and build to the specifications of the leader’s spectrum bands of choice, as these 5G subcomponents and products will ultimately drive interoperability across networks. The rest of the world does not face the same sub-6 spectrum limitations as U.S. carriers, and is subsequently pursuing 5G development in that range. As a result, the United States may find itself without a global supply base if it continues to pursue a spectrum range divergent from the rest of the world.
If the future 5G ecosystem adopted by most of the world is built on the sub-6 mid-band spectrum, the United States will also be faced with mmWave device interoperability challenges and sub-6 infrastructure security concerns. As sub-6 becomes the global standard, it is likely that China, the current leader in that space, will lead the charge. This would create security risks for DoD operations overseas that rely on networks with Chinese components in the supply chain. Even if the United States were to restrict use of Chinese equipment suppliers domestically, the United States is not a big enough market in wireless to prevent China’s 5G suppliers from continuing to increase market share globally, resulting in significant pressure on a declining set of vendors that would serve the U.S. market. These vendors will in turn be unable to invest R&D towards future 5G offerings due to decreasing market share, limiting the number of competitive products and depriving DoD and U.S. industries of better and cheaper global supply chains.
China plans to deploy the first widespread 5G network, with its first set of sub-6 services becoming available in 2020. First-mover advantage will likely drive significant increases in their handset and telecom equipment vendors market along with their domestic semiconductor and system suppliers. As a result, Chinese internet companies will be well-positioned to develop services and applications for their home market that take advantage of 5G speed and low latency. As 5G is deployed across the globe in similar bands of spectrum, China’s handset and internet applications and services are likely to become dominant, even if they are excluded from the US. China is on a track to repeat in 5G what happened with the United States in 4G.
