CRA Insights

The economics of 5G deployment in the “race” to 5G: To open or not to open a technological system: insights from the history of mobile phones and their application to 5G

May 5, 2021
Fibre optics, hardware, circuit board in the background

Is it a good business strategy for a creator of new technology to make that technology available to other companies in the industry, including its competitors? And if so, on what terms? Further, is it a good business strategy for a developer of new technology to allow third-party companies to develop applications for it? And if so, on what terms? These questions go to the core of what it means for a technological system to be “open” or “closed.”

As the cellular industry transitions to 5G, discussions about the appeal of open versus closed solutions are becoming more intense. In recent years, industry stakeholders—including carriers and infrastructure suppliers—have debated the virtues and weaknesses of open versus closed approaches to the definition of radio access network (RAN) interfaces.

The historical case studies analyzed in this Insights suggest that decisions made in this area, and others related to it, are likely to have a substantial effect on both the diffusion of 5G networks and the distribution of rewards across industry participants.