LIVE FROM GSMA MOBILE WORLD CONGRESS AMERICAS 2017: Rajeev Suri, Nokia CEO, dismissed any suggestion that the fourth industrial revolution will fail to live up to the hype, stating that he “deeply believes we are on the cusp” of a technological and productivity revolution.
Suri, speaking in today’s opening keynote, said there was an argument, albeit a pessimistic one, that companies and countries could simply “skip” investing in new innovations and technology because the last industrial revolution had failed to live up to expectations.
“Since the 1970s, at the time of the third industrial revolution, productivity growth has actually fallen to roughly one third from the previous hundred years,” he said. “Think about it. The massive innovation in computing, communications and so much more has done little to accelerate economic growth.”
He added that despite a modest bump in the 1990s through ICT, there had been nothing close to the scale of improvement that came in the 1950s, and that should make “all of us concerned”.
“Where is all our hard work, innovation and investment gone?” he asked. “What does that imply about the potential impact of the next round of technological investment in 5G, IoT, connected factories and more.”
Bell Labs study
Suri, however, citing a study by Nokia Bell Labs, has found reasons to believe that the same trends from the fourth industrial revolution will not follow, as he tipped the telecoms industry in particular to benefit from the next wave.
He said five segments enhanced by digital networks – health, energy, transportation, communication and production – will lead the world into a new golden age, all underpinned by 5G.
“With each of these technologies on a trajectory to grow vigorously into the late 2020s, we believe they will reach a tipping point similar to what happened in the 1950s,” he said.
The US, according to Bell Labs, will achieve a “major productivity jump” in the five year period from 2028 to 2033, in the range of between 30 per cent to 35 per cent.
“This higher productivity could add trillions of dollars to the US economy every year,” he said. “If you took $1 trillion and divided it to every citizen in the US, you could hand everyone a cheque for $3,000 and still have $22 billion to spend.”
So, with the telecoms industry likely to make the largest investment in 5G, how does that translate to returns for the industry?
Providing solutions to enterprises will be key, according to Suri.
“In 2018, the telco is expected to generate $150 billion in total EBITDA as a result of delivering enterprise solutions to customers. Yet we see that telcos who embark on a path to 5G – such as moving from 4G to 4.5G and 4.9G or focusing on SDN and a move to cloud will see massive growth in revenue and earnings in their enterprise businesses from today’s relatively small base. We are talking about over 80 per cent growth in revenue and nearly 100 per cent growth in EBITDA between 2018 and 2020. Pretty good, I would say.”
And leveraging next-generation digital networks that go beyond connectivity, including new 5G features such as network slicing and massive MIMO, could prove even more lucrative for telcos in the long run.
“We see a 150 per cent jump in revenue and a 200 per cent jump in EBITDA for the enterprise segments of these businesses between 2018 and 2028,” he said.