Page:The 5G Ecosystem Risks & Opportunities for DoD.pdf/9

 adoption of new handsets with new semiconductors that not only could move much more data, but were computationally much faster as well. U.S. companies like Apple, Google, Facebook, Amazon, Netflix, and countless others built new applications and services that took advantage of that bandwidth and those new handset capabilities. As LTE was deployed in other countries, those same handsets and applications spread across the world, driving U.S. dominance in global wireless and internet services.

The United States has benefited significantly from this lead. Recon Analytics published a report in April 2018 estimating that the introduction of 4G contributed to 70% growth in the wireless industry between 2011 and 2014, bolstering GDP while increasing jobs in the wireless industry by over 80%. By leading the charge on 4G, the United States was able to build a global ecosystem of network providers, device manufacturers, and app developers that shaped the future of 4G and the experience of all other countries implementing it.

First-mover advantage is particularly pronounced in wireless generation transitions because the leader can set the foundational infrastructure and specifications for all future products. For example, China is in the process of laying down fiber optic cables in its own territory and plans to do the same for the countries participating in its Belt and Road initiative, in addition to building 5G networks throughout Europe. This will allow China to selectively grant access to certain 5G companies and products to ride on that infrastructure. China is using this opportunity to promote sub-6 spectrum usage, which will shape the entire 5G product market going forward. If companies want to sell their 5G products into China or into any network with Chinese sponsorship, they will have to build to Chinese preferred specifications and partner with Chinese companies. This increases the risk of product backdoors and vulnerabilities throughout the supply chain.

The shift to 5G will carry the same potential risks and rewards as previous generational transitions, but at an even larger scale. The leader of 5G stands to gain hundreds of billions of dollars in revenue over the next decade, with widespread job creation across the wireless technology sector. 5G has the potential to revolutionize other industries as well, as technologies like autonomous vehicles will gain huge benefits from the faster, larger data transfer. 5G will also enhance the Internet of Things (IoT) by increasing the amount and speed of data flowing between multiple devices, and may even replace the fiber-optic backbone relied upon by so many households. The country that owns 5G will own many of these innovations and set the standards for the rest of the world.

For the reasons that follow, that country is currently not likely to be the United States. DIB 5G Study