China outspending USA in developing 5G backbone

5G network

It cautions, "The US risks losing its technology leadership position unless swift action is taken to help unlock industry-wide investment in the country's underlying communications infrastructure".

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 hard to catch up with, according to a Deloitte study published Tuesday.

Despite the global technology clout that the United States has the potential to lose if bested by China, it could also miss out on potential economic benefits that come with adding billions of devices to a 5G network, according to a press release.

"We're talking about billions of devices on the same network, not just millions", said Dan Littmann, a principal at Deloitte and an author of the study. China has outspent the United States by $24 billion since 2015 and has built 350,000 new cell phone tower sites, while the U.S. built less than 30,000. In 2035, 5G is expected to enable $12.3 trillion of global economic output, IHS Markit estimated in a recent report.

China now has 10 times more sites to support 5G communications than the United States.

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USA may find challenges to match China on investment, the report said. According to the report, this suggests that China and other countries "may be creating a 5G tsunami, making it near impossible [for the US] to catch up". During just three months in 2017, Chinese carriers and cell phone tower companies added more sites than the USA had during the course of the past three years. Compounding the impact of that investment, Deloitte estimates that the equipment necessary to add a carrier in China is about 35 percent less than the US. On a per capita basis, the United States' tower density lags China by approximately three times. This means the United States has 0.4 sites compared to China's 5.3 sites for every 10 square miles.

This matters because 5G's speed and coverage capabilities rely on the addition of towers and small cells to the network, the report notes: "5G standards provide for less spectral efficiency gains than previous generations of network technology".

The report titled 5G - The chance to lead for a decade illustrates how China and other countries are outpacing the USA in terms of wireless communication infrastructure spend, tower density and efficiency of execution.

At the same time, the new revenue streams carriers expected to create with LTE networks largely failed to materialize, Deloitte says.

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