The Wall Street Journal - 07.09.2019 - 08.09.2019

B6| Saturday/Sunday, September 7 - 8, 2019 ** THE WALL STREET JOURNAL.**

EXCHANGE

not in landing astronauts on the

moon. In telecom, European coun-

tries pioneered cellular networks

in the 1990s. Then American com-

panies rallied to globally dominate

the technology that powers today’s

mobile internet.

American government officials

and telecom-industry leaders say

the U.S. is beating China on 5G cel-

lular sites available to consumers

at the moment. Even if China pulls

ahead on quantity, they say Ameri-

can networks may boast better

quality, providing the higher

speeds and reliability needed for

the most complicated 5G technolo-

gies, such as remote surgery and

virtual reality.

“Let’s be clear: The United

States, not China, is leading the

world in 5G,” FCC Chairman Ajit Pai

said in a statement. “Right now, we

have commercial 5G deployments in

numerous cities across our country,

while China has none.”

The merger of T-Mobile US Inc.

and Sprint Corp., approved by

federal regulators but awaiting

the outcome of a lawsuit by state

governments, should help speed

the U.S. build-out, FCC leaders

say. Those two carriers, along

with bigger rivals AT&T Inc. and

Verizon Communications Inc.,

have all launched 5G commercial

service in several cities, and all

the carriers plan coverage across

the nation by the end of 2020,

though, analysts say, on less in-

frastructure and largely on slower

airwaves than in China.

U.S. wireless providers are ex-

pected to outspend their Chinese

counterparts on 5G capital ex-

penses, $284 billion to $179.8 bil-

lion, from 2018 to 2025, according

to data from GSMAi, the research

arm of a global wireless trade

group. But because it’s so much

cheaper to build 5G in China, that

country is projected to have five to

10 times as many major cellular

sites over the next five years, said

Stefan Pongratz, an analyst at tele-

com research-firm Dell’Oro Group.

These cellular sites, or base sta-

tions, contain antennas and other

hardware and form the backbone

of modern communications net-

works. Base stations typically sit

atop stand-alone wireless towers

along highways, or on poles on

rooftops. These base stations work

similarly to Wi-Fi routers, con-

nected by cables to the internet

and wirelessly transmitting signals

to a person’s cellphone.

China is on pace to have at least

150,000 5G wide-area base stations

available for anyone to use, by the

end of the year, more than any

other country, said Bernstein’s Mr.

Lane. Bernstein estimates South Ko-

video-broadcasting satellite oper-

ators, among other organizations,

hold much of these coveted mid-

dle frequencies in the U.S. A Pen-

tagon advisory board in April sug-

gested that the military share this

spectrum, while satellite opera-

tors propose selling some of

theirs to wireless carriers for bil-

lions of dollars.

Only Sprint holds a significant

chunk of these airwaves in the U.S.

Mr. Carr, the FCC commissioner,

said his agency is working with

the Pentagon and satellite opera-

tors to free up this spectrum, and

that U.S. wireless carriers could

eventually have more of these fre-

quencies than Chinese ones.

To carry the 5G signals, China is

reusing existing 4G towers, requir-

ing carriers to share towers and

repurposing lampposts and other

street fixtures.

The FCC last year set up strict

“shot clock” deadlines to encour-

age local governments and utilities

to share facilities with wireless

carriers, but some telecom execu-

tives say the rules haven’t helped

much. “There’s an unwillingness to

share by the utilities,” said Ken

Schmidt, head of Steel in the Air, a

wireless-infrastructure valuation

firm. “Without the sharing, it’s go-

ing to significantly limit the ex-

pansion of 5G outside dense urban

areas for the next five years.” Mr.

Schmidt said carriers are finding it

faster just to build new towers.

Chinese carriers will also build

new towers, which shouldn’t take

long once they identify the ideal

land plots. “If it’s public use, we will

just build there,” said Ouyang Xin-

tian, a China Mobile senior techni-

cian, in an interview in Tongguan’s

council building, next to one of the

elaborate multitiered wooden tow-

ers that dot the region.

China Tower, the state-owned en-

terprise in charge of building cellu-

lar towers for the three Chinese

wireless carriers, says it mostly uses

state-owned land for ground sites.

In the U.S., about 95% of the

grounds and rooftops suitable for

cellular towers are privately

owned, Mr. Schmidt said, with the

average rent for a ground lease

around $1,300 a month. The time-

line from finding a location to hav-

ing a working tower typically takes

between one and six months, but

in rare cases can stretch to two

years, he said. The biggest delay is

obtaining zoning permits from mu-

nicipal governments, despite FCC

efforts to speed up the process.

A typical steel cellular tower

costs $80,000 in the U.S. Because

China’s telecom regulator man-

dates its three carriers to share

towers, it is common to see three

sets of antennas stacked on top of

each other. They also cut equip-

ment and energy costs by sharing

power converters, the fiber-optic

cables that provide connectivity

and other equipment on or

around the tower.

American wireless carriers also

share. About 60 to 70% of U.S.

towers have more than one tenant,

Mr. Schmidt said, with an average

of 1.5 tenants per tower. But he

said carriers often don’t want to

share the fiber-optic cable, which

forces rivals to go through the ex-

pensive process of digging new

lines for wires.

And then there’s the cost of the

telecom equipment itself, which in-

cludes the radios hanging on tow-

ers that wirelessly communicate

with phones, as well as the giant

routers and switches in climate-

controlled rooms that make sure

data gets to the right place. Tele-

com carriers spend $80 billion a

year on it, and Huawei is the

world’s biggest maker of the stuff

by far. Its hardware is often more

advanced and cheaper—by 20% or

more—than equipment from West-

ern rivals, say European wireless-

carrier executives.

Washington has effectively

banned Huawei from major U.S.

networks over concerns that the

company can’t refuse orders from

Beijing to spy or conduct cyberat-

tacks. Huawei denies it does the

bidding of the Chinese government.

Cost savings and reduced red

tape mean that wireless networks

can affordably serve Tongguan vil-

lage and its surrounding province,

Guizhou, an infamously poor,

mountainous region in the south

akin to the West Virginia of China.

Chinese officials believe that pro-

viding wireless service promotes

better connectivity and economic

opportunity, helping to alleviate

poverty—a key goal of Chinese

President Xi Jinping.

4G was available across 97.3% of

Guizhou in the first half of 2019,

according to Ookla, a Seattle inter-

net-speed research firm. West Vir-

ginia had 85.3%.

In Tongguan, 4G has already im-

proved life; many elderly residents

spend evenings video chatting

with their children working in cit-

ies. 4G service helped persuade

Wu Yinglei to quit his job brewing

alcohol in the provincial capital in

2013 to return to Tongguan to

open a business selling vegetables

and a tangy homemade sauce of

tomatoes and chili peppers. He

uses his smartphone to sell the

wares via an online store on

China’s ubiquitous WeChat app.

“4G already makes our life bet-

ter. In the past, we were isolated.

Now our products and sauce are in

high demand,” said Mr. Wu, now

35 years old, adding that he looks

forward to 5G “so we can connect

with the world.”

—Xiao Xiao

contributed to this article.

Tongguan, which lacks modern
plumbing, could get the superfast
networks by 2021.
“We look forward to 5G,” said
Wu Shengmin, Tongguan’s baby-
faced village chief. His locale
boasts superb service on current
4G systems that would be the envy
in much of the U.S., courtesy of a
nearby cellular tower nestled in a
tree-covered peak.
As it did in constructing its
high-speed rail network and Olym-
pic Games infrastructure, the Chi-
nese government has flexed its au-
thoritarian, top-down power to
clear red tape for a 5G project that
it deems a national priority. It has
directed regulators, provincial and
local governments and its three
major state-owned wireless carri-
ers to work together.
In the U.S., where residents are
prone to complain loudly about
new cellphone towers going up next
door, Washington’s strategy is far
from unified. The White House
hasn’t taken an important step to
clear the military from valuable 5G
airwaves, while measures from the
Federal Communications Commis-
sion meant to fast-track 5G have
actually created infighting among
Washington, municipal govern-
ments and private wireless carriers,
which are now suing one another.
American officials and wireless-
industry leaders say they are
clearing roadblocks and that the
U.S. will maintain its lead in 5G,
citing projections showing that a
greater proportion of Americans
will use the technology compared
with the Chinese in a few years.
“Beijing can snap its fingers and
put up untold cellular towers over-
night, but in the long run, I have
more faith in the U.S. system,”
said FCC Commissioner Brendan
Carr, the organization’s point per-
son on wireless infrastructure.
“Beijing is known for wasteful,
debt-fueled spending on massive
infrastructure projects. You don’t
have to look further than some of
the ghost cities across China.”
In June, the Chinese govern-
ment granted 5G licenses to wire-
less carriers months earlier than
anticipated. Days later, China Mo-
bile Ltd. awarded its first major
contracts for 5G equipment, with
Chinese cellular-equipment giant
Huawei Technologies Co. winning
the most deals. The country’s two
smaller state-owned carriers said
last month they were discussing
jointly building and sharing a 5G
system, a partnership that would
save costs and speed construction.
China’s first 5G networks will go
live within weeks.
“By the end of this year, it’s
clear that China will have more 5G
than any other place on the planet,
and by the end of 2020, they’ll
have 100 million 5G users,” said
Chris Lane, a Bernstein analyst
and former strategy director for
Vodafone Group PLC, the world’s
No. 2 wireless carrier by subscrib-
ers behind China Mobile. “That’s
far more than any other country.”
Just as America’s trailblazing 4G
networks helped Uber Technologies
Inc. and Instagram reach global
heights, 5G could turbocharge some
Chinese companies. It might also
help China’s efforts to stem a scien-
tific brain drain that has led some
of its brightest students to study
abroad and then stay there.
“If you’re a scientist, where do
you want to do it?” said retired
Gen. Robert Spalding, who was es-
sentially forced out of the White
House’s National Security Council
last year after proposing that the
federal government play a bigger
role in managing America’s 5G
build-out. “You want to do it
where they’re doing the research
and have the money.”
Being first to a new technology
isn’t always everything. The Soviet
Union beat the U.S. to space but

Continued from page B1

In the Race

To 5G, China

Sprints Ahead

*Includes Washington, D.C. †Percentage of time 4G was available to people

Note: Data from first half of 2019

Source: Speedtest by Ookla

TheNeedforSpeed

China’s4GnetworksarenearlyasgoodasU.S.ones,anditsearly5Gsystems

willprobablyeclipseAmerica’sinavailabilityand,innonurbanareas,speed.

FASTER

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20Mbps 25 30 35 40 45

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Mobilenetwork,bylocation

Average

A young man checks his smartphone on Tongguan’s main road.

rea will place second with 75,000,
while the U.S. will have 10,000 such
sites by the year’s end.
In the U.S., wireless carriers
spend billions in Washington-run
auctions for radio frequencies, or
spectrum, for 5G. Then they spend
billions more to lease real estate
for cellular towers. Then they
spend billions on top of that to
build the actual towers and put
hardware on them.
Beijing gives its carriers the
spectrum and real estate—the gov-
ernment decides land-use rights in
China—at a low price. And it is
employing strategies that make ef-
ficient use of both.
For the most part, Washington
has set aside two chunks of spec-
trum for 5G. One lets a cellular
tower beam a signal over miles,
but at speeds not much faster than
4G. The other chunk, which U.S.
wireless carriers are focusing on,
lets a tower zip data
at superfast rates, but
over only a few hun-
dred feet.
China’s telecom
regulator focuses on a
third chunk, what
telecom executives
and experts call the
Goldilocks of spec-
trum: airwaves that
blend fast speeds with
transmission dis-
tances of about half a
mile. One cellular
tower in China can
cover the same area
as 100 high-speed
American ones.
“Spectrum is very
important in deter-
mining the costs of
5G,” said Huawei
global vice president
Daisy Zhu. “The U.S.
has a problem with
spectrum.”
Tongguan’s current service on 4G allows residents to video chat on their phones. The military and

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