Round Two of the 5G Battle is Just Beginning. Can America Surge Ahead?

By Jon Pelson and Warren Wilson

The People’s Republic of China (PRC) won round one of the competition to build the world’s fifth-generation (5G) wireless networks — but the 5G race is far from over.

China’s Huawei and ZTE led the commercialization of 5G network hardware with heavy state support. Huawei, though hobbled by U.S. bans, remains the world’s 5G market leader and provides much of the new 5G gear globally, including to U.S. allies. The United States, whose telecommunications manufacturing industry weakened by years of poor management and policy neglect, failed to offer end-to-end alternatives to countries it sought to warn away from PRC firms.

Yet the next round of 5G growth will come in an area that America is capable of dominating: transformative wireless applications. So-called “enterprise 5G” allows small firms and even individuals to launch and customize powerful private networks and services that can foster decentralized, disruptive innovation in areas like autonomy and advanced manufacturing. By 2030, the market for global enterprise 5G is forecast to reach $180 billion. To seize this opportunity, the U.S. Government must strengthen its support for wireless innovation in partnership with the private sector, harnessing the American superpower of distributed innovation.

Why Round Two Can Play to U.S. Strengths

Round two of the 5G competition will be marked by “5G Advanced” technical upgrades that increase network intelligence and efficiency, enabling more robotics, autonomy, and extended reality capabilities. These are precisely the types of improvements needed to boost the efficiency and security of America’s manufacturing base to reduce its dependence on China. Private, enterprise-level networks don’t require the scale of public cellular networks, offering a natural entry point for smaller players and startups. And emerging approaches, like Open Radio Access Networks (Open RAN), could enable users to choose from and install a mix of off-the-shelf hardware and software from different vendors, rather than relying on closed, full-stack offerings from large, end-to-end producers like Nokia, Ericsson, and Huawei. Taken together, these steps will create new market opportunities and allow smaller and non-traditional players — ranging from individual coders and start-ups to giants like Dell, Dish, and Amazon Web Service (AWS) — to enter and forge a diverse, vibrant network tech ecosystem.

Operation Warp Speed for 5G Applications

U.S. policymakers should accelerate the development of 5G network applications to foster first-mover commercial uses in strategic sectors, such as smart manufacturing and logistics. Leading in 5G applications would best position America and its firms to develop foundational security architectures and standards for these networks, rather than relying on the PRC or other countries to build them first. To spur new apps, the government can use purchase guarantees and procurement to incentivize rapid private sector innovation, as it did with Operation Warp Speed for COVID-19 vaccines. Rather than picking winners, the government should allow the market to determine who offers the best solutions for priority use cases, including small firms and new entrants. The following initiatives will help ensure the United States doesn’t miss this opportunity to regain the lead in wireless technology:

• Enterprise 5G Competition: The U.S. Government should fund a large-scale, Operation Warp Speed-style competition to pilot and scale high-priority, commercializable 5G applications, potentially with newly allocated funds from the Public Wireless Supply Chain Innovation Fund. This would help de-risk initial investments by large U.S. firms which might otherwise be hesitant to gamble on novel solutions. Sector-specific competitions can focus on use cases ripe for 5G network innovation partnerships, including manufacturing, logistics, agriculture, and healthcare — all of which are crucial for U.S. competitiveness and prosperity.
• Using Government Procurement to Create a Market: The government can create a market for solutions quickly as it procures military and civil networks. The Department of Defense has committed $600 million to testing enterprise private 5G network applications on its installations, and is already using these networks for logistics use cases. This is a good start. Government should test more in environments ranging from national parks to ports to U.S. Embassies abroad.
• Boost Testbeds: Public-private partnerships like Platforms for Advanced Wireless Research (PAWR) are already conducting cutting-edge research on these topics in several “5G Innovation Zone” testbeds around the country, but their scale is small. These testbeds are instrumental in piloting cross-sector technologies, such as Open RAN architectures and spectrum sharing techniques. Federal funding for these testbeds should be doubled, from $50 million to $100 million, with matching private sector support and a focus on sustainable, private sector-driven development and commercialization of applications.
• Help Target Industries Digitalize: Users need basic levels of digital readiness before they can benefit from dedicated 5G networks. To meet enterprise 5G demands, U.S. public-private partnerships like NIST’s Manufacturing Extension Partnership (MEP) should expand efforts to help manufacturers digitalize their operations.
• Free Up More Spectrum: Even if American innovators can develop valuable use cases, businesses will need access to radio spectrum in which to operate their networks. Releasing spectrum to smaller operators, in addition to the large mobile carriers who currently own most of it, will open new innovation horizons by allowing smaller companies to deploy innovative networks for local customers. In the short-term, the best route for doing this is by expanding the Citizens’ Broadband Radio Service (CBRS), which enables limited, lower-cost use of government-held spectrum. America is the global leader in such use of “unlicensed” spectrum and should capitalize on this advantage. Yet U.S. authorities also must adopt a longer-term strategy for more spectrum licensing and sharing to underpin future wireless growth.
• Align with International Partners on Trusted Networks: U.S. partners like Japan are eagerly embracing — and often leading in — private 5G network technology. Lower-income countries are interested in greater flexibility and decreased costs that Open RAN networks may offer. U.S. policymakers can help by sharing best practices and offering technical assistance. At the same time, U.S. policymakers should work with partner countries to develop security standards for private 5G.

The race to develop 5G applications is just beginning. The PRC is seeking to build on its early 5G lead by applying its technology to high-impact industrial uses. In this round, however, American firms are more likely to have compelling tech solutions to offer foreign partners as alternatives to PRC-origin tech. But the United States will only win “5G 2.0” if it can quickly develop best-in-class applications. America must move fast to recapture the global wireless innovation lead, maximizing advanced networks’ economic potential and ensuring their security in an increasingly digitized world.

Chuin-Wei Yap, State Support Helped Fuel Huawei’s Global Rise, Wall Street Journal (December 25, 2019).

Restoring the Sources of Techno-Economic Advantage, pg 35–36, Special Competitive Studies Project (November 2022).

5G/6G Wireless Networks, U.S. Department of Homeland Security (June 2022).

Becoming 5G Advanced: the 3GPP 2025 Roadmap, 5G Americas (December 2022).

Rick Switzer, The Next Pandemic Could Be Digital, Special Competitive Studies Project (February 2023).

David Adler, Inside Operation Warp Speed: A New Model for Industrial Policy, American Affairs (Summer 2021, Volume V, Number 2).

This competition would be in addition to NTIA’s 5G Challenge, and distinctively focus on enterprise applications rather than network architecture.

Department of Defense Hosts Ribbon-Cutting for 5G Smart Warehouse Network, U.S. Department of Defense (May 2022).

Building a National Delivery System for Data, Special Competitive Studies Project (January 2023).