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ECONOMY

International battle over 5G infrastructure heating up

  • September 5, 2018
  • , Nikkei , p. 11
  • JMH Translation

The tech industry is gearing up for “5G,” which is expected to be put to practical use in 2020. On Sept. 4, Mitsubishi Electric unveiled a device dedicated to drastically increasing communication speed. NEC, Fujitsu and several other makers are also looking for new business opportunities, but China’s Huawei, the world’s leading provider of 5G base stations, and other Chinese firms maintain a solid presence in the 5G market. Meanwhile, new players, who use conventional servers to lower costs, are also broadening their presence.  

 

The technology that Mitsubishi unveiled on Sept. 4 is an optical communication device, which is designed to transmit large volumes of data between 5G base stations. Using an optical signal instead of the conventional electric signal makes it possible to cope with high-speed data transfers in large volumes and realizes a 40% cut in electricity consumption.

 

5G is presenting a much-awaited big business opportunity for many communication equipment manufacturers. Fuji Chimera Research Institute predicts that the shift to 5G will generate 4.188 trillion yen in the sale of wireless base stations and 26.14 trillion yen in the sale of devices and other equipment in 2023.

 

The market for base stations is projected to become a key battleground, where Huawei, Ericsson Sweden and Nokia from Finland seize an 80% global share. In particular, Chinese players are broadening their footprint. According to the U.K.-based IHS Markit, Huawei expanded its share in the base station market and grabbed the crown position in 2017. ZTE, another Chinese firm, came to fourth place. They offer services at a much lower cost than rivals and increased their market shares both in developing and industrialized countries.

 

But the likelihood is growing that Chinese players may hit the skids due to trade tensions and “cybersecurity” concerns. At the end of August, Australia decided to ban Huawei and ZTE from entering its 5G market from the fear that classified information may be leaked out via these Chinese firms.

 

Japanese players may profit from this, but technological innovation is giving rise to new rivals.

 

In early August, there was a rumor that Rakuten may have selected an emerging player as a provider of base stations. Rakuten noted that it won’t disclose the name of the firm that it selected, but people close to the industry conjectured that Rakuten may have partnered with Altiostar Networks, an American firm, in addition to Nokia.

 

Altiostar, which was founded in 2011, is not well-known in Japan, but it is steadily broadening its reach as a maker capable of changing the base station architecture.

 

Besides Altiostar, U.S.-based Mavenir Systems and ASOCS from Israel are emerging as promising players in this field. Altiostar is rolling out a pilot project to operate base stations using conventional servers in partnership with SK telecom, a South Korean mobile service operator.

 

Even Huawei might be eclipsed by rising new players. Japanese firms, which are exposed to tougher competition, face the challenge of overhauling their strategies by introducing innovative ideas such as combining self-drive and Internet of Things technology. (Abridged)

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