When should companies invest in 5G?

In the UK, EE has provided 5G services in several cities already and other telecom companies are also planning to release their 5G services later this year or early next year; furthermore, BBC used the 5G to live stream Trump's state visit to the UK. Meanwhile, in China, the state controlled telecom companies are launching 5G services in several major cities. However, some countries seem late to join the 5G party.

At the moment, Huawei is the leader in the 5G sector, and it can reduce the cost of building a 5G network significantly. This is why some of America's allies insist on using Huawei equipment to build their 5G networks. However, even with using Huawei's equipment, it is not cheap to build a 5G network to replace the current 4G network. Then despite the fast speed and other benefits brought by 5G, the companies and countries always have to analyse both the cost and benefit. Is it wise to build the 5G network right now?

For the private telecom companies, it is a difficult choice. Building a 5G network can help them to win the competition against those which are reluctant of providing 5G services; however, the risk is also obvious. First, in many Western countries, their governments are facing pressure from the US, so there is a probability that their governments may ban using Huawei's equipment, then the cost of building a 5G network will increase significantly and the time of finishing building the network is also likely to be delayed. Secondly, at the moment, the application of this technology is at its very early stage, the market knows 5G has a great potential but does not how exactly people can take advantage of this new technology. How long it takes for the market to figure out the most effective application of this technology is another uncertainty. If it takes too long, it means the telecom companies will suffer a long period of losses from providing 5G services. Thirdly, how many customers are willing to upgrade their services once the companies build their 5G network right now. At the moment, if someone wants to get 5G service, he or she does not only need to upgrade their services with their network providers, but also needs to get a smartphone which supports 5G and such smartphone is not cheap. So how many people are willing to pay for 5G services right now means how much cash these providers can get after burning so much cash for building the services.

However, for governments, the story is much more straightforward. Although we are unsure about how we are going to use 5G, it is almost certain that 5G has enormous potential. Governments should focus on the benefit of the entire population in the long run; based on this belief, they should invest in building the 5G network. Helping to build a 5G network can reduce the private sector cost, so it will be faster to provide 5G services for its population and potentially lower the costs for its population. More importantly, the application can only gain development when 5G is there and gets enough users. If the number of 5G users is very insignificant, it is unattractive for the private sector to invest in technologies and products relating to 5G.

Overall, I think that 5G network should be built as early as possible and the government should help the private sector to build the network by subsidies and/or other policies since the private sector may not have sufficient incentives to build a 5G network to cover the entire population.