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[5G Future] A global fight for network dominance begins

May 02,2019
Four of the earliest 5G-enabled smartphones, from left to right, are the Samsung Galaxy S10 5G, LG V50 ThinQ, Huawei’s Mate X and Motorola’s 5G Moto z3. Only the Samsung and Motorola are currently available. [SAMSUNG ELECTRONICS, LG ELECTRONICS, JOONGANG ILBO, GOOGLE]
Since Korea’s three mobile carriers kick-started the 5G race on April 3, a slew of other telecommunications firms from around the world have announced plans to launch their own networks.

In the United States, Verizon rolled out its 5G network in Chicago and Minneapolis just an hour after the Korean launch, with AT&T launching its limited service shortly after. Both Swisscom and Ericsson in Switzerland also declared the launch of their 5G networks two weeks after the Korean carriers.

Mobile operators from China and Japan as well as parts of Europe are getting ready to unveil their superfast networks, although there’s no longer the frantic rush for first place that pushed the Korean carriers and Verizon.

Korea’s mobile operators - SK Telecom, KT and LG U+ - started their services with 5G coverage concentrated in the capital area as well as major metropolitan cities including Busan and Daegu. The carriers have continued to gradually expand their coverage over the last month - there are 54,202 base stations as of April 29 - with the aim of reaching nationwide coverage by 2022.

Verizon has similar aims in the United States. On April 25, it announced that an additional 20 cities, including Atlanta, Boston and Charlotte in North Carolina, will get 5G coverage within this year.

China plans to commercialize 5G within this year in major cities like Shanghai and Guangzhou, with a large-scale rollout planned by 2020. Japan is also aiming for 2020, hoping to get its 5G networks off the ground before the 2020 Tokyo Olympics opens in July.

Since 5G is still in the initial phase, industry insiders predict it will take at least two years for the network to become prevalently used.

“If you can offer a [gigabit] speed, there are some customers that are willing to pay a premium for 500 [megabits] to a gig speed, and so forth,” said AT&T CEO Randall Stephenson at the company’s earnings call on April 25. “We’re two to three years away from seeing that play out.”

The continuous delays on the release of 5G smartphones and the unstable network connection suggest 5G still has a long way to go.



5G smartphones

At this point, Samsung’s Galaxy S10 5G and Motorola’s Moto z3 are the only 5G-enabled smartphones, although the Motorola device requires an add-on modem to receive a 5G signal. Plenty of other companies have announced they will bring out their own 5G devices, but many, including LG Electronics, are reporting delays.

LG planned to unveil its 5G-enabled LG V50 ThinQ on April 16, but pushed back the release date to introduce the device in a more “complete” form. The decision followed a slew of complaints from 5G early adopters that raised issues with the Samsung 5G phone. LG has not specified a new release date.

Samsung last week decided to postpone the launch date for its ambitious dual-screen Galaxy Fold after faults were reported in pre-release trials.

Among the 5G smartphone options slated for introduction, Apple is indeed one of the most anticipated brands.

Originally, Apple was expected to be a latecomer to the 5G race due to a delay from Intel, which was to supply 5G chips for the next iPhone model, according to industry insiders.

Instead of waiting, Apple on April 17 reached a settlement with Qualcomm to end a two-year legal battle over patent royalties, and signed a six-year licensing agreement to receive 5G modem chips from Qualcomm.

“The end of the legal battle between Apple and Qualcomm will not only pull up the release date of Apple’s 5G-enabled smartphone, but also speed up the development of the 5G market in general,” said Lee Chang-min, an analyst at KB Securities.

Considering the delays to Intel’s 5G modem chips, industry insiders had anticipated that Apple would not be able to bring out its first 5G model until 2021 as it takes months for a company to introduce the new device even after securing a stable supply of chips.

“But with Qualcomm already having its own 5G modem chip, the Snapdragon 855, Apple could release a 5G model next year,” said Lee.

Apple’s faster-than-expected entry could foster the development of the 5G industry.

“Apple is a dominant player in the premium phone market, unlike Samsung which also offers affordable models. A 5G smartphone is a premium smartphone and will stay that way due to the high equipment costs,” said Lee.

“Considering Apple users have high brand loyalty, it is likely they will wait until a 5G iPhone is released. So the market that would have rapidly developed in 2021 will be pulled to next year.”



Network equipment

Although Samsung is currently the leader in the 5G smartphone market, Huawei is the dominant player in the network equipment market, followed by Ericsson and Nokia.

According to IHS Markit and Eugene Research, Huawei accounted for 31 percent of the telecommunications network market last year, closely followed by Ericsson (27 percent) and Nokia (22 percent). Samsung stood at a distant fifth with 5 percent after ZTE (11 percent).

Bans on Huawei’s 5G equipment over security issues from countries like the United States and Australia could prove to be a major obstacle for the Chinese company, but Britain’s decision to use Huawei equipment has opened the door to the European market.

Last week, British Prime Minister Theresa May signed off on allowing Huawei to help build “non-core” parts of the country’s 5G infrastructure, including antennae.

“The fact that Britain decided to embrace Huawei equipment for its 5G network could leave other countries around the world feeling a little reassured about the security concerns raised against Huawei,” said Park Jong-seon, an analyst at Eugene Research.

“Despite strong disagreement from the United States, the number of countries that utilize Huawei networks will increase in coming years.”

Germany has also indicated that it is open to Huawei equipment.

“The operators all work with Huawei technology in their systems,” said Jochen Homann, the head of Germany’s Federal Network Agency, according to a report from the Guardian. “If Huawei were excluded from the market, this would delay the rollout of the digital networks.”

European countries are likely to use Huawei equipment due to economic reasons, according to Lee.

“Many countries, including in Europe, use Huawei equipment for 4G networks. Since 5G networks are largely built around the existing 4G networks, it will be massively expensive to build entirely new networks.”

Huawei’s dominance won’t hurt Samsung’s goal of reaching a 20 percent market share in the network equipment market by next year, as the two firms aim for different markets.

Huawei’s core markets are in Europe, Africa and China, while Samsung targets the rest of the world. So for Samsung to strengthen its foothold in the industry, the company has to take on Nokia and Ericsson, according to a source from the industry.

“The United States is Samsung’s core market for 5G equipment exports,” said Park. “Samsung will be able to meet its goal for next year just by covering the U.S. market.”

Samsung, along with Nokia and Ericsson, is contracted to provide network equipment for three major mobile operators in the United States: Verizon, AT&T and Sprint.

Recent media reports on Nokia’s slow network speed could strengthen Samsung’s position.

In Korea, KT has already decided to replace some Nokia 5G equipment to that made by Samsung because of the slow network speeds and poor performance.

SK Telecom and KT use 5G network equipment made by Samsung, Nokia and Ericsson while LG U+ also uses Huawei equipment.

“Even though telecoms companies offer the same network speeds, there can be a difference in speed depending on the types of communications equipment,” said a source from the industry.

But the market share for Samsung could slide once China - the biggest telecommunications market - and Europe begin to build 5G networks on a large scale. According to Park, Samsung has a lower chance of expanding into those countries than Huawei or ZTE because of the lower brand value.


BY JIN MIN-JI [jin.minji@joongang.co.kr]


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