China has in recent years outspent the U.S. by $24 billion in the area of next-generation mobile internet technology known as 5G, potentially creating a “tsunami” that will be difficult to catch up with, according to a Deloitte study published Tuesday.
5G would make it possible for people to download films and stream high bandwidth video for technologies including virtual reality. But beyond consumer applications, the tech could support connected infrastructure in cities, including driverless cars. In 2035, 5G is expected to enable $12.3 trillion of global economic output, IHS Markit estimated in a recent report.
So it’s no wonder there is a race to dominate the technology. That’s become a factor in the current U.S.-China trade war.
For now, it appears China has more money behind its effort.
Since 2015, it has outspent the U.S. by $24 billion in 5G infrastructure, Deloitte’s study found. China has built 350,000 new cell sites, while the U.S. has built fewer than 30,000 in the same time-frame. Deloitte’s report noted that China plans hundreds of billions of dollars in 5G-related spend.
And it could be tougher for the U.S. to match China on investment. Deloitte estimated that the equipment necessary to add a carrier in China cost about 35 percent less than the U.S., suggesting that Washington would need to spend 2.67 times the amount that China does to generate an equivalent amount of wireless network capacity.
“China and other countries may be creating a 5G tsunami, making it near impossible to catch up,” Deloitte said in its report.
Deloitte recommended that the U.S. deliver “lighter-touch policy frameworks” to help reduce deployment times of equipment required for 5G. The consultancy also said that mobile carriers and other partners needed to collaborate more. It recommended the creation of a “national communications infrastructure database” in order to help share data between various parties.
As another era of untapped economic potential emerges with the adoption of 5G technology … investment in upgrading the underlying communications infrastructure becomes even more critical,” Deloitte’s report said.
“But unless tangible steps are taken to help rebalance the private investment case for the upgrade with the demonstrated external benefits to other industries and the public good, the United States may risk losing the leadership it gained in the previous era. The negative consequences could take decades to overcome, and other countries are already making their moves.”