5G Technology Leadership: Winning in the Global Digital Economy

The topic of 5G technology leadership has come to the forefront of government policy discussions around the world especially in light of a rising Chinese tech threat as well increasingly tense trade and geopolitical relations between China and the US. 5G has become a strategic technology that is considered vital to the economic competitiveness of nations and is touted to usher in the next industrial revolution. But who is leading the technology race in the early days of the 5G era? How do we determine who the frontrunners are today and in the future? Why does it matter?

Why is technology leadership important? As it pertains to 5G, it is vital for sustained economic leadership in an increasingly digital and connected world. Since the advent of the US tech trade war with China, the question of US technology leadership has come into question as Chinese firms, Huawei in particular, continue their aggressive growth and progress their dominant market share and competitive positioning outside of their home turf of Mainland China. Trust and national security concerns regarding the tech supply chain that runs through China, custodianship of data, and intellectual property rights (IPR) have prompted US policymakers to reevaluate the nation’s leadership in strategic technologies such as 5G.

5G Leadership versus 5G Technology Leadership

The proper qualification of technology leadership is important as it has implications on government policy, investment in R&D, and fostering of industrial ecosystems that incubate innovation on top of strategic technologies such 5G. Technology leadership also influences and shapes global technology standards such as those set by 3GPP (Third Generation Partnership Project) for 5G. Given the global scope of 5G standards, they have significant influence on the direction of innovation as well as associated commercial opportunities. 

It turns out that having a discussion about technology leadership is not easy. Unfortunately, the term “technology” has become highly overloaded with uses that stray far from the essence of what it means. These departures lead us to designate online asset brokerage firms such as AirBnB and WeWork as technology companies. These designations are fundamentally wrong and distract us from having a meaningful discussion on technology leadership and properly recognizing companies that invent the technologies that others innovate on top of. 

What is technology? Technically speaking, it is applied science and mathematics. It is sourced from discoveries and inventions that solve problems and enabling new possibilities in industry, society and our individual lives. All too often, technology is confused with the application of technology typically expressed as hardware such as a smartphone or software such as an algorithm. 

In the context of 5G, the implementation of technology might take the form of an O-RAN compliant remote radio unit (RU), a modem chip or even a smartphone. These applications in concert leverage 5G technologies specified by standards development organizations (SDOs) such the global members of 3GPP to enable the air interface that connects devices to the network. Without these foundational technologies, mobile computing and the promises of 5G such as URLLC (Ultra-Reliable Low-Latency Communications), eMBB (enhanced Mobile Broadband) and mMTC (massive Machine Type Communications) are not possible. 

Unlike an application, technology is global in nature and is relevant for any application or infrastructure deployment that relies on the associated invention. Tom Grassly’s axiom rings true, “If invention is a pebble tossed in the pond, innovation is the rippling effect that pebble causes.” Without the inventions that spawn essential technologies, innovation across the 5G ecosystem cannot occur. 5G, itself, cannot evolve to realize its aspirations. 

Muddying the Waters with Patent Counting

The notions of 5G technology leadership and 5G leadership are commonly confused. This is not surprising given that 5G is as Adam Mossoff of the Hudson Institute states, “a complex technological and commercial ecosystem.” While 5G leadership can be considered a superset that includes technology, it is often measured in terms of metrics that qualify and quantify the level of infrastructure deployment or quality of technology implementation such as the number of base stations deployed or hardware specifications such as performance per watt. 

Technology leadership needs to be measured differently, especially for 5G which is an open standards-evolved technology. Unfortunately, there isn’t a convention that everyone agrees upon. In many ways, 5G technology leadership is a perspective that has largely been shaped by the courts that deliberate patent disputes and inventors who peddle metrics to pad their brands with often times immaterial accolades of innovation. 

One of the more infamous approaches to measuring technology leadership has been patent counting popularized by numerous “world’s most innovative company” rankings published by various industry and non-industry media outlets. While patent counting is easy to tabulate, manufacture and understand, this approach for qualifying technology leadership has many critical flaws with detrimental implications on the business of invention. 

One of the critical deficiencies of patent counting is that it fundamentally discounts the quality of breakthrough  inventions that the patents specify and declare. It is a fact that patents are of heterogenous quality and importance, so relying on patent counting can obfuscate the true technical and economic gravity of a technology that an individual patent or portfolio of patents represents. 

Patent counting consequently fosters a slew of undesirable behaviors, most notably, overdeclaration of essential patents. In the case of cellular technology standards, a large number of patents declared as essential do not qualify as standard essential patents (SEPs) according to a study conducted by Robin Stitzing et al entitled “Over-Declaration of Standard Essential Patents and the Determinants of Essentiality”.

The frivolous declaration of essential patents has the adverse effect of diluting the value of essential patents thereby undermining the perceived technology leadership of SEP holders and their ability to fairly monetize their inventions. SDO’s such as ETSI do not impose penalties on inventors who declare that their patents could be essential then determined to be otherwise at a later time.

Essentiality, Not Quantity

Fortunately, recent rulings by courts around the world have come to a common determination that patent counting is not an appropriate measure of the value of patents. The approach is generally deficient because it values a group of patents based on the number of patents held by an inventor in that group. Patent counting also suggests numerical proportionality which has the adverse outcome of rewarding volume of patents rather than the importance of the invention. 

Outside of the courts, simple but prejudicial approaches such as patent counting have muddied the waters of the technology leadership discussion. While it is tempting to benchmark 5G technology leadership in simple terms, disregarding the heterogenous quality of inventions discounts the merits and value of truly essential technologies and rewards mediocrity to the detriment of the industry and the digital economy. 

There is no simple remedy to the problem of determining the quality of an invention. According to Professor David Teece of the University of California’s HaaS School of Business, “Determining whether or not a patent is ‘essential’ to some standard can be difficult.” Professor Teece further suggests that, “Determining essentiality would involve comparing the claims of a patent to the feature of the standard.”

While 5G is a “multi-layer technology ecosystem”, there is little argument that the essential features of the 5G standards are related to what Adam Mossoff cites as transmission technology. This elite category of invention is predominantly associated with 5G features that contribute to more efficient use of spectrum such as Sub-6 + mmWave carrier aggregation or make new spectrum usable such as the millimeter-wave RF system concept. 

It helps to have a sense of technical and architectural context to gain clarity on the measure of essentiality and in evaluating the quality of the inventions that contribute to the 5G standard. Many essential technologies have broad scope and critical impact at the system level. Complex systems such as the air interface for 5G new radio (NR) specified by 3GPP are simply not possible without these essential inventions. Neither are the multitude of hardware and software applications that are part of the system. 

This consideration for the whole system context is important in guiding industry and government investment toward areas of research that have high potential to yield essential technologies that will serve as the foundations of strategically important technology standards and platforms. It can also help policymakers gain a truer sense of the comparative 5G technology leadership of nations needed for making sound economic and trade policy decisions. 

5G Technology Leadership, the Basis of 5G Leadership

The topic of technology leadership is not a matter to be taken lightly by casual “top 100” rankings that widely promote misconceptions of technological leadership. 5G is a strategic, global technology standard with profound implications on economic leadership in the digital era. Given the rise of China as a leading tech economy, the subject of technology leadership in 5G has rightly become a priority topic for the United States. As China revs up its drive toward technology independence and hegemony in light of increasingly acrimonious and unstable trade and tech relations with the US. 

From a policy perspective, it is important for lawmakers, regulators and courts to apply a clearer lens on the matters of technology leadership and the associated economics of invention for strategic technologies such as 5G, especially since these technologies are expected to be global enablers and drivers of societal, industrial and economic innovation and progress going forward. Competitiveness of nations will depend on it in the global digital economy of today and tomorrow.

For more insights on neXt Curve’s 5G technology and end market research themes contact us for a detailed briefing with one of our analysts. Follow our site to get updates and notifications of our research and our 2020 research agenda.

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by

Leonard Lee

Managing Director, neXt Curve

February 15, 2021

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