 5G. They have found a way out. Everyone will play with their own small devices through the Chinese system instead of the US system," Johnson said.


Although the United States has been countering China, China, the world's second largest economy, has been hoping to deploy more business in 5G. Huawei has been lobbying Australian politicians. The British Financial Times revealed that the Chinese giant is the largest corporate sponsor of the Australian legislature. On Thursday, the Portuguese branch of the telecommunications company Altice partnered with Huawei to launch a 5G network.


In addition, Joe Madden, chief executive of market research firm Mobile Experts LLC, pointed out that China is preparing to increase its deployment of 5G. Madden wrote in the industry publication Fierce Wireless that Chinese network companies began to add orders for key components.


“In particular, we learned from at least 10 different suppliers that China's 5G deployment is now expected to begin in early 2019, rather than starting in July 2019 as originally planned. In addition, by the end of 2019, these numbers may It has become huge. The number of 5G base stations deployed in December is enough to cover the size of Germany," Madden said.


According to the United Nations World Intellectual Property Organization (WIPO), the number of patent applications filed by Chinese companies increased by 13.4% year-on-year, while the number of patent applications filed by US companies increased by only 0.1%. Huawei and ZTE are the world's two largest patent applicants, highlighting the fact that China's technology giants are building a vast intellectual property base.


Who will laugh at the end?


In this context, it is not surprising that some large Chinese mobile and telecommunications companies have been suppressed by the United States. Earlier this year, the head of the US intelligence department warned Americans not to buy smartphones made by Huawei.


ZTE is banned from using parts produced by US companies. On Monday, the US government blocked China Mobile from providing services to the US market on the grounds of national security issues.


Telecommunications and 5G are seen as important national security priorities for the White House.


Who wins and who loses? In this case, this is a trillion-dollar issue. China has been strengthening its 5G deployment. The Trump administration said that China is promoting a more equitable economic treatment, which can also be seen as gaining more space and time by gaining more advantages in the telecommunications industry. After all, 5G is obviously more important than the previous network technology.


But will there be a winner in the telecom competition? Europe, the United States and China have successfully coexisted in 4G, and for some people, the concept of winning in 5G may not be so clear.


[This article is from Netease Technology, the original title is: A major factor behind the US-China trade war is winning at a $12 trillion technology — 5G]


"This is a competition that we are paying close attention to. I really don't know who will win," Collins pointed out.




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