Opinion Last month at Mobile World Congress, the world’s largest telecoms event, attendees heard countless claims about the benefits of 5G. It was described as ‘seamless’, ‘inclusive’, ‘immersive’ and ‘secure’. While it was positive to see the 5G experience articulated to more than 100,000 visitors at Mobile World Congress 2018, what was missing was a clear explanation of what 5G will actually accomplish.
Which specific use cases will it enable beyond the familiar connected car demonstrations on every stand? What commercial models will justify the substantial investment required? For example, a 5G-connected drone could potentially cut 90% of remote site inspection costs, but who pays for that saving? How does the network provider — often only supplying connectivity — capture value? And in some scenarios, is 5G even strictly necessary?
The telecoms industry has invested more than $1.2 trillion in networks globally since 2010. Any further investment must be founded on realistic expectations of return. Some estimates suggest 5G deployment could require as much as $250 billion in the US alone. On paper the numbers are challenging. It was therefore reassuring when Sigve Brekke, CEO of Telenor, said he would not push for 5G roll-out until viable use cases are identified.
For 5G to be commercially viable, thinking must move beyond hardware — VR headsets, drones and autonomous vehicles — and toward a different infrastructure model that supports use cases capable of generating real revenue. Traditional telecom logic of each operator building its own end-to-end infrastructure to host services may not hold in the 5G era. Services are likely to be cloud-based with global reach. Large international enterprises driving the Industrial Internet of Things will expect solutions that work consistently across borders.
Infrastructure sharing and deeper partnerships between network operators and global cloud providers such as AWS and Google may become essential. When a single operator can manage, in real time, a network of millions of sensors distributed worldwide, partnerships will need to be more integrated than the arrangements commonly seen today.
Timing also complicates 5G investment decisions. Deploy too early and operators risk high costs and unproven technology choices; deploy too late and they risk losing market share, a lesson learned by late LTE adopters. For telecom CFOs, that is yet another factor to weigh carefully.
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