Page 26 - The European Business Review

Technology

manufacturers. In such a future, the key issues might include as 3G. So simplistically, 5G looks like it will cost the opera-
privacy, security, ensuring equal access for all and more broadly tors more and yet not result in any increase in revenue – that
helping those left behind by rapid societal change. is clearly not a sound business case.
But nothing can grow forever and cold, hard logic suggests Whether 5G will cost more rather depends on what 5G
we may be at peak growth now, with the rate of growth falling actually is. Amazingly, given that some claim they are already
1
and demand levelling out perhaps by 2027. This alternative trialling 5G, there is still little consensus on what constitutes
future has us reaching a point where we do not have the time 5G. Looking at various trials, announcements and develop-
WR ZDWFK DQ\ PRUH YLGHR GRZQORDGV DQG ÀQG 95 D PLQRULW\ ments, there appears to be four possible models.
occupation restricted to the home. IoT usage continues to 1. The most likely is that 5G is a small improvement on the
emerge slowly and needs little bandwidth. MNOs do not 4G radio interface, enabling higher speeds and lower laten-
invest because there is no likelihood of increased revenues. cies. This is embodied in the so-called “new radio” and
But ubiquitous connectivity becomes ever-more important might be a minor upgrade to base stations. It is often called
and to achieve it we will get much better at using multiple enhanced mobile broadband. But this 5G would hardly be
networks. Google’s Project Fi pointed the way to a future noticed by consumers and nor would it deliver much to
ZKHUH :L )L LV WKH ÀUVW FKRLFH IRU FRQQHFWLYLW\ ZLWK FHOOXODU the operators.
used as back-up when needed. Wi-Fi would increasingly 2. A second variant is so-called massive machine commu-
provide coverage in buildings, on trains and in dense areas nications, more normally known as Internet of Things
with voice calls taking place using IP-based solutions such (IoT). But 4G is delivering this capability with technolo-
as WhatsApp. Not only would this keep costs down and gies such as NB-IoT and the current thinking is that this
improve not-spots, it would also herald a shake-up in industry will continue to be the IoT mechanism for 5G. So nothing
structure with operators becoming more like wholesale new here.
providers. Users would be able to take greater control: apps 3. A more speculative concept is sometimes called ultra-
might allow them to discover the best mobile operator and reliable and low-latency communications and might
Wi-Fi networks for their daily lives and to tailor connectivity deliver blisteringly fast speeds using new frequency bands
packages to suit, in turn spurring a range of connectivity far above anything currently used for cellular. Consumers
providers to deliver better solutions. The key implications would notice this, primarily because it would require tens
ZRXOG EH VHHQ ÀUVW LQ WKH LQGXVWU\ VWUXFWXUH ZLWK PRUH WKLUG of thousands of base stations in each city. But most oper-
SDUW\ VHUYLFH SURYLGHUV EOXUUHG ERXQGDULHV EHWZHHQ À[HG ators now accept that the costs of such a deployment and
and mobile, new types of competition and an urgent need the technical risks involved are unmanageable.
for reformed regulation. 4. Finally, some such as AT&T and Verizon in the US, have
So which future transpires? UH SXUSRVHG D PRELOH WHFKQRORJ\ WR À[HG FRPPXQLFD-
Most would initially assume that the next ten years will be tions and are proposing to use 5G-like solutions to deliver
like the last ten years and as a result 5G will focus on more EURDGEDQG WR WKH KRPH LQ D FRQFHSW NQRZQ DV À[HG ZLUH-
speed and capacity and drive continued growth in data usage. less access (FWA). Most would not class this as 5G, but
%XW WKHUH DUH PDQ\ ÁDZV ZLWK WKLV YLVLRQ WKH ELJJHVW RI ZKLFK Verizon and AT&T have chosen to do so, confusing the
is that it is too expensive. Despite consuming vastly more data picture. FWA has been tried with every previous mobile
than ever before, we are not prepared to pay more for it. Across generation – but never succeeded at scale.
WKH ZRUOG UHYHQXHV DW PRELOH RSHUDWRUV KDYH EHHQ ÁDW RU LQ Whether anyone will pay more for 5G depends on what
decline. For example, Timotheus Höttges, Chief Executive of LW LV ,I LW LV WKH ÀUVW RSWLRQ VHW RXW DERYH HQKDQFHG PRELOH
Deutsche Telekom (DT), recently noted that European oper- broadband (EMB) – then it is highly unlikely that anyone will
ators’ earnings before interest and tax (EBIT) have fallen by notice any difference or pay more for it. Happily, EMB does
2
44 percent in the last 10 years, while an FCC report showed not cost the operators much either. So expect announce-
US ARPUs had declined 7% in the last year alone. MNOs still ments from about 2018 onwards that networks are now 5G,
remember launching 4G as a premium service which had little but do not expect to notice any difference either in perfor-
take-up causing them to quickly re-offer it for the same price mance or in ARPU.

Simplistically, 5G looks like it will cost the operators more and yet not
result in any increase in revenue – that is clearly not a sound business case.

26 The European Business Review January - February 2018