5G: In search of business case

07 Aug 2018

5G is on the horizon and the race is on, with mobile operators worldwide scrambling to build the world’s first commercial 5G networks. Leading the pack are US mobile carriers - AT&T, Verizon, Sprint and T-Mobile - which are slated to offer 5G fixed wireless broadband services to their customers in the country by the end of this year or early next year.

Mobile operators in the Middle East are also joining the 5G party, with Qatar-based Ooredoo having launched in May what it claimed was the world’s first “commercial 5G network” using 3.5-GHz spectrum. Meanwhile UAE’s Etisalat and Saudi Arabia’s STC also announced the launch of 5G networks, but with services and devices to be available next year.

Asia to take the lead by 2025

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In Asia Pacific, operators in 5G pioneering markets like Australia, China, Japan and South Korea are also forging ahead with their 5G deployment plans starting this year.

In June, South Korea completed the world’s first auction of 5G spectrum in the 3.5-GHz and 28-GHz frequency bands, with the country’s three major carriers - SK Telecom, KT and LG Uplus - planning to launch commercial 5G networks in March, 2019, with trials beginning December this year.

Australia is also set to have its first 5G auction on the 3.6-GHz band in November, and operators like Telstra and Optus have planned to introduce 5G services later this year or in early 2019.

In China, the country’s three major operators - China Mobile, China Unicom and China Telecom-are moving forward with ambitious plans to launch wide-scale, commercial 5G services by 2020.

According to the GSMA, Asia-Pacific will become the largest 5G region by 2025, with the region’s estimated 675 million 5G connections accounting for more than half of global subscriptions expected by that point.

China will, meanwhile, become the world’s largest individual 5G market with around 430 million connections by 2025, or a third of the global total.

No compelling business case

Despite the initiatives from the early market movers, industry players and analysts generally agree that there is too much hype around 5G and the business case for the technology remains vague. There currently aren’t many clear use cases or applications which can only be supported with 5G.

For one, the full 3GPP Release 15 completed in June this year only addresses part of future use cases for 5G - enhanced mobile broadband for consumers. Not until 2019 will the industry have full 5G-compliant standards that cover massive connectivity and lower latency services such as Internet of Things (IoT), critical communication services (e.g. remote surgery, autonomous vehicles, smart grids) and virtual reality.

These factors, together with the fact that compatible 5G-enabled smartphones will not hit the market until next year, have prompted most operators to take a wait-and-see approach before moving forward with 5G investment (Sidebar, “Mobile operators may be losing faith in 5G “).

A recent report by the GSMA concurred that there is hype, but pointed out that much of the hype around 5G has focused on consumer applications, such as AR/VR, as current 4G infrastructure is good enough to support most use cases.

“Early use cases have not moved beyond higher speeds (enhanced mobile broadband). Although this serves some unique use cases in 8K video and AR/VR, development is still nascent,” the report says. “LTE-Advanced speeds are high enough to blur the difference with 5G for all but the ultra-low latency services, which makes 5G less of a necessity.”

However, the GSMA report further points out 5G’s biggest potential lies in serving vertical use cases.

“Enterprise is the larger opportunity given the nascent but inexorable digital transformation of large swathes of advanced - and in some cases emerging - economies,” the report states.

But as a recent report compiled by the GSMA and the Global TD-LTE Initiative (GTI) focusing on the Chinese market demonstrates, effectively achieving this goal will require lawmakers to foster policy environments that empower mobile operators to work with other industry verticals to rapidly develop and launch new 5G services.

This article first appeared on Telecom Asia December July 2018 Edition

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