Business Models & Strategic Plans

Business Models & Strategic Plans

Despite many pronouncements by western telecommunications companies, full-capability 5G has yet to be deployed in U.S. markets. The cost of deploying such technology, with its required line-of-sight linkages and base stations every few hundred feet, would be prohibitive without a scalable “killer app” that could lead to a profitable business model. So at present, AT&T, Verizon and others are enhancing their 4G networks and marketing them as 5G. Chinese companies do not have the nagging problem of requiring a profitable business model before spending money to deploy the technology, mostly because Beijing has said it wants to move ahead with 5G infrastructure and has announced its financial support. As a result, the Washington Consensus, which involves markets and profits, faces another challenge from the Beijing Consensus, which involves strategies and government support. This means that Huawei Technologies will be trying large tests this year and selling and installing equipment for a large buildout in 2020 at home and will continue to sell more and more 5G equipment abroad. A competition has emerged over whether companies and/or countries will use Huawei 5G equipment or follow U.S. claims of national security risks in using the Chinese company. Huawei’s lead is based on its existing capabilities, pricing and extensive patents, three rather substantial advantages.

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