Here's how the US can beat China in the race for dominance in next generation networks - CNBC

U.S. and Chinese national flags fly outside a company building in the China (Shanghai) Pilot Free Trade Zone in Shanghai, China, on Oct. 22, 2013.

Tomohiro Ohsumi | Bloomberg | Getty Images

While China has embraced next generation networks at a faster pace, experts say the U.S. still has some advantages in the competition for dominance.

China rolled out its 5G networks nationwide on Nov. 1, with three of its state-owned carriers offering plans for the service. One week later, Beijing said it launched research and development efforts into 6G networks.

5G refers to mobile networks with super-fast data speeds that can support technologies like driverless cars. While 6G refers to the next generation of networks, 5G is still in its early stages as much of the world still operates on 4G networks.

"There will be a tendency to cast these developments as another sign that the United States is losing the race for the next generation of communication technologies," Adam Segal, director of the digital and cyberspace policy program at CFR, wrote in a separate note earlier this month.

"But the United States still has strengths to play," Segal said. "U.S. companies can dominate the applications and services that run over 5G."

Just because China switched on its networks first does not mean that the competition is over.

That's where the United States' innovative capacity could give it an advantage, said Paul Triolo, geo-technology practice head at Eurasia Group. U.S. technology companies have already been working on autonomous vehicles, augmented reality, and virtual reality, which he explained could be the first few killer applications of 5G.

"Even as China rolls out 5G a little faster, the U.S. will eventually roll out 5G in enough breadth and scope that U.S. will be able to innovate on top of it," said Triolo.

Future generations of networks promise more bandwidth and faster internet speeds, which companies like Google and Facebook can leverage to develop more advanced services, said Eric Ross, chief investment strategist at Cascend Securities.

"Here in the U.S., Apple is very ubiquitous. It'll basically be Facetime everywhere," he added.

U.S. opportunities in 5G

To get ahead, CFR's Segal agreed that the U.S. needs to focus on software development.

A Chinese mobile phone user in Shanghai, China.

Qi Yang | Moment | Getty Images

One way is to repurpose the country's mid-band spectrums, which Ross said are currently used by the military or for weather radars. Using them for 5G, instead of the high-band spectrums that are in use now, could be more efficient, he argued.

Meanwhile, China's 5G system uses spectrums of a lower band, which cover a larger area and provide more consistent network coverage, according to Ross. So the main difference between the approaches is in transmissions.

"I'm not saying that the Chinese technology is better," he said. "The tech is similar … it's the strategy."

More investment into domestic technological manufacturing could also help the U.S. gain advantage, CFR's Segal said.

"They also need to block mergers and acquisitions that could lead to equipment being supplied only by a limited number of foreign companies," he said, without naming specific companies.

For China, its early start in 5G could give them a "definite advantage in winning the next 6G transition," Ross said. As Chinese companies gain customers worldwide, building that market will give them experience in developing future products, Ross said.

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