People walk by a 5G stand at the Mobile World Congress (MWC), the world's biggest mobile fair, on February 26, 2018 in Barcelona. Josep Lago | AFP | Getty Images

Streaming virtual reality games. Driverless cars. Super-fast downloads of movies. And billions of devices talking to each other. This is the promise of the next-generation mobile internet known as 5G. The race to roll out 5G is on and the U.S., China and other parts of Asia appear to be taking the lead, while Europe is lagging behind. Fragmentation in rules across the European Union's (EU) 28 member states, a lack of investment from mobile networks stemming from weak business, and continuing debate over the allocation of radio waves known as spectrum, are the key reasons for the region falling behind. "Europe is significantly lagging China and North America when it comes to 5G commitments and deployment," Ben Wood, chief of research at CCS Insight, told CNBC in a recent interview. "In the U.S., we've got intense competitive rivalry between the leading players which is accelerating investment in 5G, and in China there is absolutely no question that they see an opportunity to innovate their own 5G, which would be the first generation of technology where they could really be the undisputed leader."

What's the state of play in 5G?

In December, 3GPP, a body that governs cellular standards globally, agreed on the first specifications of what 5G will look like. The technology made its debut at the Winter Olympics in Pyeongchang, South Korea, in February.

The Chinese government has been pushing the development of its 5G industry, naturally favoring its own companies such as Huawei and ZTE, which both make equipment necessary for the technology to work. Due to the size of the Chinese market, which is expected to be the biggest for 5G by 2022, according to data from CCS Insight, both Huawei and ZTE could have an advantage. Huawei, in particular, has been trying to broaden its reach beyond China. Beijing has signed 25 agreements with telecoms operators around the world to trial 5G equipment, according to a Reuters review of company reports. It also announced plans earlier this week to scrap domestic data roaming fees and reduce prices for mobile internet. China's leadership hopes to have pre-commercial products ready by mid-2018. Such a top-down approach is helping to boost the efforts of local carriers to roll out 5G. State-owned China Mobile, for example, plans to build this year what it claims would be the world's largest 5G trial. In the U.S., mobile carriers AT&T and Verizon have both announced plans to begin rolling out 5G in select cities this year and in 2019. On Tuesday, the House of Representatives passed a bill that allows the Federal Communications Commission (FCC) to hold spectrum auctions required for 5G. Spectrum is certain radio waves required for various communication standards. This will allow the development of the next generation networks.

And in Europe, lawmakers agreed a deal last week to free up spectrum for 5G that will be available to EU companies by 2020.

EU leader 'worried'

While China and the U.S. talk about 5G roll-outs in 2018 and 2019, the EU's timeline is a bit longer. And although the recent spectrum agreement paves the way for 5G, there's still a lot of squabbling between different stakeholders. Spectrum is licensed for a certain period of time. But the duration differs across the EU's 28 member states. The European Commission, the EU's executive arm, hoped to have a 25-year minimum licencing spectrum, but the recently-agreed proposal is for 20 years. Some EU countries, such as Germany and Italy, have pushed back against a longer duration. Mats Granryd, head of the GSMA, a body that represents telecoms companies globally, expressed his concern last week.

"We need to be able to have a fair understanding that we have spectra for a long time. It will take time to build these networks (and) to get return for that investment. Therefore, we need to feel secure that the spectrum that we rightfully bought will be ours for a long period of time," he told CNBC in an interview at Mobile World Congress in Barcelona, Spain, in February. European officials have even expressed concern about falling behind the rest of the world in 5G. Andrus Ansip, the European commissioner responsible for the so-called digital single market, said he is "worried" about Europe's position. "The biggest problem in the European Union is fragmentation," Ansip explained to CNBC in an interview last week.

'War for 5G'

Both the U.S. and EU have acknowledged the threat of China. The U.S. government's Treasury Department has expressed concern about Broadcom's proposed merger with Qualcomm, saying the latter could lose ground to China in the 5G development race. "China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover," the Treasury Department said in a letter Monday to lawyers involved in the deal, citing Huawei as a competitive threat. In January, a National Security Council (NSC) document leaked to Axios.com highlighted Washington's concern with the rise of 5G in China. The proposals put forward by the NSC include building a "secure, high-performance... 5G network faster than anyone is currently predicting — three years." The plan was criticized by the FCC, which is in charge of leasing out spectrum, and industry lobby groups. White House officials told Recode at the time that the proposal had merely been floated by a staff member and may never come to fruition.