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Who Is Ahead In The GDP Race – USA Or China?

NewsGram Desk

Everyone talks of China overtaking the USA in GDP and 5G. We now live in a globalized and digital world where productivity and technologies decide GDP growth. I have extensively written on both subjects, and find the subjects of immense interest to India. What is so special about 5G? Is it just communication technology?

We must remember that these technologies (IR3.0 technologies and later) changed the direction of GDP growths from the West to Asia after 1970, particularly China in this globalized, connected world. IR 1.0 and 2.0 technologies had helped most Western nations take over all nations in GDP growth when they increased their GDP 5 to 10 times, and most Asian nations went down 10 times between 1830 to 1970. Everything changed post-1970.

In his 2000 book, "The Coming Collapse of China", Gordon G. Chang predicted the end of China in 5 to 10 years, based on perceived inefficiencies of state industries, failure to build an open democratic society, and non-performing loans of big four state banks. In his 2012 book with the same title, he regretted non-collapse by 2011, and predicted this would happen in 2012 due to China's premature entry into WTO in 2001 (Julia Lowell also said so) would lead to a nation of contradictions with the ruling class divided, leading to economic collapse.

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But thanks to the strong leader Xi Jinping, and the interminable term is given to him by Politburo, China grew fast, because the international community was tolerant towards China, and the USA encouraged China to grow, despite China not following WTO rules. China also committed thefts of technologies from the USA and West and started its own units breaking all WTO rules. And though everyone knew of the events leading to this growth, the American MNCs having immense control over the State, supported this growth as it profited them (not the nation through the carefully designed and almost irreversible supply chain structured by the Chinese industry). China prospered earlier because Deng the President till 1987, and later very influential till the mid-90s, was very progressive, and despite contradictions, enforced market-based rules. Tiananmen Square massacre and the USA's indirect support also helped Chinese growth. (Despite visible opposition, he wrote a letter of support).

According to the third book by Chang published in 2020 "The Great US-China Tech War", he and other authors said that today both countries are engaged in tech. war and the winner will decide who dominates 21st century. Beijing was not even a contender a decade back. America is now already behind in critical areas. The new technologies now operate on multiple national and international regulations. They also have to simultaneously operate on telecom, broadcasting, competition, security, privacy, AI and investment, etc. regulations, making the operation difficult for small and emerging companies.

Today, the US and China are engaged in a cold war, similar to the US-Russian cold war, which was won by the USA in the 1980-90s, with the disintegration of Russia without a bullet being fired. And all Presidents from Nixon to Obama supported Chinese growth because it helped them destroy the cold-war rival Russia. China being a much bigger intriguer and a deceptive nation grew enormously with the help of seven Presidents after Nixon, and now challenges US. China earlier grew with the help of stolen technologies also. It is no longer so and has invested hugely in R&D, and commercial use of new technologies – "David G. Goldman".

US, India and some other countries flourished when they started operating on far better and fully digital 2G to 4G standards/technology and regulation (converged network and regulation). But there was a problem in some countries like India, where we could not migrate to a converged network due to the opposition of incumbent telecom operators, and tried to inefficiently operate on Unified Access License in 2004, and later moving to the case to case regulations for 4G networks.

5G is the new global wireless standard after 1G to 4G networks, much faster and having lower latency, packing density etc. 5G enables a new kind of network that is designed to connect virtually everyone and everything together including machines, objects, and devices, both static and moving, and like everything in new technologies evolving and changing fast. 4G Broadband earlier delivered deep web functionality to our latest technology smartphones. 5G is still evolving and changing to more efficient solutions.

The United States and other liberal democracies are falling behind China in the global 5G race. "I estimate that China is about 10 times ahead of us in the 5G space. This is a national emergency. The United States needs to get the necessary bandwidth and funding to the telcos to get that built out, we may have already lost that one, that's how dire the situation is," Schmidt told CNN recently. "If these technologies are built in China, for example, they are not necessarily going to follow our privacy rules or our ethics We have to be careful to win this battle," Schmidt said, pointing to the Chinese government's plan to lead the global market for AI by 2030.

5G is the new global wireless standard after 1G to 4G networks, much faster and having lower latency, packing density etc. Pixabay

China's 5G networks are among the most advanced in the world. According to CCS Insights, China will account for more than half of all 5G users by 2022. China is also expected to dominate through 2025, at which time it might represent 40 percent of global 5G connections, according to the GSMA.

Mainland China is already the world's largest smartphone market, and it also boasts the largest 4G market, with 843.7 million 4G subscribers. Based on a 5G study published by the China Academy of Information and Communications Technology, the research arm of the Ministry of Industry and Information Technology (MIIT), China's aggressive investments in 5G infrastructure will be key to the country's status as the world's largest 5G market soon.

Another strength of Chinese networks is their international cooperation. They had even collaborated with fast-growing Indian networks/regulation in 2005. China Mobile's cooperation with Ericsson reaches back to late 2015 when the companies began testing 5G radio technology, evolving network architecture toward 5G, the Internet of Things (IoT), and global knowledge- and experience-sharing.

In June 2017, tests on Huawei's 5G radio technology were completed, adopting 5G New Radio (NR), massive multiple-input, multiple-output (MIMO), and other technologies to achieve over 6 Gb/s of single-user downlink throughput and over 18-Gb/s of cell peak rate. Huawei partnered with multiple vendors in the spirit of industry collaboration. The country's 5G market is heading toward a significant financial boom. According to Business Insider, the impact could account for 3.2 percent of China's entire GDP in 2025, generate 8 million jobs, and add 2.9 trillion yuan in economic value by 2030. As hungry consumers demand more and more 5G services, the country expects a huge increase in the number of new companies, employment opportunities, and equipment sales.

Late, late 5G in India: India's history with wireless services began early. The first experimental wireless telegraphy links were demonstrated as early as 1902. However, widespread use of wireless technology had to wait for 90 more years. The first mobile phone service was launched in 1985 on a non-commercial basis, but it was only in 1995 that commercial/private services were started. The initial subscriber growth was modest, however new policy initiatives, beginning 2004, spurred rapid growth with the subscriber base reaching 560 million in 2009 and well over a billion by 2017 from 10 million in 2002. The growth rate also rose to 3 times the Chinese growth ever in a few intervening years. Early deployment of mobile networks was based on 2G technology, with 3G technology entering service in 2010 and 4G in 2016. All mobile services from 2G to 4G offered services based on increasingly advanced phones, with smartphones arriving about a decade ago.

2G and the early 3G networks primarily offered voice services, but beginning with later 3G and now 4G technologies, the networks provided internet-based services like video, email, and social media. 4G technology has been a major inflection in mobile technology with packet-switched data transmission and high-speed connectivity. The 5G technology's main benefits such as high speed, low latency, high connection density, greater reliability, and high energy savings are all conducive to enable Digital India to use cases such as smart cities, smart manufacturing, smart agriculture, smart healthcare, to name a few.

The Fifth Generation (5G) mobile communication technology is a paradigm shift in the field of communications as it not only enables human-to-human communications but machine-to-machine communications in a digitally connected world with a variety of use cases. There are three key use cases of 5G. One of them, of course, is mobile broadband with very high throughput up to 20 Gbps, also called enhanced Mobile Broadband (eMBB)e. This will provide a substantial increase in broadband throughput over that of 4G. The other two important use cases of 5G are Ultra-high Reliable Low Latency (URLLC), and Massive Machine Type Communications (MMTC). These additional use cases result in a huge diversity of applications, which cannot be supported by previous generations of the mobile technology such as 4G. Significantly enhanced capabilities than those of 4G are possible in 5G. These are in terms of spectral efficiency, which can be as high as 30 bps/Hz, very low latency of less than a couple of milliseconds and very high-speed mobility support of up to 500 km/hour. But the problem today is very limited market for 5G usage but very high prices for spectrum etc. GOI is looking at issues around high prices of spectrum and its limited availability. We faced the similar problems in 2004, but were carefully dealt with in new unified access regulations, license fee and connectivity charges.

5G would unleash massive machine to machine communication by connecting a large number of devices, transforming many sectors such as Transport, Agriculture, Healthcare, Power grid etc. The ultra-low latency and reliable communication (URLLC) is another capability offered by 5G enabling newer applications such as vehicle to vehicle communication, remote robot assisted surgery, mission critical communication, augmented reality (AR), virtual reality (VR) etc. Some of these, for example, vehicle to vehicle communication, also called the V2X communication, may not require high speed data access but needs extremely low latency or response time. Similarly, applications such as robotic surgeries require very low latency coupled with high reliability of communication. Some other applications like AR or VR may not only need high speed data access but low latency communication as well.

In its Report titled 'Making India 5G Ready' in August, 2018 Inter-Ministerial High Level Forum for 5G India anticipated the start of 5G in 2020. Based on the Report, the Government is creating an enabling framework for development of 5G services in India. Progress is slow as many new developments have taken place and the 5G services are expected to be introduced gradually and advance to a full range of services as ecosystem and demand for services grows. Indian IT technologists are far ahead of those in the world. 5G can unleash new economic opportunities and societal benefits giving it the potential for being a transformational force for Indian society. It can help the country leapfrog the traditional barriers to development as well as advance the Digital India Mission. The cumulative economic impact of 5G on India can reach one trillion USD by 2035. But the progress in development in new services/usages is slow in India, and does not match with the high anticipated fee.

There are apprehensions that India is set to miss the 5G bus due to lack of preparedness, spectrum issues, inadequate use-case development, uncertainty around sale of radio waves for 5G, etc. Inadequate availability of spectrum, high spectrum prices, poor development of use cases, low status of fiberization, non-uniform RoW issues, deficient backhaul capacity, etc. are some of the factors coming in the way of rolling out of 5G services in India, missing the target dates in the Report.

Globally 118 operators in 59 countries have deployed 5G network, though only China and Korea has progressed to significant commercial operation. Currently, the 5G network covers around 7 per cent of the world population. It is expected that 20 per cent of the world population will be covered by the year 2025. Major countries where 5G technology have been launched are USA, Canada, UK and European Union, Asia pacific countries like China, Japan, South Korea, Thailand, Australia, New Zealand and Philippine etc. In Middle East, UAE, Oman, Saudi Arabia, Qatar, Kuwait, Bahrain have also launched 5G. In Africa, 5G has been launched in South Africa. Mostly, 5G has been launched partially in these countries. Countries in Asia Pacific like South Korea, Japan and China have witnessed sizeable growth in 5G developments and possibly they are ahead of the curve.

China has already developed more than 5 lakh 5G base stations covering around 7-8 per cent of their population. Regarding status of deployment of 5G in India, 5G High Level Forum has given its report titled Making India 5G Ready to the Government in August, 2018. 5G Hackathon had been organized and the Department have shortlisted 100 use cases for further development. 30 out of 100 use cases will be demonstrated along with TSPs to learn 5G use cases and roll out challenges. Even though the report of the 5G HLF has been released by the Department of Telecommunications in August, 2018 minimal implementation instructions have been issued so far. Spectrum issues which are at the heart of 5G are yet to be resolved. The TSPs, have submitted that spectrum bands for 5G are yet to be identified and made available to them. The current reserve price of spectrum is one of the highest in the world, which needs to be rationalized taking into account per capita income, extremely low usage, and reserve price benchmarks of other countries, 5G trial applications have been submitted by the TSPs in the month of January, 2020, however, till date the guidelines for trials have not been made clear and there is no set date for commencement of these trials. In the initial years, the core will be 4G and the radio access network will be 5G. First it will not be rolled out pan India, but in selected areas where the demand would justify the Capex.

Sufficient preparatory work has not been undertaken for launching of 5G services in India. As such, India has not moved beyond the modest beginning stage as compared to other countries in the world. Important point to ponder about India is; while 2G was deployed globally in 1991, it was deployed in India only in 1995; 3G was deployed globally in 1998 but deployed in India ten years later, i.e. in 2008. Similarly, 4G services were launched in India 7 years after their global launching in 2008. This reflects poorly on our planning and execution. Now when many countries are swiftly moving towards 5G technology, India is likely to witness its deployment only by early 2022, that too partially. So it is very likely that after missing the 2G, 3G and 4G bus, India is going to miss on 5G opportunities, unless time-bound action is taken in core areas where Governmental intervention is required. It is disappointing that the Government have hardly learnt from the past delays as the vision for 5G which was reflected in the constitution of the HLF and Expert Committees has not been transformed into action on the ground is not reflected in the policies formulated by the Government. The Government are yet to take action on many of the recommendations of TRAI/ITU and High Powered Paulraj committee, on issues which have direct bearing on 5G deployment.

International Telecommunication Union (ITU) has identified two broad spectrum ranges for 5G, the frequency range-I and frequency range-II. Frequency range-I extends from 410 MHz to 7125 MHz and multiple frequency bands have been identified for 5G in this large range. Frequency range-II is the millimeter wave band lying between 24.25 GHz and 52.6 GHz. Around 40 countries in the world have completed allocation of 5G spectrum. So far as allocation of spectrum for 5G in India is concerned, TRAI on 01.08.2018 had given their recommendation for the auction of spectrum, in the 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300-3400 MHz and 3400-3600 MHz bands for providing mobile services. Even after the lapse of more than 2 years since TRAI gave their recommendations for auctioning of spectrum, the auction of 3300 MHz to 3600 MHz in the prime band for 5G is yet to be done by the Department. Main problem is the reserve price, which is being looked at again.

5G ecosystem is currently available in three bands, lower band, Mid Band 3300 MHz to 3600 MHz and millimeter wave band (26 GHz and 28 GHz) for 5G deployment. Globally seven operators have deployed 5G in lower band, 82 operators have deployed in mid band and more than 8 operators have deployed in mmWave band. However, India at present does not have sufficient spectrum earmarked for 5G in any of these bands.

Department of Space and Defence are seeking spectrum in the bands identified for 5G. To make India 5G ready at the earliest, the Government need to allocate at least 100 MHz per operator in 3.5 GHz, at least 400 MHz per operator in mmWave (26,28,37 GHz) and at least 2×10 MHz per operator in each of these bands in Sub-GHz (600 MHz & 700 MHz). This is without taking into consideration the requirement of the operators in E&V band. In 3.5 GHz, which is basically the mainstream spectrum for 5G, almost every operator across the globe has 100 MHz. However, in case of India out of 300 MHz, 25 MHz are required for satellite uses. About 100 MHz between 3.3 and 3.4 GHz has been demanded by Defense. If this is deducted, only 175 MHz is available. DOT is deliberating with Department of Space (DoS) and the Ministry of Defense (MoD) for making sufficient spectrum available for 5G IMT services. The Department have stated that they have received very positive response and expressed the hope that the issue will be resolved. With regard to mmWave spectrum, the same is yet to be earmarked in India. The average 4G spectrum per operator in India is around one-fourth of the global average.

We have four times more people and four times less spectrum which means that spectrum available to one person is 1/16th of the global average. Availability of 175 MHz only in 3300 MHz to 3600 MHz band will mean that approximately 50 MHz or so spectrum per operator could be allocated, which is far below the global average.

TRAI had recommended Rs.492 crore per MHz as reserved price for spectrum in 3300 MHz to 3600 MHz for 5G which is far higher than the auctioned spectrum price in other countries. Comparison of unit pricing of 5G spectrum with other countries indicates that it is 07 times costlier than UK, 14 times costlier than Australia, 35 times costlier than Spain and 70 times costlier than Austria. Price recommended by TRAI is exorbitantly high and ranges from 3-70 times of the market determined price of the spectrum in other countries in absolute terms and is 16 times of the price in relative terms. They are of the view that there is a need to strike a balance between the Government's expectation to generate revenue from the auction and growth of the sector and the overarching impact of 5G across the sectors.

Department of Telecommunications had approved financial grant for multi-institute collaborative project to set up Indigenous 5G Test Bed for building end-to-end 5G Test Bed in India in March, 2018 with total cost of Rs 224.01 crore. The Test Bed was expected to be ready by October, 2020. However, due to the Covid-19 pandemic, the work of hardware design, fabrication and testing was adversely affected. The test bed is likely to be set up by October, 2021. The indigenous test bed is completely home-grown and it is first of its kind, wherein eight leading academic and research institutes have come together to build the test bed with Government support. The eight collaborative institutions are IIT (Indian Institute of Technology) Madras, IIT Delhi, IIT Hyderabad, IIT Bombay, IIT Kanpur, IISc Bangalore, Society for Applied Microwave Electronics Engineering & Research (SAMEER) and Centre of Excellence in Wireless Technology (CEWiT). Indiaes effort is unique with special focus on setting up a Test Bed that will be utilized by academic, industry, telecom operators and startups to develop solutions and use cases which can be India specific. The Test Bed is going to raise India's visibility in the global forums and standardization bodies. 5G Test Bed project is focused on developing IPRs in the country in 5G technology. Some of the IPRs generated by this project can also be utilized for product development for the Defence sector of the country. It is expected that technology spin-offs from this Test Bed will enable Indian industry and startups to enter the Indian and global markets for 5G telecom equipment, thus addressing a critical gap in our economic and security prospects.

China has been working on use case labs for last two years and claim to have more than 100 use cases for 5G which have been built through initiatives from Government, academia, operators and industry verticals. On the contrary, India does not have any applications or Use Cases which are ready to promote business case and capex investment by operators. Coordinated Government actions are required for enabling digital transformation across sectors. DoT is working with different Ministries/Departments for setting up of India specific Use Case in education, healthcare, agriculture, public safety, fintech, etc. So far, Institute of Development and Research in Banking Technology (IDRT), an institute under RBI, in collaboration of Department of Financial Services, has come forward for setting up of 5G use case lab in Banking and Financial Services and Insurance (BFSI). The Department are also presently working with Food Safety and Standard Authority of India for setting up of use case lab in food safety certification and Ministry of Health, AIIMS, Ministry of Housing and Urban Development for setting up of use cases in respective domains. To develop more use cases, the Department have organized 5G Hackathon and have shortlisted 100 use cases for further development. Out of these, 30 Use Cases will be demonstrated along with TSPs to learn 5G use cases and roll out challenges.

The government have allowed all applications for 5G trials, in limited areas and for a limited time, to test potential 5G India specific use cases based on enhanced Mobile Broadband (eMBB), Massive Machine Type Communications (MMTC), and Ultra Reliable Low Latency Communications (URLLC) in isolation on noncommercial basis subject to strict safeguards. The Department has received 16 applications for 5G trials, using imported as well as indigenous technologies. 5G trials were likely to be started in 2-3 months. DoT has issued guidelines for the assignment of spectrum for trials across all available spectrum bands on a nominal fee of Rs 5,000. Guidelines for experimental spectrum have also been issued. An Inter-Ministerial Committee has been constituted under Member (Technology) in the Department of Telecommunications for monitoring and evaluation of 5G technology trials.

With regard to Indian entities/TSPs that have been issued experimental license, the Department have informed that so far one experimental (radiating) license for 5G Test Bed at IIT, Delhi has been issued on 20.04.2018 with 3 months validity and 5G field trials have not yet been permitted.

Enhanced Mobile Broadband (EMBB), Industry 4.0 is the main driver for 5G. Industry 4.0. is rooted in the concept of advanced manufacturing, also called Smart Manufacturing. Industry 4.0 based solutions enable better interoperability, more flexible industrial processes, and autonomous and intelligent manufacturing. Many countries in the world like the USA, Germany, UK, and Australia have allocated 5G spectrum for industrial development. For example, in Germany, Mercedes is setting up a factory entirely based on 5G, termed as Factory 56. Many countries are setting aside spectrum and laying out policies for industrial growth using 5G. Not only industry, but captive users of mobile wireless communications are also industries, police, paramilitary, fire, forest and mining, municipal corporations and public utilities as well as critical infrastructure services like Railways, Metros, Airports, Sea Ports, Refineries, Highways, etc.

Industry 4.0 will be one of the main drivers of 5G in the days to come. However, the present licensing policy is not conducive to the growth of Industry 4.0. The manufacturing industry's choice and decision to come to India is heavily dependent on how quickly the Government of India can go ahead and allocate spectrum for the 5G-driven industry. The issues relating to licensing and allocation of spectrum for Industry 4.0 need to be properly streamlined to attract the manufacturing industry to set up their base here and also to reap the full benefits of 5G in the industry.

Fear of 5G deployments in China: Many reports overstate the extent of Chinese 5G deployment for several reasons. Chinese government's push to "accelerate user migration to 5G through measures such as package upgrade offer, and credit purchases, etc." Service providers then start encouraging customers to upgrade to 5G subscriptions regardless of their actual need, use, or device. Some companies reduce 5G subscription prices so much they are even cheaper than staying on a 4G plan. "With all of China's big telcos slashing 5G package prices in the past few months, it could well be that customers are being drawn in more by attractive tariffs than by a desire to get their hands on the latest hardware and its related capabilities." Chinese telecom providers listed 9 million 5G users in October 2019, a month prior to its actual activation.

ITIF report suggests that by counting anyone on a 5G plan-even if they only have a 4G device connecting to 4G infrastructure-as a 5G subscriber, and measuring individual base stations instead of cell sites, China's 5G stats paint a misleading picture. Consider that China Telecom and China Mobile (the two largest operators in China) reported 150 million "5G package customers" as of September 2020. But according to China's Academy for Information and Communications Technology, only 94 million 5G devices had been shipped for all of China during the same time frame, indicating a sizable gap between the number of "subscribers" and actual 5G users.

The discrepancy may be due largely to terminology: "5G package customers" is a blanket term often used by Chinese carriers to refer to anyone on a 5G subscription, regardless of whether they actually have a 5G device or access to a 5G network. China Mobile acknowledges that they count anyone "who has subscribed to 5G tariff plans" as a 5G customer. The number of 5G-capable devices alone is impressive, and the competitive threat from China justifies a thoughtful policy response, but no one should be worked into a panic by goosed stats.

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Deployment figures are often further mischaracterized because of the way Chinese operators sometimes count each spectrum band as a separate "logical" base station instead of actual pieces of equipment. Just like how a Wi-Fi router can work on different spectrum (generally 2.4 GHz and 5 GHz), a mobile base station can operate on multiple spectrum bands. American carriers would generally count a multi-spectrum base station as at most one piece of equipment. But some Chinese reporting apparently treats each individual spectrum band a base station supports as a different "logical site." A representative from Huawei explained that "a China Unicom base station supports GSM 900, GSM 1800, WCDMA 2100 and LTE. Most of the equipment is deployed in the same room at one physical site, but there are four bands, so there are four logical sites." As a result, Chinese numbers could easily be misrepresented as three to four times higher compared with how other operators tend to count equipment.

Slow and steady may win the race. India won the race in 2G growth after 2010 (Comparison with Chinese growth ever.) Whereas the United States is pursuing a gradual, economical deployment of 5G, the problems with China's rushed 5G deployments are already starting to show. One of Huawei's own executives went so far as to call China's 5G "fake, dumb and poor," mostly due to poor integration with the 4G network. Another former official warned in a recent speech that China's 5G push could become a failed investment. While China is no doubt investing substantially in the expansion of its 5G network, including by pressuring its state-owned carriers to invest faster than the market demands, Chinese figures must be properly scrutinized when using them to make US/other country policy decisions.

National Strategy of 5G

5G, will be a key driver of our Nation's prosperity and security in the new age economy towards which we are progressing fast. It will provide consumers, businesses, and governments with remarkably fast network connections that will enable tens of billions of new devices to harness the power of the Internet, transforming the way we live, work, learn, and communicate. A whole government and industry-led approach should be launched for faster rollout with demonstrable use cases. Spectrum cost should be rationalized to remove the artificial cost barrier.

Indigenous and demonstrable use cases are the backbone of 5G because that will create a new economy.

The Indian government has to finalize the list of industries where it needs to achieve indigenous technological innovations, and handhold them for a profitable start. (IANS/JC)

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