Telecoms industry bet on connecting everything to recoup 5G overheads
BARCELONA — For the telecoms industry, the task of launching 5G services is a lot like going the wrong way on the moving walkways that ferry delegates around the vast Barcelona fairground that hosts the Mobile World Congress.
Operators are striding towards a future with data speeds up to 100 times faster than 4G networks and billions of connected devices to help run homes, offices, factories and cities — creating a seemingly limitless opportunity for an industry now hamstrung by the smartphone market’s saturation.
Moving against them is the expense of upgrading networks to run 5G: This requires denser arrays of masts and “smallcells” to deliver data-intensive services, and the laying of fiber-optic cable to boost speed and achieve the low reaction times needed to delight online gamers or make self-driving cars safe.
Put it all together, and the global cost of 5G infrastructure investment and enabling the so-called ‘Internet of Things’ (IoT) will run to $2.7 trillion by the end of 2020, estimates Greensill, a company that provides working capital to industry.
With early movers like the United States, China, Japan and South Korea only starting to roll out 5G networks, and other regions — especially Europe — still years away, the challenge will be to earn back that up-front investment.
“There will be some very tough discussions, but hopefully now what will be interesting to see is that there should be enough test deployments and real market data and we can start to see at least in the short term if it’s viable,” said Sam Evans, a partner at global consultancy Delta Partners.
Industry association GSMA, which hosts the Mobile World Congress, sees a vast opportunity. It estimates the number of devices connected to the IoT will triple to 25 billion by 2025, generating a fourfold rise in revenues to $1.1 trillion.
“Is one use case going to finance 5G? The answer is: not really. It’s going to be a multitude of use cases that benefit from the features of 5G,” said Borje Ekholm, chief executive officer (CEO) of network vendor Ericsson.
Ekholm’s 5G favorite is remote surgery: “We laugh a bit about that, right? But the reality is already today when you operate prostate it’s done with a robot,” said Mr. Ekholm, in a dig at the industry’s male-dominated demographics.
DATA ECONOMY
The first deployments of 5G, for example by Verizon in four US cities, are of fixed-wireless broadband in which high-speed internet is delivered by radio without the expense of having to lay fiber-optic cable to homes and offices.
At Mobile World Congress, Nokia CEO Rajeev Suri proudly showed off a cylindrical 5G router standing about a foot tall that will soon provide home internet to a selected group of customers of Australian carrier Optus. “5G is here, it is now, it is today,” he told a presentation.
Mobile broadband will follow — in big cities at first — as some of the devices displayed in Barcelona, including Huawei Technologies’ $2,600 folding smartphone, enter serial production.
For operators, though, 5G is more about finding new ways to use sensors to generate exponential increases in volumes of data — the industry’s stock in trade — to offset the deflation in prices that is now capping revenue growth and squeezing margins. —