I heard the terms ‘use case’ and ‘business case’ repeatedly during a two-day visit to 5G World in London a few weeks ago.
The event, which featured presentations from some of the world’s biggest operators, updated on the progress of the next-generation of mobile, with the widely touted commercial launch now just two or three years away.
While many used the show as an opportunity to trumpet some of the ways they expect to benefit from 5G, I could not help but get the impression that the operator march towards this next great evolution has not been as clear-cut as they would have liked.
With squeezing margins and the mammoth investment in LTE still burning a hole, making the 5G leap is perhaps not as justifiable as the jump from 3G to 4G, particularly if you have investors looking for immediate returns to the top line.
Of course, you will find little argument against the industry and technology continuing to move forward, as this market simply cannot stand still.
As we have heard for the past half a decade or so, mobile networks and operators need to do more than simply provide connectivity, and 5G is heavily touted as the necessary leap to provide crucial value-add, and broaden the operator ecosystem.
To that end, autonomous vehicles, telemedicine, IoT, the industrial internet and VR are all expected to emerge as world changing developments, all fuelled by a 5G network, offering countless partnership opportunities for operators.
But, it is equally hard to ignore the notion even 2020 might be a bit too soon for 5G, particularly if you buy into the idea that 4G is currently doing more than enough to serve consumer demand for high speed mobile broadband.
Indeed, BT’s CEO of technology services and operations Howard Watson proclaimed “5G will have a lot to live up to”, as he opened a presentation at the event by outlining the company’s plans to continue to invest in its 4G network for the near future.
Was I actually at 4G World?
Deutsche Telekom’s VP of innovation and research, Uwe Janssen, was first up to provide a rather bleak assessment of the industry’s push to 5G.
While bemoaning the massive infrastructure spend it would require to deploy 5G, he also suggested shareholders were not entirely happy with the returns generated from capital deployed: “They are always challenging us to improve,” he said.
Janssen went on to cite a Barclays study which said “only a few global operators” would be able to benefit from the three major segments expected to be aided by 5G – enhanced mobile broadband, enhanced IoT and ultra-reliable and low latency networks.
Perhaps not exactly the message delegates attending the event expected to hear.
Janssen went on to urge “radical change” across the board to allow operators to meet the 5G challenge.
The story continued in a panel on 5G investment, as Telenor Norway CEO Berit Svendsen warned the industry is “already in big trouble because there has not been increases in revenue for many years”.
While stating that Telenor itself had been “lucky” because its 4G success had led to top line growth, she cautioned others had not experienced the same fortune.
To address this, she urged the industry to identify a strong business case and use case for 5G, insisting that increasing network efficiency and enabling faster speeds for consumers was not enough to justify the “huge” investment required.
Telenor Norway will head into 2020 with a keen focus on developing autonomous driving, remote surgery and fish farming – arguably, a set of use cases which would take any operator out of its comfort zone.
In another session, panellists even argued some of the touted 5G use cases could be delivered before the technology comes to market.
Matt Beal, Vodafone Group’s technology for Innovation and Architecture, pointed out the industry is often “criticised for its speed”, and IoT was one particular “5G use case” the industry should “quit waiting on”.
Canada-based Telus’ CTO Bernard Bureau (pictured below, second from right) further cautioned that while it was all well and good pursuing shiny new business models to justify the 5G leap, today’s operators still operate on the fundamentals of the industry: selling connectivity.
“There is very little money to be made in connectivity,” he said, adding: “The money will be made on the added value and the service. But an operator like us does not have the weight to build that ecosystem.”
Keeping Deutsche Telekom’s Janssen’s comments in mind, Nokia’s mobile networks CTO, Hossein Moiin, added to a recent spate of bleakness around Europe’s 5G prospects in particular.
Moiin, following calls from industry bodies including the GSMA, urged a change in Europe’s regulatory approach, calling for the market to open up in a bid to encourage investment.
He cautioned failure to do so could see Europe left behind in the global 5G race.
The CTO (pictured) also said the likely uptick from 5G in terms of revenue would present itself over time, and investment would happen as the use cases continue to grow. This, too, would be dependent on other industries becoming “digital and fully networked in the way they operate”.
Summing up the current struggle, a recent study by S&P Global Market Intelligence showcased the European operators’ fall from grace.
The analysis showed that a decade ago, European giants Telefonica, Deutsche Telekom, Telecom Italia, BT and Orange were among the top-ten largest operators in the world, according to Forbes Global 2000 records.
In the same analysis in 2017 only three European companies made the illustrious list (Deutsche Telekom, Telefonica and BT), while Asia now counts five members, along with US big boys AT&T and Verizon.
The study further cited calls from both Mike Fries, Liberty Global’s CEO, and Orange chief Stephane Richard, who have argued M&A in Europe must be allowed to offset the investment constraints hitting the segment.
Justifying the investment in 5G without any consolidation is “definitely a challenge”, added Chris Lewis, founder of telecoms consultancy Lewis Insight.
Back to 5G World, and BT’s Watson perhaps summed up the current operator dilemma perfectly: “It is no longer a case of build it and they will come,” he said.
With Asia and the US going full pelt, it is hard not to see European operators coming to the 5G party in 2020.
However, it will be post 2020 and after building ‘it’, that the real test will begin.
The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.