Monday, June 17, 2019

"U.S. Behind" Meme is Popular, if Historically Almost Meaningless

The U.S. is falling behind meme never goes away, where it comes to communications. The latest assertion is that the United States is falling behind in 5G. That claim has been made many times in the past, and always has proven wrong.

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

It is an old pattern of claims. Consider voice adoption, where the best the United States ever ranked was about 15th globally, for teledensity (people provided with phone service).

With the caveat that some rural and isolated locations never got fixed network phone service, not many would seriously argue that the supply or use of fixed network voice was an issue of any serious importance for the nation as a whole, though it is an issue for rural residents who cannot buy it.

Some even have argued the United States was falling behind in spectrum auctions.  What such observations often miss is a highly dynamic environment, where apparently lagging metrics quickly are closed.

In the specific case of 5G, the forecast and service activation data suggest the United States is among the very-first commercial deployers of 5G.

The other metaphor often used is that 5G is a race, with rewards of some type accruing to the earlier adopters, often said to be economic growth or perhaps market share in the 5G infrastructure or applications business.

The precedent often cited is leadership in 4G. Policymakers and analysts often say that U.S. “leadership” in 4G access lead to--or enabled--leadership in other areas, such as platforms, apps and services.

This is subtle. Is there is a general or universal correlation between early and ubiquitous deployment of 4G and leadership in platforms, apps and services? For example, nobody refutes the notion that the biggest global brands in internet platforms, apps and services are based in China and the United States.

But was 4G--or something else--responsible for that development? To be sure, 4G was the first mobile air interface whose “killer app” was mobile internet. So 4G enabled app development. But, though, necessary (you need the platform to enable the apps), was 4G sufficient?

Globally, 4G has not enabled similar levels of growth, something European policymakers directly or indirectly worry about.  If 4G really was the catalyst for economic growth, such growth should be heightened on a broader basis, and that has not clearly happened.

So one might argue the opposite position: fast 4G deployment allowed firms in some countries to move faster because they already were positioned to lead in mobile applications and services.

To make the crude argument, Shenzen in China and Silicon Valley in the United States already existed, and already were best placed to lead in mobile internet apps, services and platforms. In other words, simply deploying 5G does not confer any particular advantages if the skills levels, existing competencies, capital resources, legal frameworks and existing role in internet ecosystem industries does not already exist.

One might argue with greater effectiveness that the U.S. market “needs” more mid-band spectrum allocation. But spectrum allocation potential in various countries varies, depending on what other claimants already have rights to use mid-band spectrum. Much of the U.S. mid-band spectrum already is allocated to other users, requiring spectrum clearance or sharing to move those resources to 5G use.

In the U.S. market, virtually all mid-band spectrum between 3.1 GHz and 4.2 GHz already is allocated for other licensed users.

While it is true in one sense that U.S. mobile operators have “less access” to mid-band spectrum in those ranges, it is because other users have rights to use it: there is little unallocated mid-band spectrum in the U.S. market.

That is one reason why spectrum sharing has emerged as such an important platform in the U.S. market. The larger point is that past arguments about U.S. “falling behind” have proven to be temporary or commercially irrelevant.

One can argue, for example, that the United States lags in fiber-to-home deployment. It does, statistically. But that ignores the widespread availability of cable TV gigabit internet access using hybrid fiber coax platforms. The “lag” is statistically correct. The commercial reality is that gigabit internet access is widely available from cable operators, reducing the market opportunity for FTTH.

One always has to evaluate these “falling behind” claims in context. Historically, all such gaps have functionally been temporary, or superseded.

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