Will 5G save telecoms? True believers vs skeptics
IF YOU LISTENED mostly to gearheads hyping the next-gen wireless technology 5G, you’d probably expect telecom leaders to be ecstatic about it as they descend on MWC (Mobile World Congress) Monday in Barcelona. Demand for mobile services has never been higher and is expected to keep growing, in large part because 5G promises unprecedented capacity, speed, low latency, and life-altering new apps.
After a tough decade of new competition and declining profitability in some regions, many industry folk view 5G as a possible savior, offering renewed revenue growth for traditional telcos. And there will doubtless be much animated discussion at MWC about 5G, including the exciting prospects of connected cars, the Internet of Things (IoT), smart cities, fixed wireless access, and many other innovations the technology can enable.
Yet for all its much-touted potential as the foundation for the digital future, 5G may have as many skeptics as true believers. The cost and complexity of building the sophisticated infrastructure is considerable, and the actual return on investment is not yet clear.
A new McKinsey survey of 46 chief technology officers from telcos around the globe reflects that uncertainty. Confidence in the technology is high, but less clear is whether and how soon it can fuel new products and services that customers are willing to pay for. The survey also found that despite some progress, few have moved beyond the early stages of developing their business cases and commercial plans; most don’t expect large-scale deployment until 2022.
At whatever stage they find themselves, operators will have to follow several key principles as they navigate the uncharted 5G terrain, including working closer than ever with vendors and competitors, and preparing as much for running such an advanced network as they have building it.
The unproven economics of 5G are daunting enough, but the more serious challenge traditional telcos face lies inside their organizations. Unless they radically reinvent how they operate, they risk having little to show for massive 5G capital investments, with more dynamic digital rivals continuing to capture the benefits.
Most haven’t been bold enough in incorporating digital and analytics or fundamentally changing how they work. To keep up with customers’ increasing demands, they’ll need to be constantly making data-driven decisions, using agile methods to shorten time to market from months to weeks or even days, and attracting (and retaining) talent to build the tools and technology needed to turn 5G into a source of innovation and differentiation.
Only via that kind of transformation can the industry hope to overcome one of its biggest obstacles to success: a lack of customer focus, and a corresponding lack of customer satisfaction and trust. 5G alone can’t change that. But if telcos achieve this level of organizational change, they’ll be much better positioned to solve other challenges, including 5G’s economics. And if that were to happen, well then, the industry (and its customers) would really have reason to celebrate.