Case Study

Racing into the 5G Era:

Generational Technological Change and Firm Strategy
in Mobile Telecommunications

01/2020-6558
This case study was written by Daitian Li, Assistant Professor of Management at the University of
Electronic Science and Technology of China (UESTC), Yangao Xiao, Professor of Management at
UESTC, Tony Tong, Professor of Strategy and Entrepreneurship at the University of Colorado Boulder,
and Guoli Chen, Associate Professor of Strategy at INSEAD. It is intended to be used as a basis for
class discussion rather than to illustrate either effective or ineffective handling of an administrative
situation.
To access INSEAD teaching materials, go to https://publishing.insead.edu/.
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COPIES MAY NOT BE MADE WITHOUT PERMISSION. NO PART OF THIS PUBLICATION MAY BE COPIED, STORED, TRANSMITTED, TRANSLATED,
REPRODUCED OR DISTRIBUTED IN ANY FORM OR MEDIUM WHATSOEVER WITHOUT THE PERMISSION OF THE COPYRIGHT OWNER.

This document is authorized for use only in Prof. Anita K.'s Strategic Management at Indian Institute of Management - Kozhikode from Jul 2024 to Jan 2025.
 “It is not the strongest species that survives, nor the most intelligent. It is the one
that is most adaptable to change.”
A saying often attributed to Darwin 1

The telecom industry has witnessed four generations of technological change, evolving from
the first generation (1G) of mobile communications to the fourth generation (4G). The advent
of 5G will add a new chapter to the G-story, 2 but is different from previous generations because
in addition to much higher speeds it promises much lower latency (response time) and higher
density of mobile connections.3 These will create tremendous business opportunities for
different players both in the telecom industry (e.g., equipment makers, chipset providers) and
in other “enabled” sectors (e.g., automobile, consumer electronics). By 2024, about 45% of the
world population will be covered by 5G. 4 In 2035, the global 5G value chain is forecast to
generate $3.5 trillion in revenue and 22 million jobs, enabling the production of $12.3 trillion of
goods and services. 5 However, while each new generation provides a “window of opportunity” 6
there will inevitably be “winners” and “losers”.

The Evolution of the Mobile Communications Industry

Since the 1970s, mobile communications have experienced five generations of technological
change (see Exhibit 1), each of them improving on previous performance (e.g., data rates) and
adding new features.

1G to 2G

Research on 1G started in 1971 and the 1G network was launched commercially in 1981.
Despite different technological standards (e.g., AMPS, TACS, NMT), they all supported
analogue voice communications – data services were not available. Motorola, the company
that developed the world’s first mobile phone, was market leader in the 1G era.

Research on 2G started in 1982, and the first 2G network was launched commercially in 1992.
There were two standards: GSM, which was widely used in Europe, Asia and other parts of
the world, and CDMA, which was adopted in North America and South Korea. The transition
from 1G saw major technological change: in addition to digital voice services, 2G offered basic
data services like Short Message Service (SMS). Market leadership gradually shifted from
Motorola to Nokia.7

1 This saying is often mistakenly attributed to Darwin. The evolution of a misquotation is just as interesting as the
evolution of technologies. Please refer to the “Darwin Correspondence Project” for more information:
https://www.darwinproject.ac.uk/people/about-darwin/six-things-darwin-never-said/evolution-misquotation
2 “Groundwork for the future”, by The Economist, 2019 https://worldin2019.economist.com/groundworkforthefuture
3 “The 5G revolution”, by The Economist, 2019
https://worldin2019.economist.com/transformbusinessesandtheworld
4 "Half of the world will have 5G coverage in five years", By Julia Horowitz. CNN Business, June 11, 2019
https://www.cnn.com/2019/06/11/tech/5g-networks-ericsson/index.html
5 “5G will lift mobile into a technology that changes the world”, by Qualcomm, 2019
https://www.qualcomm.com/invention/5g/economy
6 Lee, K., & Malerba, F. (2017). Catch-up cycles and changes in industrial leadership: Windows of opportunity and
responses of firms and countries in the evolution of sectoral systems. Research Policy, 46(2), 338–351.
7 Landini, F., Lee, K., & Malerba, F. (2017). A history-friendly model of the successive changes in industrial leadership
and the catch-up by latecomers. Research Policy, 46(2), 431–446.

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 2G to 3G

Mobile communications evolved from basic data services to mobile internet services. Research
on 3G started in 1991 and the first 3G network was commercially launched in 2001. Mobile
phones evolved from a simple device for phone calls to computer-like devices that could handle
sophisticated tasks. There were three 3G standards: the Europe-developed WCDMA, the US-
developed CDMA2000, and the China-developed TD-SCDMA. Mobile phones evolved from
feature phones to smartphones. Samsung and Apple emerged as the leading makers. In the
network equipment market, Chinese firms Huawei and ZTE was rapidly catching up.

3G to 4G

The transition from 3G to 4G was smoother. Maximum download speed increased from 7.2
Mpbs to 300 Mpbs; maximum upload speed from 2 Mbps to 150 Mbps. 8 Higher network speeds
could support data-demanding applications such as high-definition video streaming and online
gaming. Mobile phones had larger screens (see Exhibit 1). The new generation saw
incremental improvements along the existing technological trajectory – applications running on
4G networks would still work on 3G (but with a less satisfactory user experience). There were
two main international standards, LTE and Wi-MAX. Huawei surpassed Ericsson, becoming
the market leader in the network equipment market and the third largest player in the mobile
phone market after Samsung and Apple.

4G to 5G

With 5G we can expect a unified global standard: IMT-2020. The transition involves another
major technological advance, as 5G has distinct capabilities (see below) which may take us to
a connected world and will involve a series of new technologies and business opportunities for
a wide range of products.

5G Technologies, Capabilities, Products

Although 5G is essentially a technical standard for the radio access network, the network
architecture includes the radio access network, optical access network, metro network, and
core network (see Exhibit 2). 5G involves a range of core technologies including Massive
MIMO, beamforming, new radio frequencies, channel coding, multiple access technologies,
network slicing, and D2D. These enable three 5G distinct capabilities: enhanced Mobile
Broadband (eMBB), ultra-Reliable Low Latency Connection (uRLLC), and massive Machine
Type Communication (mMTC), with major implications for both telecom equipment and
complementary products.

5G Core Technologies

Core technology 1: Massive MIMO

MIMO – Multiple-Input Multiple-Output – uses multiple antennas to transmit and receive signals
simultaneously on the same radio channel, which enhances the spectrum efficiency of the
network.9 Although the concept existed in the 4G era, it often consisted of only two to four
antennas, whereas 5G adopts an upgraded version called Massive MIMO, which uses a large

8 “How fast is 4G? - 4G speeds and UK network performance”, 4g.co.uk, 2019 https://www.4g.co.uk/how-fast-is-4g/
9 "What Is Massive MIMO Technology?", 5G.co.uk, 2019 --https://5g.co.uk/guides/what-is-massive-mimo-
technology/

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 number of software-controlled antenna cells to transmit and receive signals. 10 Telecom firms
have produced Massive MIMO systems with 96 to 128 antennas.

Core technology 2: Beamforming

Beamforming, which is related to Massive MIMO, refers to a signal-processing technology that

can direct signals towards a target. By controlling the antenna array, the technology ensures
that there is constructive interference in one direction but destructive interference in others.11
Beamforming technology is important for 5G systems because it enhances the spatial
selectivity of wireless signals, allowing better coverage and higher data rates. 12 Together with
Massive MIMO, it will bring new revenue opportunities for telecom firms that produce base
stations and antennas.

Core Technology 3: New Radio Frequencies

5G can utilize frequency bands below 6 GHz as well as higher than 24GHz. Radio signals at
different frequency bands have different propagation properties. Low-frequency bands can
provide wider coverage. While this saves on the cost of building a large network, continuous
frequency spectrum is a scarce resource in low frequency bands. High frequency bands are
suitable for communications that require high data rates, but radio signals at such high
frequency cannot propagate over long distances, so the coverage of a single cellular network
is often small. This increases the number of antennas and base stations installed, thereby
increasing the cost of building a large network.

Core Technology 4: Channel Coding

This is a technology for controlling errors in wireless communications, as radio channels are
often unreliable and subject to different kinds of noise.13 Polar Code is used as the control
channel in the enhanced mobile broadband scenario, while LDPC is the coding method for the
data channel. The choice of channel coding technologies is an important parameter of the
standardization process and will impact the key products of 5G (e.g., chipsets). Leading
telecom firms are competing fiercely to promote their own technologies. Huawei is the main
advocate of Polar Code, while Qualcomm is the key sponsor of LDPC.

Core Technology 5: Multiple Access Technologies

Multiple access technologies enable multiple users to access and use the cellular system
simultaneously, 14 making it one of the core technologies underlying different generations of
mobile communication systems. 5G involves different multiple access technologies, including
OFDM-based technologies, NOMA, etc. (Further discussion is beyond the scope of this study).

Changes in channel coding, multiple access technologies, and radio frequency will impact the
design of mobile chipsets, especially the baseband chipset and Radio Frequency Integrated
Circuits (RFIC).

10 Osseiran, A., Monserrat, J. F., & Marsch, P. (2016). 5G mobile and wireless communications technology. Cambridge
University Press.
11 Technical definition from Wikipedia, https://en.wikipedia.org/wiki/5G#Beamforming
12 "Beamforming, from cell-centric to user-centric", Ericsson, 2019
https://www.ericsson.com/en/networks/trending/hot-topics/5g-radio-access/beamforming
13 Technical definition from Wikipedia, https://en.wikipedia.org/wiki/5G#Channel_coding
14 Technical definition from Wikipedia, https://en.wikipedia.org/wiki/Channel_access_method

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 Core Technology 6: Network Slicing

A technique that can separate network functions and physical infrastructure through software
technologies, such as Network Function Virtualization (NFV) and Software Defined Networking
(SDN). Each slice has the network resources and network functions to satisfy the needs of a
particular type of business (e.g., IoT, autonomous driving). It offers third-party users
programmable capabilities without touching the physical network infrastructure.15 Firms in
downstream sectors are actively exploring 5G network slicing technology to bring customized
products and services to their customers.

Core Technology 7: D2D

Device-to-device (D2D) communication allows different devices to communicate with each

other directly instead of through the cellular network. 16 First introduced in the 4G era, the
technology will play an increasingly important role in the 5G era, allowing each device to
operate as end-user equipment and as a network node. It will reduce network latency, increase
network reliability, and reduce power consumption. Based on the notion of D2D, firms have
developed Vehicle-to-Anything (V2X) and Vehicle-to-Vehicle (V2V) communications, both
critical enablers of autonomous driving.

Distinct Capabilities of 5G

Compared with previous generations of mobile communications technologies, 5G comes with

distinct capabilities in multiple dimensions. 17 For example, the peak data rate of 5G rises to 20
Gbit/s and the user-experienced data rate 100 Mbit/s – at least 10 times faster than the current
4G networks. The spectrum efficiency of 5G will be three times higher than that of 4G. Area
traffic capacity will reach 10 Mbit/s/m2, 100 times that of 4G networks. 5G will bring latency
time as low as 1 ms and connection density as high as 106/km2. 5G networks can serve objects
moving at 500 km/h with an acceptable quality of service.

However, not all 5G networks will have the capabilities described above; different networks will
have different capabilities according to the usage scenario through network slicing. Generally
speaking, these different capabilities can be grouped into three categories (see diagram in
Exhibit 3).

1. eMBB, enhanced Mobile Broadband

Enhanced Mobile Broadband (eMBB) will dramatically increase the data rates of mobile
communications. It is designed to meet the increasing need for high speed mobile internet,
enabling data-demanding services such as 3D video, UHD screens, virtual reality (VR), cloud
gaming, and so on. eMBB attaches high importance to indicators such as peak data rate, user-
experienced data rate, area traffic capacity, energy efficiency, spectrum efficiency and mobility,
but is less concerned with connection density and network latency (see Exhibit 3).

2. uRLLC, ultra-Reliable Low Latency Connection

15 5GPPP. (2017). View on 5G Architecture.

16 Osseiran, A., Monserrat, J. F., & Marsch, P. (2016). 5G mobile and wireless communications technology. Cambridge
University Press.
17 ITU. (2015). IMT Vision – Framework and overall objectives of the future development of IMT for 2020 and beyond.
Geneva.

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 uRLLC will reduce network latency and enhance network reliability. It aims to provide reliable
networks for time-sensitive operations such as remote control of industrial manufacturing,
remote medical surgery and autonomous driving. To enable autonomous driving, mobility is
an important indicator, while data rates, spectrum efficiency, area traffic capacity and network
efficiency are less important (see Exhibit 3).

3. mMTC, massive Machine Type Communication

mMTC will allow a massive number of connections among different types of devices. It
provides a new window of opportunity for a large-scale Internet of Things in the future. The
most important indicator is connection density, followed by network energy efficiency. Data
rates, latency, spectrum efficiency and area traffic capacity are less important – what is needed
is a large number of connected devices that transmit a low volume of data at low cost, with a
long battery life (see Exhibit 3).

5G Products

Base Stations (including antennas)

The base station is at the core of the 5G network. Its architecture and configuration directly
affect the network’s performance. It is mainly used to provide the 5G air interface protocol
function, supporting communications between the end-user equipment and the core network.
A typical 5G base station consists of a central unit that processes data streams, and a radio
unit (including antennas) that transmits and receives signals through the air interface.18 Since
5G networks support communication between people as well as machines, demand for 5G
base stations is expected to be very high. 5G networks use Massive MIMO to achieve higher
data rates and better network capacity. Instead of using one antenna to transmit and receive
signals, Massive MIMO uses many antennas to transmit and receive signals simultaneously,
which are controlled by advanced software. 19

5G can operate as a standalone (5G SA) and non-standalone model (5G NSA). In the former
case, the 5G wireless access network is connected to the legacy 4G core network. In the latter
case, the 5G wireless access network will be connected to the 5G core network.

Chipsets

Baseband chipset: The 5G standard introduces new features (e.g., eMBB, uRLLC, mMTC)
that require new designs in terms of the baseband chipset that is responsible for synthesizing
the baseband signal to be transmitted and for decoding the received baseband signal. In other
words, it’s the module that processes signals.

Radio Frequency Integrated Circuits (RFIC): The high-speed, low latency, high-density 5G
network will impose new requirements for RFIC, a module mainly responsible for transmitting
and receiving signals. For example, the number of filters and switches in RFIC is expected to
increase and the performance of power amplifiers will be upgraded.

18 "Fujitsu Delivers Complete Set of 5G Base Station Products to NTT DOCOMO for Commercial 5G Service", Fujitsu
Limited, July 31, 2019
https://www.fujitsu.com/global/about/resources/news/press-releases/2019/0731-01.html#1
19 "Massive MIMO", Nokia, 2019
https://www.nokia.com/networks/solutions/massive-mimo/#overview

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 End-user Equipment (smartphones, tablets, wearables)

Early 5G smartphones should be almost identical in appearance to current 4G phones. The

main difference resides in the communication module. Non-communication components such
as camera, screen and memory are not divided into 4G and 5G. The communication module
is the core component of a mobile phone, which distinguishes smartphones from consumer
electronics such as PDAs, Apple iPod Touch, and gaming devices. The communication
module here mainly refers to the 5G baseband chip, which is an important part of the SoC
(System-on-a-Chip) of a mobile phone (see Exhibit 4). The baseband chip, which processes
the baseband signal (unmodulated signal), determines what network standard the handset can
support (e.g., GSM, CDMA, WCDMA, LTE), as well as the network speed it can reach. The
5G chipset will support new frequency bands defined by the 5G standard, including low
frequency bands (Sub-6GHz) and/or high frequency bands (millimetre wave).

Leaving technical details aside, the main difference for mobile users is increased network
speed. For example, 5G chipsets will in theory allow mobile phones to achieve download data
rates of up to 10 Gbps, 20 Higher speeds will support more complex applications and ultimately
change the form of the phone. Like smartphones, 5G modules can also be integrated into other
types of equipment such as tablets and wearable devices.

IOT

5G promises further improvements on multiple dimensions of mobile communications, bringing

higher data rates, better mobility, lower latency, higher density of connections, and more
accurate positioning of devices. This will create business opportunities for a wide range of IOT
products (e.g., drones, cars, smart appliances, medical equipment) that capitalize on the
different capabilities of the 5G system. For example, drones and cars might capitalize on the
mobility and latency dimensions to achieve autonomous driving/flying. The mobility dimension
of 5G may be less relevant for medical equipment, which however will still capitalize on the
low latency and high reliability of 5G networks.

Key Players in the 5G Era

Telecom Firms

Qualcomm

Qualcomm focuses on standards development and chip design. In the 1980s, most telecom
companies focused on the development of TDMA technology (the basis for the GSM standard
widely adopted in the 2G era), but Qualcomm believed that CDMA could significantly increase
network capacity and reduce network costs. After investing years in R&D, it demonstrated that
CDMA could provide better call quality and lower operating costs. In 1996, Bell Atlantic
Telecom launched the first CDMA network in the United States. With Qualcomm’s support,
CDMA finally became a mobile communication standard to compete with GSM, and networks
were established worldwide.

When CDMA technology was first developed, few manufacturers were willing to produce
CDMA mobile phones so Qualcomm began phone manufacturing itself. Although it was not

20 "What is the difference between 5G mobile phones and 4G mobile phones: Is it more expensive to be compatible
with 4G networks?", THE PAPER, December 2018
https://www.thepaper.cn/newsDetail_forward_2774362

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 profitable per se, it contributed to the development of a CDMA eco-system. Later, as
manufacturers started to produce CDMA phones, they were worried that Qualcomm (a
competitor) would not provide them with the latest chips. However, it was clear that
Qualcomm’s profits came from selling chips and licensing its technology, hence in 2000 its
phone manufacturing business was sold to Kyocera and its network equipment business to
Ericsson. Since then, Qualcomm has focused on developing mobile communication standards
and designing mobile chipsets.

As Qualcomm holds many core patents for CDMA, any company that wants to use the
technology must pay Qualcomm, although given that the world’s most prominent mobile
communication standard was GSM in the 2G era, Qualcomm’s monopoly position was far from
obvious at that time.

In the 3G era, the world’s three major standards, WCDMA, CDMA2000 and TD-SCDMA, all
borrowed elements from CDMA technology, giving Qualcomm an increasingly important role
in the mobile communications industry.

Patent fees charged by Qualcomm are very high. Mobile phone makers using Qualcomm chips
are bound to pay Qualcomm 5% of the price of the phone as royalties, in addition to the cost
of purchasing the chip. As a result, many firms abandoned CDMA technology in favour of
developing OFDMA technology when 4G started to emerge.

3GPP, an international standard-setting organization, was established to promote Long Term

Evolution (LTE) of mobile communication technologies. To compete with 3GPP, Qualcomm
established 3GPP2, which promoted another 4G candidate, the UMB standard, but this
ultimately failed to win support from the industry. Nevertheless, Qualcomm’s “Snapdragon”
series of chips are still the most advanced and most popular chips for smartphones.21

While in the 5G era Qualcomm’s advantages in terms of standards are less obvious (see
Exhibits 6 & 7), it is still a leading player with a large number of 5G standard essential patents.
An important part of 5G standards is which coding technologies to use for correcting errors in
signals sent over radio channels – Qualcomm is a major supporter/innovator of LDPC (Low-
Density Parity Check). In 2016, LDPC was selected by 3GPP as the coding method for the
data channel of 5G enhanced mobile broadband. Beyond that, Qualcomm has also been
working on other 5G technologies such as C-V2X, a crucial technology for autonomous driving.

Like Qualcomm, MediaTek is a major supplier of mobile chips, although it does not have the
same influence on mobile communication standards. Intel, which previously focused on
computer chips, has also tried to enter the mobile communications industry as technologies
such as NFV and SDN emerged.

Ericsson

Ericsson, a telecom equipment manufacturer from Sweden, founded in 1876, became a major
telecommunications player in the 1970s. In 1977 it installed the world’s first digital telephone
exchange. Since the 1990s, Ericsson has focused on the development and production of
mobile communications infrastructure and mobile phones. It holds a large number of standard
essential patents for 2G (GSM), 3G (WCDMA) and 4G (LTE/LTE-Advanced) mobile
communication systems. In the mid-to-late 1990s, Ericsson held the third largest market share
in the global GSM mobile phone market, but post-2000 this started to decline. In 2001,
Ericsson’s mobile phone division ceased to operate as an independent division. Henceforth,

21 "Patent 'Rogue' - the history of Qualcomm", Sohu, June 2018 -- https://www.sohu.com/a/234198660_308613

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 its phones would be produced under the Sony Ericsson brand, a joint venture between the two
multinationals. In 2012, Ericsson sold its shares in the venture to Sony, to focus on the mobile
infrastructure business – where it had the biggest market share (38%) worldwide.

With the rise of Huawei, Ericsson’s position in the global communications market was
challenged. In 2017, its share of the global mobile communications market was 27%, second
only to Huawei (28%) (see Exhibit 8).

An active player in the 5G era, Ericsson has submitted 10,528 5G standard technical
contributions and holds 1,058 5G declared patent families (see Exhibits 6 & 7). By November
2019, Ericsson had successfully launched 23 5G networks in 14 countries, with 76 5G
contracts or commercial agreements signed with different operators around the world.22 To
achieve more flexible allocation of bandwidth and better performance at the mobile edge,
Ericsson formed a partnership with NVidia, uniting the former’s capabilities in 5G technologies
with the latter’s capabilities in GPU and AI technologies. 23 Ericsson has also been collaborating
with Volvo in the autonomous driving domain.

Nokia

Nokia, a multinational corporation originating in Finland, provides mobile communication

equipment and related services. Established in 1865, its early business included logging and
paper-making. From the 1980s, it transformed into a telecom company. In 1982, Nokia
produced the first mobile phone (Senator) in Northern Europe. In the mid-1980s, it entered the
US market, producing phones that supported the AMPS (1G) standard, while also committed
to developing GSM technology. 24 In 1992, as mobile phone usage exploded and prices
dropped, Nokia released the first portable GSM mobile phone, the Nokia 1011.

In 2003, Nokia released the Nokia 1100. Thanks to its low price, stable performance and
excellent quality, it sold 250 million units worldwide.25 In 2004, the newly designed Nokia 7610,
its first megapixel mobile phone, became another best-seller. From 2005 to 2010, the ‘golden
age’ of its development, Nokia saw stable growth of the mobile phone business; its market
share reached 40% at one point. Symbian OS supported by Nokia was widely adopted in
different brands of mobile phones.

However, in 2007, Apple’s iPhone revolutionized the industry, ending Nokia’s dominance. In
2011, Nokia announced a strategic partnership with Microsoft and decided to adopt Microsoft
Windows Phone system for its phones (e.g., Lumia 800). Its refusal to adopt Google’s Android
system allowed other phone makers (like Samsung) to catch up and the alliance was no match
for the IOS or Android camp. In 2013, Microsoft announced the acquisition of Nokia’s mobile
phone business. Since then, the Nokia mobile phone brand has been withdrawn from the
market. 26

Notwithstanding, Nokia remains an important player in the network equipment market. In June
2006, Nokia and Siemens announced a merger of their telecom equipment businesses, each
investing 50% to form Nokia Siemens Networks, for a total transaction of €25 billion. In April

22 "5G is open for business", Ericsson, November 2019 - https://www.ericsson.com/en/5g

23 "Nvidia and Ericsson announce the first GPU-powered 5G mobile network", By Chuong Nguyen. Digital Trends,
October 2019 - https://www.digitaltrends.com/computing/nvidia-egx-5g-mobile-network-ericcson/
24 Baidu Baike, - https://baike.baidu.com/item/%E8%AF%BA%E5%9F%BA%E4%BA%9A/114431
25 "From Wood Pulp Factory to Multinational Enterprise-Demystifying the history of Nokia", ZOL, December 2014
http://pad.zol.com.cn/497/4971076_all.html
26 "From Wood Pulp Factory to Multinational Enterprise-Demystifying the history of Nokia", ZOL, December 2014
http://pad.zol.com.cn/497/4971076_all.html

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 2011, Nokia Siemens Networks completed the acquisition of Motorola’s wireless network
business for $975 million.27 On July 1, 2013, Nokia announced that it would spend €1.7 billion
to acquire the 50% stake of the joint venture held by Siemens. The acquisition was completed
in 2014. In 2015, Nokia acquired Alcatel-Lucent, another major communications equipment
provider for $16.6 billion.

Since this series of acquisitions, Nokia has re-emerged as a big player in the global telecom
market. In 2016, revenue was $24.9 billion, second only to Huawei ($75.1 billion).28 Currently,
Nokia is ranked among the top three in terms of 5G patents and technical contributions (see
Exhibits 6 & 7).

Huawei

Huawei has caught up with other multinationals in the 5G era. On the technology side, it holds
the most 5G patents in the world. On the market side, Huawei had shipped more than 100,000
base stations by May 2019. It estimates that there will be 6.5 million 5G base stations around
the world in 2025, covering 58% of the global population.

Founded in 1987, Huawei is the world’s leading provider of ICT infrastructure and end-user
equipment. By 2018, it had 188,000 employees and operated in more than 170 countries,
providing ICT services to more than 3 billion people. In 2018, Huawei achieved sales of RMB
721.2 billion, a 19.5% increase on the previous year.

Huawei attaches great importance to technological innovation and invests over 10% of annual
revenues in R&D. This has made Huawei one of the world’s largest patent holders. By the end
of 2018, Huawei held 87,805 patents, of which 11,152 are US patents. It has invested in 5G
research for more than 10 years and has declared a total of 2,570 standard essential patents
to ETSI. 29 By February 2019, Huawei had signed more than 30 commercial contracts for 5G
with the world’s leading operators, and delivered more than 40,000 5G base stations.

Huawei’s business covers three broad categories: operator business, consumer business and
enterprise business, which account for 40.8%, 48.4%, 10.3% of the company’s revenues
respectively. In recent years it has strategically moved towards the consumer business.30 At
the 2018 World Mobile Congress, Huawei officially released the world’s first 5G terminal chip
based on 5G and the first 5G Customer Premise Equipment (CPE) based on this chip. In
September 2018, Huawei became the first vendor to complete the three-stage testing of a 5G
standalone (SA) network, led by IMT-2020 (5G) Promotion Group.31 It has actively explored
new applications of 5G, cooperated with more than 280 industry-leading partners, and carried
out more than 50 collaborative projects covering the energy, transportation and manufacturing
sectors. Most notably, it has established partnership with leading car makers such as Audi,
Mercedes-Benz, Volkswagen, Toyota and GM, and has proposed a new AI-based network
architecture for autonomous driving.

27 "Nokia Siemens Networks completes acquisition of certain wireless network infrastructure assets of Motorola
Solutions", Motorola Solutions, 2011
https://newsroom.motorolasolutions.com/news/nokia-siemens-networks-completes-acquisition-certain-wireless-
network-infrastructure-assets-motorola-solutions.htm
28 http://m.jrj.com.cn/rss/sohu/2017/8/3/22839084.shtml
29 ETSI stands for European Telecommunication Standardization Association
30 Huawei Annual Report 2018
31 "Huawei First to Complete IMT-2020 (5G) Promotion Group's Third Phase Core Network Test for 5G SA", Huawei,
September 2018
https://www.huawei.com/us/press-events/news/2018/9/first-vendor-china-5g-standalone-test

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 Currently, Huawei is the largest holder of 5G standard essential patents, as well as the most
active player in terms of 5G technical contributions (see Exhibits 6 & 7). Unlike Qualcomm,
Huawei is a major supporter/innovator of the channel coding technology “Polar Code”, invented
by Turkish Professor Erdal Arikan in 2008. While Polar Code was known to be theoretically
possible at that time, it was pre-mature for industry applications and the technological
uncertainties were high. Seeing it as a high-risk-high-reward opportunity, Huawei has been
working on Polar Code since 2010, spending billions on R&D. 32 At the end of 2016, the Polar
Code supported by Huawei was selected by 3GPP as the coding method for the control
channel of 5G enhanced Mobile Broadband.

ZTE

Like Huawei, ZTE is a vertically-integrated telecom firm, whose businesses cover telecom
operators, corporations, and consumers. In 2018, ZTE’s operating income was 85,513.2
million RMB, of which 66.75% came from its telecom operator business, 10.79% from its
enterprise/government business, and 22.46% its consumer business. Its R&D staff of 25,969
(2018) account for 38% of total employees. By the end of 2018, ZTE had applied for more than
73,000 patents, of which over 35,000 were international. In the field of 5G, ZTE has applied
for more than 3,000 patents, and has declared more than 1,000 standard essential patents to
the ETSI.

In 2018, ZTE, China Telecom, and Baidu completed the first autonomous driving test in China
based on a pilot 5G network in Xiong’an. ZTE collaborated with China Telecom, successfully
making the first call based on a 5G standalone network. It has also been working with other
industry partners, exploring 5G-enabled applications such as 16-channel HD video, AR/VR
seminars and autonomous driving.33

Samsung

Currently the world’s largest smartphone manufacturer, Samsung has competitive advantages
along the entire smartphone value chain. It is one of the very few companies that can produce
almost all the important components of smartphones (screens, memory, storage, batteries,
processor chips). For example, its Exynos processor powers a wide range of Samsung
phones, competing with Apple’s A-series processors, Qualcomm’s Snapdragon and Huawei's
Kirin processors. In September 2019, Samsung announced a new processor, Exynos 980,
which has a built-in 5G modem. 34 Although active in the wireless network equipment market
for many years, network equipment was never its main business. With the rise of Huawei in
the smartphone domain, Samsung realized that the mobile communications network business
could complement its smartphone business.

In 2012, Samsung entered the 4G communications equipment market, winning the first 4G
communications equipment contract in the European market, although the market at that time
was largely dominated by Ericsson and Huawei. In recent years, Huawei’s rise in the
smartphone market has posed a serious threat, derived from its technological advantages in
the field of communications network business. Samsung needs to improve its position in the
network equipment market as a response to Huawei’s arrival. In the American market, where

32 "The Key For Huawei, And China, In 5G Race Is A Turkish Professor", by Ben Sin. Forbes, July 2018
https://www.forbes.com/sites/bensin/2018/07/27/the-key-for-huawei-and-china-in-5g-race-against-the-u-s-is-a-
turkish-professor/#6764242c222b
33 ZTE Annual Report 2018
34 "Samsung's new Exynos 980 processor has a 5G modem built in", The Verge, September 2019
https://www.theverge.com/circuitbreaker/2019/9/4/20849629/samsung-exynos-980-processor-5g-modem-built-in-
default-ifa-2019

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 telecom operators have a strong influence on sales of smartphones, investment in the network
equipment side would strengthen its relationship with telecom operators and boost sales of its
smartphones. With the advent of the 5G era, as mobile communications extend beyond
humans to different types of machines, the move towards the network equipment business will
open up new market opportunities for Samsung.35

In 2017, Samsung ranked fifth in the global telecom mobile infrastructure market, accounting
for a mere 3%, far behind ZTE (13%), Nokia (23%), Ericsson (27%), and Huawei (28%).
Following US telecom operator Verizon’s announcement in early 2018 that it would build 5G
networks in 11 cities, Samsung has received orders for 5G network equipment in seven of
them, suggesting that it may have a bigger role to play in the 5G era. 36

Firms in 5G-enabled Sectors

The advent of 5G will open a wide range of business opportunities in downstream sectors. The
three capabilities of 5G (described above) will enable different application scenarios. eMBB
offers a window of opportunity for applications that require high-speed mobile broadband, such
as high definition (3D/4K) videos, advanced cloud services, AR/VR. mMTC for applications
that require massive connections and wide coverage, such as smart home and smart city.
uRLLC for applications that require reliable, low latency networks, such as industrial
automation, autonomous driving, and telemedicine (see Exhibit 9). Among these, eMBB-
enabled applications such as high-definition videos and VR/AR products will reach the market
first because they are on the existing tech trajectory (e.g., increasing data rates). Apps that
rely on other capabilities of 5G (e.g., mMTC, uRLLC) will take more time to reach the market.

Phone Makers

Given the historic links between the telecom and mobile phone sectors, it is not surprising that
phone makers were the first to embrace the opportunities brought by 5G. According to Statista,
shipments of 5G-enabled smartphones in the world will increase to 1,500 million units by 2025
(see Exhibit 5). With faster upload and download speeds, we can expect more data-demanding
services, such as ultra-high definition videos, cloud gaming and on-site/immersive
experiences.

As the market leader, Samsung was an early mover in the 5G space. By September 2019, it
had announced four 5G smartphones: the Samsung Galaxy S10 5G, Samsung Galaxy Note
10 5G, Samsung Galaxy Fold, and Samsung Galaxy A90 5G. Huawei, Oppo, Xiaomi have all
released their own 5G smartphones, such as Huawei Mate 20 X 5G, Oppo Reno 5G, and
Xiaomi Mi Mix 3 (see Exhibit 10). The only exception is Apple, which had not launched any
5G-based smartphones by September 2019. Apple could afford to be a late adopter of 5G,
given its unique eco-system and loyal fan base, as was the case with 3G and 4G. Litigation
with Qualcomm, a major provider of 5G modems, added to the delay in R&D for Apple’s 5G
smartphones.

Generally speaking, 5G smartphones are more expensive than 4G smartphones at the

moment. Even if consumers are willing to buy 5G smartphones, the experience may not be
very different (from 4G) simply because many areas still do not have 5G network coverage.

35 "Samsung has become the world's fourth largest communications equipment supplier, Huawei and Samsung will
have more intense competition", Elecfans, August 2018
http://www.elecfans.com/tongxin/20180824738212.html
36 "The world's top five network communication equipment manufacturers: Huawei's ranking makes the Chinese
proud!", Sohu, July 2018 - https://www.sohu.com/a/241547815_823568

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 Nevertheless, we can expect more 5G smartphones coming onto the market in the next few
years.

Automobile Firms

With the 4G network, cars can already communicate with each other, transmitting and
receiving important information for navigation, adaptive cruise control, etc. However, the high
latency does not allow autonomous driving. 5G greatly improves the safety of vehicles by
providing real-time data exchange among vehicles (V2V), base stations, and edge computing
centres (V2X) to avoid collisions. Low latency and high reliability are extremely important here.
Since autonomous driving requires vehicles to function in areas without cellular signal
coverage, this can be achieved by using the D2D technology of 5G. Applications of 5G in the
automobile sector include, but are not limited to, autonomous driving, traffic and logistic control,
and information sharing.

To embrace the opportunities provided by 5G, traditional automobile firms have been actively
collaborating with telecom firms. For example, Volvo Cars allied with Ericsson to work on
Connected Vehicle Cloud,37 while Audi collaborated with Huawei to develop autonomous
driving technologies.38 New entrants regard 5G as a key technology for future vehicles. For
example, Google started the Self-Driving Car Project in 2009, which later evolved into the
autonomous driving technology developer Waymo. Although Waymo and its predecessor have
been working on autonomous driving technologies for ten years, the CTO of Waymo, Dmitri
Dolgov, sees 5G as an ‘accelerator and enabler’ for autonomous driving.39 Indeed we will not
see truly autonomous driving until 5G coverage becomes ubiquitous. 40 Uber has gone one
step further, working with AT&T on 5G-enabled flying taxis.41

Energy Firms

With the advent of 5G, energy companies could realize intelligent inspections by using AR/VR
technologies that allow inspectors to work remotely as 5G networks will allow real-time
interaction between the inspector and the site. Since 5G can increase the density of
connections by 10 times, it will allow the energy companies to deploy a large number of
sensors along their energy distribution channels, collecting real-time status data for data
analytics. The low latency of 5G networks will also allow companies to achieve precision
control in their energy systems, adjusting their supplies based on real-time demand. 42 Oil and
gas companies such as Chevron, BP and Shell already rely on IOT technologies and data
analytics to manage their business 43. As 5G will facilitate data monitoring and collection, we
can expect to see more energy companies using 5G technologies in their business.

37 "Ericsson and Volvo Cars sign five-year Connected Vehicle Cloud worldwide deal", Ericsson, November 2018
https://www.ericsson.com/en/press-releases/2018/11/ericsson-and-volvo-cars-sign-five-year-connected-vehicle-
cloud-worldwide-deal
38 "Huawei and Audi Announce Joint Innovation in L4 Automatic Driving", Huawei, October 2018
https://www.huawei.com/en/press-events/news/2018/10/huawei-audi-l4-automatic-driving
39 "Waymo CTO: 5G will be a self-driving car ‘accelerator and enabler’", Venturebeat, May 2019
https://venturebeat.com/2019/05/08/waymo-cto-5g-will-be-a-self-driving-car-accelerator-and-enabler/
40 "Autonomous Cars Won't Work - Until We Have 5G", by Bijan Khosravi. Forbes, 2019
https://www.forbes.com/sites/bijankhosravi/2018/03/25/autonomous-cars-wont-work-until-we-have-
5g/#15d7cb94437e
41 "Uber and AT&T partner on 5G air taxis", by Corinne Reichert. Cnet, June 2019
https://www.cnet.com/news/at-t-and-uber-partner-on-5g-air-taxis/
42 "The smart grid faces three major challenges. The national grid has many means to promote the 5G technology."
Baidu, June 2018 - https://baijiahao.baidu.com/s?id=1603687509251624847&wfr=spider&for=pc
43
"Where BP, Chevron, Shell, And Other Oil & Gas Corporates Are Investing In IoT", Cbinsights, December 2017
https://www.cbinsights.com/research/oil-gas-corporates-iot-activity-expert-intelligence/

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 Manufacturing Firms

With the advent of the fourth industrial revolution, we are seeing digital transformation in the
manufacturing sector, which allows greater production efficiency and more customized
products and services. Indeed evidence suggests that customers are willing to pay a high
premium for customized products. 44 To meet diverse customer needs, manufacturers need to
upgrade their technologies, making their production lines more flexible for different tasks. Ultra-
reliable and low latency 5G networks will give industrial robots unlimited operating areas (not
restricted by the length of cables). Different production scenarios will have different
requirements for the quality of services (QoS) of the network. Network slicing technology of
5G can ensure different levels of QoS for different tasks. 5G will facilitate data collection along
the whole production processes, making the ‘industrial internet’ a reality. Ultimately, 5G may
contribute to the emergence of a comprehensive ecosystem that connects people and
machines both inside and outside the factory, enabling information sharing across
organizational boundaries, and even allowing consumers to participate in product design
through virtualization enabled by 5G.

Indeed Siemens considers 5G a key enabler for the Internet of Things and has coined the term
“industrial 5G”. According to Klaus Helmrich, a member of the Managing Board, “Industrial 5G
opens the door to the comprehensive, wireless networking of production, maintenance, and
logistics.” 45 ABB has teamed up with Ericsson to work on 5G-based smart manufacturing,46
and manufacturers such as Yaskawa and Rockwell Automation are also following this trend.

Healthcare

Ericsson has predicted that the transformation of the healthcare sector toward 5G will create
a $76 billion market for telecom operators in 2026.47 5G will provide opportunities for
pharmaceutical firms, medical app developers, wearable device producers, insurance
companies and hospitals.

In the 5G era, companies in the healthcare sector will be able to collect and process large
amounts of data in real time, and then provide customized medical care services based on
data analytics. Hence traditional pharmaceutical companies may evolve into service
companies, providing customized healthcare services to target customers. A low latency/highly
reliable 5G network will allow doctors to perform remote surgery with robots. For example, in
April 2019, a Siemens surgical robotics company based in the US, Corindus, conducted a
series of simulated surgical cases using 5G. This will improve the operating efficiency of
hospitals and other healthcare organizations. New business models for the healthcare sector
may emerge in the 5G era.

Smart Living

From smart appliances at home to infrastructure in smart cities, 5G is a key enabler for future
smart living. Sidewalk Labs, a project initiated by Google’s parent company Alphabet, plans to
build a smart city called Quayside in Toronto, Canada, which will be covered by 5G. Powered
by 5G technologies, the city will realize a wide range of smart functions covering energy

44
Deloitte. (2015). The Deloitte Consumer Review Made-to-order: The rise of mass personalisation.
45
"Industrial 5G. For the industry of tomorrow", Siemens, 2019
https://new.siemens.com/global/en/products/automation/industrial-communication/5g.html
46
"Ericsson Estonia and ABB walk the walk on 5G smart manufacturing", Ericsson, April 2019
https://www.ericsson.com/en/news/2019/4/ericsson-and-abb-5g-smart-manufacturing-estonia
47
"Understanding the opportunities for operators in healthcare", Ericsson, 2019
https://www.ericsson.com/en/networks/trending/insights-and-reports/5g-healthcare

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 management, waste disposal, and logistics. Similarly, Alibaba has been working on a project
called City Brain, which aims to transform modern cities into smart cities. While some functions
have been realized in the 4G era, the 5G era will make cities more intelligent.

Others

5G will impact other sectors (education, agriculture, drones) and create new ones that are as
yet unknown and still to be imagined by entrepreneurs. Without killer applications to boost the
deployment of 5G, commercialization may be slow, especially since 2G/3G/4G networks still
remain capable legacy networks. Expect to see more and more start-ups in emerging sectors.

Beyond 5G
The CEO of Huawei, Ren Zhengfei, told a CNBC interview on 26th September 2019, “We have
parallel work being done on 5G and 6G, so we started out 6G a long time ago.” 48 Earlier,
Qualcomm’s R&D chief, Durga Malladi, had already said at a public event that “We will
probably do another G (6G)”. 49 In an industry characterized by generational technological
changes, it is never too early to think about what’s next. What opportunities does 5G create
for different players in the ecosystem—telecom firms and firms in 5G-enabled sectors—and
how can your firm and industry take advantage of them? As companies race towards the next
“G”, what are the associated risks and uncertainties?

48 "Huawei CEO says it's working on 6G — but the technology is still some 10 years off", CNBC, September 2019
https://www.cnbc.com/2019/09/26/huawei-ceo-working-on-6g-but-its-still-10-years-off.html
49 "Qualcomm's R&D chief: 'There will be a 6G probably'", FierceWireless, February 2018
https://www.fiercewireless.com/5g/qualcomm-s-r-d-chief-there-will-be-a-6g-probably

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 List of Abbreviations

1G First generation mobile communications

2G Second generation mobile communications
3G Third generation mobile communications
4G Fourth generation mobile communications
5G Fifth generation mobile communications
AMPS Advanced Mobile Phone System
CDMA Code Division Multiple Access
D2D Device-to-device communication
eMBB enhanced Mobile Broadband
GSM Global System for Mobile Communications
LDPC Low-density parity-check code
LTE Long Term Evolution
MIMO multiple-input and multiple-output
mMTC massive Machine Type Communication
NFV Network Function Virtualization
NMT Nordic Mobile Telephony
NOMA Non-orthogonal multiple access
OFDM Orthogonal frequency-division multiplexing
RFIC Radio Frequency Integrated Circuits
SDN Software Defined Networking
SoC System-on-a-Chip
TACS Total Access Communication System
TD-SCDMA Time Division - Synchronous Code Division Multiple Access
uRLLC ultra-Reliable Low Latency Connection
V2V Vehicle-to-Vehicle communications
V2X Vehicle-to-Anything communications
WCDMA Wideband Code Division Multiple Access

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 Exhibit 1
Evolution of Mobile Technologies

Source: drawn by authors based on Jia, Durrani, and Chen’s article 50

Exhibit 2
Overall 5G Network Architecture

Source: drawn by authors based on 5GPPP reports 51, 52

50 Jia, J., Durrani, T. S., & Chen, J. (2018). The Innovation Waves in Mobile Telecommunication Industry. IEEE
Engineering Management Review, 46(3), 63–74.
51 5GPPP. (2016). 5G Architecture For Distributed And Flexible Allocation Of Vertical-specific Network Functions.
52 5GPPP. (2017). View on 5G Architecture.

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 Exhibit 3
Distinct Capabilities of 5G

Source: Samsung website, https://www.samsung.com/global/business/networks/insights/news/5g-is-now-part-1-2018-

the-year-of-5g/

Exhibit 4
A Highly Stylized Representation of 5G End-user Equipment

Source: drawn by authors based on CICC report 53

53 CICC. (2019). Securities research report: 5G changes the world and reshapes the future.

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 Exhibit 5
Global 5G-enabled Smartphone Shipment Forecast (2019-2025)

1,600 1,500

1,400

1,200
shipments in million units

1,000
855
800

600
416
400
183
200 77
2 11
0
2019 2020 2021 2022 2023 2024 2025
Source: drawn by authors based on data from Statista

Exhibit 6
Top Patent Owners of 5G Declared Patent Families

NEC Corporation 7
ASUSTeK Computer 8
ITRI 11
MediaTek 14
Sony Corporation 14
Apple 15
Fujitsu 20
BlackBerry 20
ETRI 30
KT Corporation 42
InterDigital Technology 48
Guangdong OPPO M Telec 222
CATT 552
Intel Corporation 618
Sharp Corporation 660
QUALCOMM 921
Ericsson 1,058
Samsung Electronics 1,353
LG Electronics 1,359
ZTE Corporation 1,424
Nokia (incl Alcatel-Lucent) 1,516
Huawei Technologies 2,160
0 500 1,000 1,500 2,000 2,500

5G declared patent families

Source: drawn by authors based on data from IPlytics (July 2019)

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 Exhibit 7
5G Standard Technical Contributions by Company

Sony 4
ASUSTeK 32
BlackBerry 60
Apple 66
Fujitsu 67
ITRI 73
KT Corp 161
Sharp 212
InterDigital 229
Cisco 346
ETRI 434
OPPO 517
NEC 703
MediaTek 759
CATT 1,786
LG Electronics 1,787
Intel 2,516
Samsung 3,158
ZTE 3,221
QUALCOMM 4,087
Nokia (incl Alcatel-Lucent) 8,103
Ericsson 10,528
Huawei 13,155
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000

Number of 5G technical contributions

Source: drawn by authors based on data from IPlytics (July 2019)

Exhibit 8
Market Share of Telecom Mobile Infrastructure Companies (2017-2018)

35%
31%
30% 28% 27% 27%

25% 23% 22%

20%

15% 13%
11%
10%
5% 6%
3% 4%
5%

0%
Huawei Ericsson Nokia ZTE Samsung Other

2017 2018

Source: drawn by authors based on data from Statista

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 Exhibit 9
Application Scenarios Based on the Three Distinct Capabilities of 5G

Source: drawn by authors based on information from ITU and CICC 54

Exhibit 10
Available 5G Phones on the Market

Source: company websites, Amazon.com

54 CICC. (2019). Securities research report: 5G changes the world and reshapes the future.

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