Winning the "5G Race" Will Not Matter, Long Term

5G often is positioned as a “race,” with winners and losers. That way of looking at information and communications technology has been repeated over and over again over the last several decades about any number of consumer-facing innovations.

The “race” metaphor is no more relevant today than it was then.

It was probably inevitable that some would claim the United States is falling behind in the “race” to 5G.

After all, it has been argued that the United States was behind, or falling behind, in use of mobile phones, then smartphones, use of text messaging, broadband coverage, fiber to home, broadband speed or broadband price.

Some even have argued the United States was falling behind in spectrum auctions.  All of those prior characterizations have proven temporary, or wrong. What such observations often miss is a highly dynamic environment, where apparently lagging metrics quickly are closed.

And even when national comparisons are made, there often is not a terribly good correlation between high rankings in use of a technology and ability to produce value, at scale, from such adoption.

National rankings of adoption of any access technology are likely to prove ephemeral. And even when not ephemeral, there is not a very good correlation between supply, adoption and economic value.

Consider voice adoption, where the best the United States ever ranked was about 15th, among nations of the world, for teledensity.

For the most part, nobody really seemed to think that ranking, rather than higher on the list, was a big problem, for several reasons. Coverage always is tougher for continents than for city states or small countries. Also, coverage always is easier for dense urban areas than rural areas. The United States, like some other countries (Canada, Australia, Russia) have vast areas of low population density where infrastructure is very costly.

On virtually any measure of service adoption (voice or fixed network broadband, for example), it will be difficult for a continent-sized market, with huge rural areas and lower density, to reach the very-highest ranks of coverage.

For such reasons, no continent-sized country with vast interior and sparsely-settled areas will reach the top of any list of countries with fastest speeds. Nor is it ever easy to “know” when speeds, prices or availability are a “problem.” Disparities between rural and urban areas almost always are viewed as a problem.

Prices are harder to characterize. When all countries are compared, such prices must be adjusted for purchasing power. In other words, price as a percentage of income provides a better measure of price. In developed markets, for example, internet access costs about 1.7 percent of per-person gross national income.

The International Telecommunications Union has argued that U.S. fixed network internet access prices are among the lowest-priced globally. Mobile internet access provides another view: in perhaps a hundred countries, mobile internet access already costs less than fixed access.  

According to the latest survey by Cable, U.S. average speed ranks it 20th globally for internet access speed. As always, a significant number of the countries with the highest speeds are small.

Just what winning or losing the 5G race could mean is not simple. Some people think “winning” is a matter of which countries deploy and obtain high adoption first. Others would argue that access does not matter as much as the ability to innovate and create in terms of connected business models, apps, services and processes.

On that score, very few observers would challenge the claim that innovation leadership in the next phase of applications and technology development is going to happen in China and the United States, at scale. That is not to discount the formidable work going on in Israel, Japan or South Korea. It is simply to note that, globally, at scale, few would doubt that the at-scale progress will happen either in the United States or China.

What matters with 5G is not the speed or ubiquity of supply or demand, though that is not immaterial. Instead, what always matters is the ability of people, firms and nations to harness those innovations for economic growth.