Superfast 5G ambitions risk getting ahead of demand

When chancellor of the exchequer Philip Hammond declared he wanted Britain to become a “world leader in 5G” during his Autumn Statement on the UK economy, he was praised for his ambition by parliamentary colleagues.

Yet he was, if anything, late to the party, with the chorus of governments, companies and academics pushing the case to become 5G pioneers growing louder over the past two years.

Despite years of industry wrangling, there is still no clear definition of what 5G means, little more than a year before some countries have pledged to launch network trials of the technology.

The hardware standards for the fifth generation of wireless communications were set at a conference in Nevada last month but the software elements have yet to be agreed, as industry players continue to battle for supremacy.

The hype cycle has nonetheless been in overdrive.

AT&T has boasted of achieving data speeds of 14 gigabits per second in lab trials of a 5G-like technology with Ericsson and Intel, while one of the telco’s senior executives claimed the next generation of networks had “unlimited potential.”

The United Kingdom’s BT and China’s Huawei have formed a pact to “lead the global development of 5G mobile technologies.”

Gavin Patterson, BT chief executive, said that his company was “determined to maximize the potential of 5G for our customers.”

Ulf Ewaldsson, chief technology officer at Ericsson, which is devoting the majority of its $ 5 billion annual research spend to the new technology, argues that 5G represents the best opportunity for the telecoms industry to return to growth.

“This is the biggest thing the industry has going for it,” he said, despite being “lukewarm” about the ability of the telecoms carriers to monetize the potential of 5G.

Yet, some observers have started to argue that the telecoms industry is in danger of going too fast and too hard on 5G.

Professor William Webb, a former Ofcom director and president of the Institute of Engineering and Technology, has argued that the debate about what 5G will deliver has become “too utopian” and that the industry is in danger of investing billions in networks that deliver speeds that no one needs.

Mr. Webb, who also sits on a Department for Culture, Media and Sport advisory panel, said the telecoms industry had become “obsessed with speed” in the same way that aerospace engineers did during the 1960s at the dawn of the era of supersonic travel. That ambition led to the development of the Concorde aircraft that flew at twice the speed of sound and operated as a commercial service for 27 years. The jet’s cultural influence cannot be doubted but it did little to accelerate progress in the wider industry. “Although the Concorde was technically possible, it was economically unfeasible,” he said.

Similarly, he sees download speeds attributed to future 5G networks of more than 10 Gbps tracking well ahead of historic demand curves for mobile data.

Like cruising speeds, Mr. Webb predicts that data growth is slowing and could plateau around 2027, having only doubled in the 5G era.

The danger for telecoms operators is that they blow billions in the rush to launch 5G networks and find consumers are unwilling to pay for the technology.

It would be a familiar story in telecoms, which has seen its fair share of bankruptcies among companies desperate to invest in new networks that have tracked ahead of the demand curve, notably fiber-optic cable companies in the 1990s and satellite broadband services at the turn of the century.

Peter White, chief executive and cofounder of Rethink Technology Research, said the telecoms industry was “engaged in a desperate fantasy that 5G is almost here,” driven by the equipment makers and chip companies. He argued that the only consumer advancement offered up by 5G during the current debate is ultra- high definition video, but questioned whether consumers would want to pay for it.

That has led to 5G being pitched as an “Internet of things” ( IoT) network that will deliver lag- free communications with faster reach, lighting up a world of connected cars, virtual reality applications, smart cities and ehealth care.

Professor Rahim Tafazolli, director of the 5G Innovation Centre at the University of Surrey in the United Kingdom, said that 2017 would represent a “turning point” for 5G development because of a number of commercial trials around technologies such as low-power “narrowband IoT” networks that will become “stepping stones” to full 5G.

He forecast that a typical “smart city” deployment would need to support one million devices per square kilometer, which requires ultra-reliable networks with low latency — the time it takes for data to travel between a device like a connected car and the surrounding sensors.

“All the technology pieces are in place,” he said.

Rethink’s Mr. White argues that many businesses are formulating IoT strategies, but are not ready to supply the “gravy train” needed for telecoms carriers to roll out 5G networks rapidly.

“Never before in the history of telecoms has a technology been put forward to solve so many problems at once without anyone being clear on who will pay for what, in what time frame. The uncertainty is palpable,” he said.

But Ericsson’s Mr. Ewaldsson remains defiant that 5G will pay off. His confidence springs from the cynicism around 4G launches in 2009 that proved unfounded.

“People said: ‘ What are you going to use that data for? I’ve already got 3G,’” he recalled.