If China Reaches 5G First, How Will Countries Compete?

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MIT SMR Strategy Forum

Each month, we pose a question about business, management, technology, or public policy to our panel of academic experts. Here you can see what they think and why.
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We asked our panel of strategy experts to tell us how strongly they agree with this statement:

Introducing 5G networks 3-5 years ahead of other countries will give Chinese firms an advantage.
RAW RESPONSES
WEIGHTED BY CONFIDENCE

Raw Responses

Responses weighted by panelists’ level of confidence

Across the world, the race to deploy 5G — next-generation internet connectivity — is heating up, with several countries in contention for offering this powerful network technology first. 5G will offer much faster networks for businesses and consumers and enable new advances in internet of things technology. China, South Korea, the U.S., and Japan are among the countries most likely to make the first commercial 5G network debut, and for the U.S. and China in particular, the technology has become a focal point in an escalating trade war. This month, we asked our panel of strategy experts to examine the competitive scenario if China were to achieve a 5G rollout first.

Panelists

Panelist Vote Confidence Comments

Richard Holden

University of New South Wales
Profile
Agree 6 “I think it depends on how strong the network externalities are and the degree to which 5G technology once installed can be replaced with superior technology.”

John Van Reenen

Massachusetts Institute of Technology
Profile
Agree 5 “First-mover advantages are often exaggerated.”

Ashish Arora

Duke University
Profile
Strongly Agree 5 “Pioneers do not always benefit. But in this case, it seems likely that they will.”

Joshua Gans

University of Toronto
Profile
Agree 8 “A 5G network that is built earlier in a region moves businesses in that region into the future sooner. They can experiment with new products and services and be further up the learning curve. The cost is that global demand for those services is still far off, which diminishes their relative advantage.”

R. Preston McAfee

Economist
Profile
Agree 8 “Early experience, learning by doing, control of standards, and large scale will provide an advantage to equipment manufacturers like Huawei and ZTE, and to handset suppliers, especially with barriers to foreign firms in the Chinese telephony market.”

Shane Greenstein

Harvard University
Profile
Strongly Agree 9 “There are no compelling applications for 5G yet, but there are many promising prototypes in security, entertainment, and logistics. Give inventive and competent firms time to explore, and they will invent something and figure out how to get revenue from it. More time is a big advantage.”

Anita McGahan

University of Toronto
Profile
Agree 7 “Faster internet connectivity gives firms an edge in market analysis of all types, including financial. It gives firms an edge in responding to opportunities. The question here is whether access to 5G networks in China will be restricted to Chinese firms. If so, and if Chinese companies are not restricted internationally from access to data, then 5G will confer an advantage on them.”

Richard Florida

University of Toronto
Profile
Neither Agree nor Disagree 7 “Yes and no. “Yes” because it will create significant first-mover advantage in a huge market. “No” because it ultimately depends on whether the U.S. can freeze Chinese companies out of Western markets. This will be interesting to watch.”

Tom Lyon

University of Michigan
Profile
Strongly Agree 8 “A technological lead is usually valuable. This may be especially important in autonomous vehicle technology, which will rely on 5G networks.”

John Roberts

Stanford University
Profile
Agree 5

Barry Nalebuff

Yale University
Profile
Agree 6 “But how much of an advantage? How much did Minitel help the French in the long run? And given potential for spyware via Chinese hardware, being a second-mover might be a better position in the long run. One big gain to 5G seems to be competition to cable providers. Not sure how much that makes a difference to overall economy.”

Scott Stern

Massachusetts Institute of Technology
Profile
Agree 6 “There are multiple versions of 5G, and many companies and countries are trying to leapfrog in this area, but some of the key strategic adoption initiatives in China are likely to allow Chinese firms such as Huawei to have some advantages over competitors such as Ericsson and Nokia. But not sure if these advantages are decisive.”

Petra Moser

New York University
Profile
Strongly Agree 10 “Whoever gets access to 5G first will be first to develop new technologies that require superfast speed, reduced lag time, or increased network capacity. A lag of three to five years creates a head start for Chinese firms that will be difficult to close.”

Steve Tadelis

University of California, Berkeley
Profile
Agree 8 “It is typically the case that having access to early technology adoption leads to a leg up on introducing and benefiting from complementary technologies and innovations.”

Rebecca Henderson

Harvard University
Profile
Strongly Agree 8 “The degree of advantage is heavily dependent, of course, on how good the Chinese technology proves to be.”

Olav Sorenson

Yale University
Profile
Disagree 8 “If China actually beats other countries by three-plus years, it probably would give Chinese firms an advantage. But it’s unclear that they will. 5G has already begun being deployed in Korea and the U.S. It’s also not clear whether the version that China adopts will become the standard. If it does not, early deployment might even become a disadvantage.”

Timothy Simcoe

Boston University
Profile
Strongly Disagree 8 “Which Chinese firms? Not the carriers, for whom competition is local. Not device makers, for whom 5G (because it’s a standard) will not be a differentiating feature. Maybe infrastructure producers, like Huawei or ZTE, but it looks like security concerns will harm them in the U.S., and their real advantage in addressable markets is cost-based.”

Erik Brynjolfsson

Massachusetts Institute of Technology
Profile
Strongly Agree 7 “5G is a big deal, and the U.S. is fumbling its rollout.”

Melissa Schilling

New York University
Profile
Agree 10 “Access to 5G infrastructure and customers on 5G connections will enable Chinese firms to develop a wide range of products and services that will be more advanced than those in countries without 5G. There will be second-mover advantages for the other countries, but it could still take a while to catch up.”

Jennifer Brown

University of Utah
Profile
Neither Agree nor Disagree 6 “The advantage here isn’t obvious. Local demand may spur local innovation (and a head start on 5G tech development), but not necessarily in a way that precludes non-Chinese firms from jumping in now or later. Moreover, the international success or failure of Chinese firms may be sensitive to other countries’ tech and security policy three to five years from now.”

Lori Rosenkopf

University of Pennsylvania
Profile
Agree 8 “Working infrastructure, coupled with the large protected domestic market, will stimulate massive commercialization of related and complementary products and services by Chinese firms, which in turn will accelerate technological development.”

Daniel Levinthal

University of Pennsylvania
Profile
Agree 8 “The Chinese government can be expected to privilege national firms in building out this network and technology providers whose systems will interface with this platform.”

Topics

MIT SMR Strategy Forum

Each month, we pose a question about business, management, technology, or public policy to our panel of academic experts. Here you can see what they think and why.
Learn more about this series

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