The Wall Street Journal - 07.09.2019 - 08.09.2019

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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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4GCOVERAGE†

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20Mbps 25 30 35 40 45

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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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