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5G in 5 years?

A phenomenon has developed at telecoms industry events in 2016: the miniature city. I first noticed this earlier this year around the time that news from Mobile World Congress was dominating the technology media. Amongst the inevitable virtual reality headsets and superfast new mobile handsets,  I observed the sheer number of model cities and sports stadiums that littered the show’s exhibition floors in the images from the show floor that I saw.

Since then I’ve seen 1:32” scale model cities wherever the telecoms industry gathers. The function they serve is to show how 5G is going to change the world. How it will make transport easier, allow street lights to communicate and enable sports fans to get instant, multi-angle replays to their smartphone from the stands as the game plays out.

Truly, the telecoms industry is excited about getting 5G into the hands of customers and all the new services they’ll buy once they’ve been liberated from the limited speed and bandwidth of 4G. In Europe and the USA, operator strategies that are not built around bringing the holy grail of 5G connectivity to consumers are rare.

It strikes me, however, that we’re all making quite a bold assumption that consumers are going to take up 5G services the moment we achieve it. Will they actually do that? Probably not.

Our greatest guide to public reaction to 5G is, of course, the 4G roll out. 4G adoption was spurred by apps appearing on consumers phones and the world of new functions those apps introduced. The problem was that the apps kept becoming more and more sophisticated – graphically and functionally – and 3G connections couldn’t keep up. For consumers that created an easy choice – give up apps or upgrade to 4G. They chose 4G but then the financial jump was relatively modest.

Just like 4G, 5G will spur the introduction of new apps and exciting new functionality. Just like 4G, however, any new app or service’s magic will depend the connectivity behind it – so consumers will need jump to 5G to enjoy. Simple right? Not so much. The economics of providing 5G connectivity will make it difficult for providers to drive costs low enough to make moving to 5G more tempting than simply not adopting the latest app. Without mass adoption of 5G for big apps, we won’t see mass adoption of 5G.

Operators are already investing heavily to realise 5G and across the world governments are now beginning to auction the spectrum needed to deliver 5G services. That’s where the spending really starts. In many countries, spectrum space is highly stratified for different functions from radio broadcasts to emergency service and military communications. Certain services, particularly television, take up huge chunks of space limiting that available for the late coming mobile spectrum. The elimination of analogue television signal in favour of digital in many countries has freed up some spectrum but it remains limited and therefore valuable, particularly when sold by governments at auction.

If operators are spending huge amounts of money just for the spectrum space to provide 5G connectivity (far more space hungry than 4G), they will have to pass the cost on to the consumer or have margins deteriorate. Increasingly price sensitive consumers won’t stand for price rises and will instead stick with 4G. Instead, consumers will change their behaviours, picking and choosing which apps are stationary and which are mobile. Data hungry apps created for a 5G world (VR, AI, HD streaming) will be used when they are stationary and consequently able to use WiFi to take the data load, and the load off their pocket. Less data hungry apps will remain mobile.

5G will enable some great new services.  But I don’t believe the 5G roll out and adoption will be anywhere near as fast as the speed and bandwidth 5G promises to provide!

How do you see 5G reaching the mainstream? Let us know in the comments below.

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John Hayduk

John Hayduk

John Hayduk is the Corporate Operations Officer at Tata Communications, part of the $108.78 billion Tata group of companies. He is responsible for strengthening the company’s execution capability, driving achievement of the company goals, and leading the implementation of the company’s strategic vision that creates an open infrastructure, partner ecosystem and platforms for businesses to stay competitive in this digital age.

Follow John on Twitter: @john_hayduk

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