The two-speed arrival of 5G

Hugh Ujhazy / IDC Asia Pacific

Speaking with carriers, network vendors and communications regulators (even standards’ bodies), there is no greater excitement than the coming of 5G. The fifth generation of mobile networks is going to be bigger, better, faster and wider than anything before. It will unite disparate network technologies, supporting all the G’s that came before while offering an alternative for wired broadband internet and Wi-Fi. At the same time, 5G will address the needs of the wide variety of “things” that will connect in their millions. 

That’s the hype. From a technical perspective, 5G is undoubtedly exciting, offering fiber network speeds across the air with lower latency and the ability to ‘slice’ the network to support different workloads. However, the cost and complexity associated with the three areas of spectrum, speed and services are causing some carriers to don a shell and take on the role of the Tortoise in the race to next generation mobile networks. Others are racing toward the finish line, before the paint is dry on the 5G standard and even before devices are coming to market. 

Tortoise vs hare

The first early movers were the United States carriers (AT&T, Verizon, Sprint and T-Mobile), announcing millimeter wave (mmWave) solutions in the latter part of this year. Interestingly, these will be focused on delivery of a wireless based last mile broadband access solution, allowing carriers who were excluded from broadband markets to offer an alternative to fiber to the home.    

Carriers in the Middle East were next to jump on the bandwagon. Hot on the heels of Qatari mobile network operator Ooredoo claiming to have launched the world’s first commercial 5G network come announcements of 5G networks from two other Middle East telco’s: the UAE’s Etisalat and Saudi Arabia’s STC. Etisalat, whose announcement was made the same day as Ooredoo’s, claimed to have “the first commercial 5G wireless network in the UAE” and the first in the Middle East and North Africa (MENA) region. Though the network is available, devices and services will be available from September this year. STC said they will continue working on building the network construction gradually in the cities of the kingdom until devices are available in 2019. Interestingly, STC described their 5G implementation as a “live network” as opposed to a commercial one, highlighting the importance of being first across the line.      

In Australia, Telstra and Optus have announced services for 5G will be available in the latter part of 2018, following the spectrum auction which is touted for a November timeframe. Australian operators have gone from the lower capacity 3.6-GHz bandwidth, giving coverage and increased capacity without going to the high bandwidth (26-GHz) used by the US carriers. The United Kingdom was the first to complete spectrum auctions, with all the carriers jumping in to the fray and grabbing chunks of 4G and 5G spectrum, with 5G capacity priced around 30% higher than similar 4G capacity. 

Carriers in markets with a high level of 4G penetration and broad deployment of fiber in urban areas have been more considered in their approach to 5G. With 4G speeds approaching 2Gbps and fiber to the premises and the home offering up to 1Gbps, markets like Singapore find the need for additional speed a more elusive concept and are spending time looking closely at the use cases that justify high speed, low latency radio networks. Though South Korea led the pack in terms of 5G trials (Winter Olympics 2018), spectrum auctions have been announced and floor pricing set, but services will not come online till Q12019.
   
Use cases for 5G

Beyond bragging rights, current speeds and service levels seem to satisfy most of the use cases, especially those in the consumer segment. Prices continue to drop for mobile services, even as capacity increases. Therefore, the lure of improved performance that drove the move from 3G to 4G will be less effective in the 5G world. 

The investment in new infrastructure both in the core network and the base stations is significant. Carriers must examine which services they bring to market and when – a limited deployment network might be enough to claim winner’s rights in the race, but cooler heads will be looking closely at the revenue models around 5G before broad scale commitment takes place.

In the race to 5G, the Tortoise may well be the one who has the broadest smile. Regardless, 5G will be sprayed across slogans for the next few years, as consumers and businesses alike are lured to upgrade their network and device choices to get on board with the latest big thing in mobile.  

Hugh Ujhazy is the Head of Research for Internet of Things and Telco Practice at IDC Asia/Pacific 

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