Introduction
No longer hype, 5G is a technology that is already out there and ready to change the whole telecom and technology landscape within a year. Governments and mobile operators across the world are readying to allocate 5G-ready wireless spectrum ahead of large-scale network deployments. Competition is fierce on the 5G global stage, 5G activities are growing, as vendors and service providers in technology-focused countries work on early 5G network trials and test 5G in limited circles.
Global 5G deployments
In 2018, around 13 commercial 5G networks were launched including both mobile and fixed wireless deployments worldwide. As the race to 5G continues, these numbers are expected to triple by the end of 2019. The total count of live 5G deployments is expected to reach 55 by the end of this year; Europe contributing the largest with 21 deployments followed by the Middle East with 14 deployments. Asia is expected to have 10 deployments followed by America with 8 and Australia with 2 deployments. These numbers are realistic and look very achievable as compared to the exaggerated numbers and promises analysts and operators are making. Having said that, 55 deployments would still be a huge step in the 5G era; more than 14 network equipment manufacturers have announced involvement in 5G trials involving Huawei, Samsung, Ericsson, Nokia, ZTE to name a few.
To highlight some of the major deals in Europe, Nordic telco Elisa announced availability of a commercial 5G network in Tampere, Finland and Estonia’s capital city Tallinn in the month of June 2018. In late 2018, French carrier Orange announced detailed plans regarding 5G network deployment and commercial launch.
In the Middle East, the UAE, the KSA and Qatar are leading the 5G race. In the UAE, local operators Etisalat and Du have confirmed the roll out of 5G in the second half of 2019; while the KSA is releasing an additional 400 MHz in mid-band (3.5 GHz) for commercial operators. Apart from telecom operators, network manufacturers are also approaching large businesses, which have potential use cases for 5G. Huawei has partnered with Middle East based electrical product manufacturer Alfanar to explore how IoT and 5G technologies can be implemented in electrical products.
In Asia, South Korea is taking an early lead in 5G deployment. All three operators, SK Telecom, LG Uplus and KT in the country have already launched 5G in December 2018. However, they currently provide access with mobile 5G routers since 5G phones aren’t set to grow until end of 2019. Australia is the second Asia-Pacific country after South Korea to auction off 5G spectrum; four telecom operators Telstra, Optus, Dense Air Australia and a joint venture between TPG Telecom and Vodafone Hutchison Australia are set to roll out 5G in the country soon. With Japan hosting the ninth Rugby World Cup in 2019, it has set the stage for limited pre 5G commercial services. NTT DoCoMo and KDDI both have revealed plans to launch pre commercial 5G services in limited areas in 2019, with full-fledged services in 2020.
In America, Verizon launched a commercial 5G service in October 2018 with an offering called 5G Home, which is so far available in Houston, Los Angeles, Sacramento and Indianapolis. On the business front, Verizon is partnering with Walt Disney’s StudioLab to explore how next-generation connectivity can improve Disney’s content production and transmission. AT&T reportedly launched a 5G service in 15 cities in 2018; however, the initial rollout was available to selected businesses and consumers only. AT&T plans to make 5G publicly accessible in 2019 after it makes the NETGEAR Nighthawk 5G Mobile Hotspot available for purchase.
Looking ahead, 5G momentum will intensify in 2019 and 2020 with further commercial launches around the world and continuous work across the industry on spectrum, specifications, network deployments and devices.
Factors driving investment in 5G
The above deals and deployments clearly show the potential of 5G and the future telecom operators envision of the technology. We will try to understand the factors that are actually driving these investments by countries and telecom providers. At a broader level the use cases of 5G can be grouped into three categories, enhanced mobile broadband, IoT, and mission-critical applications. The success of these use cases is dependent on the performance of all network parameters including spectrum, radio access network (RAN) infrastructure, transmission, and core networks.
5G will enable virtual and augmented reality, connected automobile, IoT (smart manufacturing, smart city), personal AI assistant, connected drones, connected energy, wireless health, wireless entertainment, and much more. However, use cases, which will cater to smart vehicle and transport system, enhanced human interaction AI and the broadband experience for business enterprises are the ones, which will drive commercialisation success along with sustainable market growth.
We saw the vast array of use cases that 5G provides; we heard all the hype of 5G, the new opportunities, and the new ways to delight customers with 100× bandwidth, 10× throughputs, and 10× reductions in latency. But what about the commercial success of 5G; the road to 5G monetisation is not easy and will take a long time to reach breakeven. The capital investment required in spectrum, RAN, enhanced packet core and IT infrastructure is substantially high. Organisations will have to adjust and transform. Creating effective monetisation opportunities will be essential to ensure maximum return on both capital and organisational investments. While operators plan 5G rollouts it is very important they also be clear with their monetisation plans.
5G is coming at a time when customer experience is becoming a key performance metric and a top challenge. Choosing to embark on the journey towards 5G, the following three things are critical to address the monetisation issue of 5G. Firstly, 5G is all about scale: unless operators are targeting a huge audience with unique niches to drive initial volumes it will be difficult to sustain the market. Secondly, a strong enterprise segment service offering will become important for 5G monetisation. The current technology ecosystem is not geared for the next generation of enterprise service offerings, an open dialogue to create a platform to support all current ecosystem players including OEMs, vendors and managed service providers, and future ecosystem players will be very important. Lastly, building solutions that will compel the customer to approach the operator will be crucial rather than the operators pushing their offerings.
Time to Invest in 5G and stay competitive
The global race to lead the 5G revolution, as well as faster full-fibre broadband, is arguably the most important of the modern era and one that could decide who dominates vital technological advancements, like Artificial Intelligence (AI). As the final countdown to 5G launch has begun, companies are increasingly investing in 5G technologies. 5G technology investments are primarily driven by the companies’ need to secure market leadership, meet customer demand, and take advantage of flexible and scalable networks.
Compared to investments in the earlier generation of wireless mobile technologies, investments in 5G will be significantly high. That would also be on account of the pace at which the technology will mature. The deployment of 5G is expected in a time frame of 3 years from 2019 to 2022, as compared to 4G and 3G which took around 6 years and 9 years, respectively. Moreover, the commercial synchronisation of 5G with network and network devices (Smartphones, CPE, etc.) has already started in 2018 and would realise its full potential in a year. Earlier technologies took around 3 years to synchronise with network devices and applications.
Competition is going to be fierce 2 to 3 years down the line; preparing to invest at that stage may also increase costs considerably along with delayed implementations. And while the latecomer fully implements 5G, there are chances that the market could reach a maturity level where customer acquisition costs will increase as they would already be users of the first comer. So it would not be wrong to say that for a sustainable run in the 5G race, operators need to start investing at the earliest.
Authored by: Suraj Godse, Sr. Research Analyst, Digital Transformation, Frost & Sullivan
Saurabh Verma, Associate Director, Digital Transformation, Frost & Sullivan
