The US 5G Economy Today
Business Climate. As a global center of digital technology, the US is a magnet for telecommunications innovation. According to Startup Genome’s 2022 report, the US is home to 12 of the top 30 startup ecosystems in the world; it also hosts four of the top six cities for startups. That makes the US the highest-ranked country for both number of startups and quality of startups, in terms of the factors that make them likely to succeed.
Awareness of the value of 5G is growing in the digital sphere, with increased investment and noteworthy publicly funded innovation projects. The US Department of Defense is prototyping a 5G-to-Next-G smart warehouse system, the first in a series of DoD 5G investments that will total more than $500 million. Idaho National Laboratory has opened its 5G-based Wireless Test Range for exploring security risks and military capabilities. The National Science Foundation supports the Platforms for Advanced Wireless Research program, providing test platforms for a wide array of use cases and enabling research into cutting-edge technology to solve business challenges. All of this and more will contribute to rising demand.
Private company R&D will do the same. Many major wireless and tech businesses—including Verizon, AT&T, and T-Mobile—as well as startups such as the AR company Taqtile are investing in 5G research. For its part, Warner Media has incorporated 5G research into its work on virtual reality storytelling.
The Future of the 5G Economy
As the US continues to build out its 5G economy, it must maintain progress along all five key success factors: spectrum availability, networks, innovative ecosystems, business climate, and talent. Bringing the technology to scale and managing the barriers and risks that hold back full deployment will take time.
Planners must also manage the risks inherent in any new technology. For example:
- Unpredictability in the spectrum pipeline represents a risk. Areas of concern include unpredictability in the future supply of full power, the licensed spectrum for 5G (particularly mid-band spectrum), and the risk of falling behind global peers in enabling future 5G use cases.
- Orchestrating the many ecosystem players for advanced 5G use cases is an ongoing challenge. Planners must explore ways to overcome orchestration challenges among players in the innovative ecosystem in light of the complexity of B2B integration owing to the number of players involved and the transformative changes often required within businesses.
- Digital talent will play an increasingly important role in the 5G economy going forward. The US needs to develop the requisite digital talent domestically and continue to upskill its workforce to meet the needs of the 5G economy.
All of these risks are manageable. In this section, as we look at the future of success factors, we’ll also consider ways to manage and mitigate risk.
Spectrum Availability. Congressional authorization for the FCC to conduct spectrum auctions expired in March 2023. In the meantime, policymakers have not developed long-term plans for future auctions or spectrum reallocations.
The primary way for policymakers to fuel the supply side of the 5G ecosystem is by making more licensed full-power spectrum available for mobile use. This will ensure that the US is fully equipped to foster and respond to new 5G use cases. Future applications, whatever form they take, will likely demand more capacity, speed, and reliability from 5G networks.
On the other hand, spectrum shortages may lead to congestion issues for existing mobile services, impeding companies’ ability to scale FWA or other data-intensive applications, and discouraging innovators from taking full advantage of 5G’s potential. Establishing a clear plan for allocating the 5G spectrum is also important to give wireless service providers the certainty they need for long-term capacity and capital expenditure planning.
Today, the US trails a number of other countries—including Brazil, China, France, Germany, Italy, Japan, and the UK—in 5G spectrum availability. This gap will probably grow wider over the coming years if the US government does not hold further spectrum auctions.