Does 5G Network Deployment Produce Device, App, Platform Success?

U.S. mobile service providers might invest $275 billion over about seven years to create new 5G networks, estimates CTIA. By some estimates, that could be about a 37 percent increase over what was spent to create 4G networks. Other estimates, including those by Verizon, suggest that might be a high forecast, as Verizon predicts flat capital investment levels over the next few years, even as it builds 5G.

Other elements of thinking about 5G might also differ from expectations. Consider the argument that early deployment of 5G access networks is directly related to the health of device and app markets.

Though there is an obvious indirect effect--new networks create the means to satisfy demand for new devices that take advantage of those networks--one might argue other forces explain supplier results.

Research in Motion flourished because its device was uniquely optimized for mobile email. Nokia flourished because its devices were optimized for voice and text. When demand shifted to mobile internet access, Apple’s iPhone gained ascendancy, as mobile email, voice and text became necessary features, but not the drivers of new use cases.

European Commission officials clearly believe that network deployment and industrial success (devices) are causally related. The DU spokesman for digital economy and society said that in the “ mobile equipment industry, we had 80 percent of the market in 2008 and because we were not ready for 4G mass deployment, the EU industry lost almost its entire market share for mobile phones.”

That might not be accurate. Nokia arguably was slow to recognize that web browsing and application experience had become the key driver of device demand, while Apple was first to capitalize on that trend.

The rise of Chinese smartphone suppliers likewise was more related to ability to produce quality devices at lower prices, not the existence of China’s 4G networks, directly.

Deployment of 5G networks arguably is important for other reasons, such as creating a similar infrastructure platform allowing new applications and use cases to be created. But “leadership” in 5G devices, applications and platforms is not directly propelled by such deployment.

Other factors explain why China and the United States, for example, seem to be producing more leading applications and platforms.