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In the 5G race, the prize remains unclear

August 20, 2020, 10:45 AM UTC

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Good morning. David Meyer here in Berlin, filling in for Alan.

My first full-time journalistic gig was writing about cellphones and telecommunications, and it began in mid-2006, a fascinating time for the sector. Just over half a decade previously, many network operators had spent eye-watering amounts on securing radio spectrum for 3G mobile-broadband networks, but they still had little to show for it.

The technology’s big use case was a mystery—there were smartphones and apps of a sort, but the announcement of the first iPhone was still months away; Apple was yet to revolutionize the presentation of mobile programs in a way that would lead to mass-market adoption.

I was reminded of this situation by two pieces of commentary in the last day, this time regarding 5G.

One was Tae Kim’s Bloomberg piece on Apple’s historic $2 trillion valuation, which noted that—in the context of the pandemic—it could prove difficult for the company to convince economically-insecure Americans to buy expensive 5G iPhones. “Further, I’m still skeptical there will be new apps anytime soon that will need the faster fifth-generation wireless speeds, making phone upgrades less compelling,” Kim wrote.

Personally, I suspect many phone users will be keen to upgrade their devices if only because relentless disinfection with potent chemicals has damaged their screens. But the argument is valid; early adopters will usually have to wait a while for that choice to bear fruit.

The other piece came this morning from Iain Morris, news editor at telecoms trade outlet Light Reading, who noted that early deployers of 5G in East Asia are still waiting to see results. In Japan, takeup is low. In South Korea, a lot of people have bought 5G phones, but they aren’t spending more on mobile services as a result. Looks like a similar story in China, too—and as for the much-vaunted business applications of 5G, he wrote, “there are few real-world examples that cannot squeeze into 4G or Wi-Fi.”

Morris’s point is that, for all the hype about 5G being the prize in some grand, global race, its rewards are “far less obvious” than those in the arms, space or vaccine races.

While some politicians see 5G as “central to the way economies will function in the future and the way our countries will secure themselves”—the words of hawkish U.S. Senator Tom Cotton, backing the American assault on Huawei—Morris argues that the technology is already at risk of fragmentation, and the pandemic could “hinder app development and service innovation for years.”

In short, 5G really isn’t as important as some make it out to be, and won’t be for a good while yet—something worth bearing in mind when governments use it as a rallying cry in their geopolitical squabbles, and when smartphone makers try to get you upgrading to the latest and greatest.

News below.

David Meyer
@superglaze

david.meyer@fortune.com

TOP NEWS

Markets wobble

Asian and European markets have fallen, and U.S. futures are down, after members of the Federal Reserve said the rebound in employment was slowing and additional easing may be needed. In China, shares fell after the People's Bank of China dampened expectation for additional monetary easing. And in Australia, the markets took fright due to concerns over worsening ties with China. Reuters

Trump vs Goodyear

The latest brands-vs-politicians squabble comes courtesy of Goodyear, which reportedly told employees they couldn't wear pro-Trump "MAGA attire" to work. Goodyear insists that it discourages employees from any political campaigning in the workplace. Either way, the President urged his supporters to boycott the company, and said he might change the tires on his presidential limo. The boycott announcement caused Goodyear's stock to drop as much as 6%. Fortune

Share buybacks

The pandemic nearly halved stock buybacks in the U.S. in the second quarter. Provisional figures put the quarterly total at $89.7 billion, down 46% year-on-year, on pace for the lowest quarterly total since Q1 2012. Financial Times

Walk away

The financial sector can have an "enormous positive impact on the climate movement," Citi CEO Michael Corbat wrote in a CNN op-ed. Corbat said the sector should develop standards that let companies "identify and disclose the potential impacts of their businesses on the environment and the potential impacts of climate change on their businesses," and banks should "have the courage to walk away" if clients won't reduce their emissions. However, he rejected calls for Citi to divest entirely from the fossil fuel industry, as "we believe in working with them, not against them." CNN

AROUND THE WATER COOLER

MediaTek woes

Chipmaker MediaTek was set to do well out of the loophole that let Huawei buy off-the-shelf chips designed by third parties, even if those third parties used U.S. technology. Now, with the U.S. Department of Commerce having closed off that route, the Taiwanese firm's stock price has plummeted—as has that of other processor manufacturers in a similar boat, such as Novatek and Realtek. Fortune

Californian fires

Residents in parts of California's Lake and Napa counties have been told to evacuate, as dozens of wildfires spread across the state. Lightning strikes have been blamed for the majority of the fires, though a man has also been arrested over suspected arson. A helicopter pilot fighting the fires died when his craft crashed, causing yet another fire. New York Times

Oh, Canada

Canada's government had a heck of day yesterday. Finance Minister Bill Morneau quit in the midst of a conflict-of-interest probe that is also targeting Prime Minister Justin Trudeau. Morneau's successor, Chrystia Freeland—a former journalist who has served as foreign and international trade minister—is the first woman to hold the post. Then Trudeau suspended Canada's parliament for five weeks, saying he needed the time to reshape his pre-pandemic agenda into an "ambitious" recovery plan. His critics say the suspension is about that ethics probe. Washington Post

Navalny poisoning

Alexei Navalny, the Russian opposition leader and anti-corruption campaigner, has apparently been poisoned again. Last year he suffered a suspected poisoning while in police custody; this time he seems to have ingested poisoned tea while on a place from Siberia to Moscow. His spokeswoman, Kira Yarmysh, says he has fallen into a coma. Deutsche Welle

This edition of CEO Daily was edited by David Meyer.