The Business Case for 5G
“If you look from 3G to 4G,” Patterson said during the event, “the case was underpinned by going from what was a pretty poor internet experience to one which was really opening up the potential of the internet to mobile. And we haven’t found that yet for 5G.”
Vodafone Group CTO Johan Wibergh has also been a vocal realist about the need to ground the business case for 5G in current needs that can be met in the near future, rather than far-off use cases such as AI and autonomous vehicles. He noted at the Huawei forum that this industry tends to over-hype things, and referenced 2G and 4G as technologies we got right, but 3G as an experiment that wasn’t fully realized in many parts of the world.
And going back to Bloomberg’s Kharif and Moritz, they note that most mobile carriers are targeting 2020 for a 5G rollout and that the GSMA expects carrier revenue to grow 2.5% a year after that. But that’s only half a percent more than their growth annual growth from 2015-2020. That’s a return that makes it hard to justify the cash outlay.
But supporters aren’t worried about the lack of a fully refined business case. “We don’t talk about the use cases [for electricity] anymore,” said Qualcomm’s Amon. “We just assume it’s there.”
A growing number of carriers are confident that those business cases will indeed emerge.
“We’re always evolving our network and looking forward to what’s next,” said Hank Kafka, AT&T’s vice president for Access Architecture and Analytics. “We believe our leadership in
software-defined networking (SDN) gives us a 5G advantage.” He notes that an SDN approach can help keep costs in check. “This network approach, which AT&T is the global leader in (planning to
virtualize 75% of our network by 2020), delivers a cost advantage in the deployment of 5G technology over the traditional, hardware-intensive network approach. We expect that the pioneering work
that we have done in network virtualization and software-defined networking will also help enable our network to handle the growth in data consumption driven by mobile video and advanced
applications that 5G will bring.”
“The path is known but it isn’t straight and the route is a bit foggy right now,” Bill Menezes, principal research analyst at Gartner, covering cellular and mobile services, told Pipeline. He notes that there are many projections that show new the new use cases that 5G could ostensibly support—autonomous vehicles, network slicing to support new MVNOs for different verticals, massive AR/VR deployments—generating enough revenue to make the business case work. But there’s a lot of road to cover between now and then.
“The reality is that we do not expect 5G networks to be fully ready in 2020 to support the optimal quality and extreme flexibility to support wide deployment of such use cases,” Menezes said. “There will be a sequence of hardware and software upgrades and it is likely that the true potential of 5G, one that will live up to the 5G vision, can only be realized during the 2025 to 2030 time frame. Until we see that time getting closer, the path to a business case remains murky.”
Despite the long and winding road predicted by analysts, AT&T, Verizon, and many others aren’t waiting around for every aspect of the market to mature. “We expect to be the first U.S. carrier to deploy standards-based, mobile 5G services for some customers later this year,” AT&T’s Kafka told Pipeline.
Vestberg, meanwhile, told the crowd at CES, speaking on behalf of Verizon, that “we will be first.”
So the race is on, even as the size of the trophy, the value of the purse, and the nature of the race itself are still emerging.
And so it goes. It would seem - at least for now - this race is being run for potential of winning and, at least to some degree, the sake of competition.
