China investment in 5G
Deloitte: China Winning Race to 5G; Has Outspent U.S. by $24 Billion in 5G Infrastructure
China is pulling ahead of the US in the race to build infrastructure for 5G wireless, according to a new report from Deloitte Consulting. The report titled “5G – The chance to lead for a decade” illustrates how China and other countries are outpacing the U.S. in terms of wireless communication infrastructure spend, tower density and efficiency of execution. Together, these practices are distinguishing China’s lead in the early stages of 5G deployment. This report explores the sense of urgency for wireless carriers and policy makers to work together in an effort to increase investment in the country’s communications infrastructure and offers potential solutions to help improve economic efficiency.
China has outspent the U.S. by $24 billion since 2015 and built out ten times more sites than the U.S. to support 5G communications, according to the report. In just three months of 2017, Chinese cell phone tower companies and carriers added more sites than the U.S had done in the previous three years, the Deloitte Consulting report found. The country has built 350,000 new cell phone tower sites, while the U.S. built less than 30,000. Even with this estimate normalized to account for the population to wireless subscriber ratio, the study concludes that the U.S. has under spent China in wireless infrastructure by $8 to $10 billion per year since 2015.
In 2017, U.S. tower companies and carriers added fewer sites in the last three years than China added in three months. China now has 1.9 million sites, 10 times more than the U.S., which yields almost 40 times the tower density per square mile, and three times the density on a per-capita basis.
“We predict that 5G will expand the network effect dramatically by extending the reach of the internet to almost any kind of connection, by almost any kind of device, anywhere a wireless signal can reach,” said Dan Littmann, principal, Deloitte Consulting LLP. “The potential economic benefits of 5G will soon become a key differentiator for cities looking to attract both businesses and residents. For the U.S. to remain competitive and eventually emerge as a leader, the race to 5G should be carefully evaluated and swift actions should be taken.”
- Establishing lighter touch policy frameworks that are able to deliver higher scale and efficiency and help reduce deployment cycle times.
- Encourage collaboration among carriers and other ecosystem organizations so that the demonstrated benefits from network effects are equitably shared.
- Implementing a national communications infrastructure database to provide deployment statistics, leading practices, and visibility into small cell approval and denial rates.
The report concludes that as another era of untapped economic potential emerges with the adoption of 5G technology, investment in upgrading the underlying communications infrastructure has become increasingly critical. Unless tangible steps are taken to help rebalance the private investment case for the upgrade, the U.S. may risk losing the macro-economic leadership it gained in the previous wireless investment era.
“Maintaining U.S. leadership in mobile communications requires that carriers, technology vendors, OTT innovators, municipalities and policy makers collaborate to build a strong business case for 5G. Deployment costs and cycle times for a densified network infrastructure is are critical for the U.S. to gain equal footing with other countries striving to be first to 5G,” Littmann added.
While China is streaking ahead of the US in terms of network rollout, it looks like there are also several other nations who are in a more comfortable position also. In terms of the number of sites per 10,000 citizens, Deloitte estimates this number at 4.7 in the US, though this is eclipsed by China (14.1), Germany (8.7) and Japan (17.4). Looking at the average number of sites per ten square miles, US stands at 0.4, while China has 5.3, Germany has 5.1 and Japan has 15.2.
Jamie Davis of telecoms.com writes:
The US telcos might be bragging about getting to launch commercial 5G services first, but this means very little. Having several pockets of 5G coverage scattered over the US, focused around the cities which house telco HQs is not the same as taking a leadership position in the 5G economy. When it comes to network densification investments, a key factor for the success of the technology, China does seem to be taking the lead.
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Addendum:
ITU Report on 5G:
https://www.itu.int/en/ITU-D/Documents/ITU_5G_REPORT-2018.pdf