Typography

5G won’t come cheap. In the United States alone, fiber infrastructure to prepare for the next-generation technology could cost up to $150 billion, according to Deloitte. But despite 5G’s hefty bill, a recent survey discovered that 75 percent of end-user organizations would be willing to pay more for 5G mobile capabilities.


The survey conducted by Gartner found that just 24 percent of respondents would be unwilling to fork out more to pay for 5G. 59 percent of respondents believe that 5G is a network evolution, while 37 percent perceive it as an enabler of digital business. The survey also found that respondents from the telecom sector are less persuaded than those in other industries that 5G will be a revenue enhancer.

The telecom industry tends to view 5G as a “matter of gradual and inevitable infrastructural change, rather than as an opportunity to generate new revenue,” said Sylvian Fabre, research director at Gartner. Telecom companies will be willing to pay a 5G premium for their internal use, he added, while end-user organizations in the manufacturing, services and government sectors, for example, are “less likely to be willing to pay a premium” for the technology.

There’s no doubt about it: 5G rollout will be expensive. Timotheus Höttges, CEO of Deutsche Telekom Group, says blanketing Europe with a 5G network will require investments of between €300 billion ($355 billion) and €500 billion ($558 billion). There’s also the issue of coping with the explosion of data that will come down the line in the next few years with the rapid introduction of Internet of things (IoT) devices.

In addition, revenue potential for 5G remains uncertain. Operators, for example, are not expecting to see much increase in mobile broadband revenues as a result of launching 5G, according to Bernard Bureau, CTO of Canada’s Telus Group. Speaking at 5G World in London this year, he said despite the high costs and uncertainty of return investment, it would be “foolish” not to use more efficient technology [5G].

For example, if your phone breaks, you’re most likely going to upgrade to a new model – not a model as old as the one that broke. But you also want to know how much that new model will cost. That’s the dilemma facing the telecom industry today – operators know that investing in 5G isn’t pointless, but there’s no guarantee that it will bring the returns they desire.

The strongest potential for 5G is IoT and ultra-reliable low latency, whereby everything – including connected cars, robot surgeons, and even fridges – will be connected via a 5G network, which will generate new streams of revenue. Smart cities and the evolution of IoT adoption will drive fast uptake of 5G, transforming the focus from a consumer-centric cellular coverage to more machine-centric communications, Deloitte predicts.

5G misunderstandings 

IoT communication stands out as the main use case for 5G in Gartner’s survey of respondents. The majority of respondents (57 percent) said their organization’s main intention is to use 5G to drive IoT communication. This finding is surprising, according to Gartner’s Mr. Fabre, as the number of connected ‘things’ won’t necessarily exceed the capacity of existing cellular IoT technologies before 2023 in most regions.

Even once fully implemented, 5G will suit “only a narrow subset of IoT use cases that require a combination of very high data rates and very low latency,” he said. “In addition, 5G won’t be ready to support massive machine-type communications, or ultra-reliable and low-latency communications, until early 2020.”

The study suggests there might be misunderstandings about 5G’s applicability, since there are “many proven and less expensive alternatives” that already exist today for IoT connectivity – use of Wi-Fi, ZigBee or Bluetooth, for example, would avoid the cost and complexity associated with cellular communications, the study says.

4.5G speeds and capacity, for instance, will likely be sufficient for most devices in the near future. Therefore, massive IoT communications could be difficult to sell today as a 5G use case, because the requirements are diverse and current solutions can do the job. Telecom consulting firm Analysys Mason suggests that while this ultra-high performance use case won’t be possible for quite some time, it’s the only use case that “exploits the unique capabilities of 5G performance.”

There also tends to be confusion about 5G’s rollout date: a large majority of respondents in the study (84 percent) believes that 5G will be widely available by 2020, whereas CSPs’ plans indicate that wide availability may not be achieved before 2022. What’s more, Gartner predicts that, by 2020, only 3 percent of the world’s network-owning mobile CSPs will have launched 5G networks commercially.

“Although standards-compliant commercial network equipment could be available by 2019, commercial rollouts of 5G networks and services by CSPs before 2019 are likely to use pre-standard equipment,” said Mr. Fabre. CSPs’ marketing organizations need “realistic roadmaps” for 5G coverage and typical performance, so that they communicate with customers accurately, he added. They also need to publish “clear 5G rollout plans for the years 2019 to 2021.”

Weighing up the risks

Many operators have already announced plans to launch 5G even though they have only recently deployed LTE-Advanced. In the GCC, Etisalat, Ooredoo and STC are eager to deploy the technology by 2020, particularly Etisalat, with Dubai’s Expo 2020 looming. But there are many unknowns to consider: for one, use cases haven’t yet been defined, standardization of 5G is progressing slowly, and regulators must allocate additional suitable spectrum.

In these circumstances, the deployment of 5G by 2020 is uncertain, even though 2020 is widely regarded as the target launch date in the Gulf region. Telecom operators will require the support of equipment vendors such as Huawei, Qualcomm and Nokia who are keen to use 5G to support them in maintaining leadership in mobile services, says Analysys Mason. Vendors have an opportunity to provide operators “the full suite of evolution technologies from LTE-A to 4G Pro and ultimately to full 5G services.”

5G is still in the early development stages, and standards for the technology are yet to be agreed upon by the 3rd Generation Partnership Project (3GPP). The ITU’s Radiocommunication sector (ITU-R) has set an expected schedule for 5G standardization process for 2019-2020. As such, 5G is expected to start rolling out globally sometime in 2020, with commercial launch dates expected at the beginning of 2021, Deloitte predicts.

5G will not only connect people but also machines, automobiles, and city infrastructure on a much grander scale. The leading players across the 5G value chain are today looking for use cases of the future to establish their investment plans. Rollout of the technology may be expensive and full of risks, but the bottom line is, 5G will bring the promise of energy efficient networks, speeds of up to 10Gbps and latencies of mere milliseconds.