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The 5G future is arriving faster than many had predicted. But,
for the struggling telecom industry, it still can't arrive fast enough.
The mobile telecom industry has left behind the era of easy growth, driven
by smartphone and tablet adoption. And the anticipated new era of growth
based on innovations like virtual reality and
the Internet of Things hasn't yet picked up the slack.
But, in recent months, the mood among telecom leaders, is imbued
with newfound optimism. That's because the industry has managed to put aside
the squabbling and politics that usually accompany a new wireless standard, to
place 5G on the fast track to reality.
Already, momentum is building for actual rollouts and there is
hope that 5G networks will soon unleash an avalanche of investment and inspire
a wave of new services that profoundly changes the world, while also returning
the telecom industry to a new era of prosperity.
So far, U.S. telecom companies have spent over $60 billion for
5G-compatible segments of the electromagnetic spectrum in Federal Communications
Commission spectrum auctions. Telecom companies in countries such as Germany,
India, and Canada have also heavily invested in securing spectrum rights in
their respective national auctions as competition for increasingly crowded
The huge sums of money invested in spectrum auctions around the
world in recent years demonstrates the rising value of electromagnetic spectrum
and its increasing centrality in economic life. In fact, wireless spectrum is
now one of the increasingly more valuable intangible resources in the world.
More specifically, massive investments in 5G-compatible spectrum are a telling
indication of the perceived economic promise of 5G wireless technology, slated
to be rolled out in developed economies in 2019 and in emerging markets shortly
However, before the industry can spin spectrum into gold, it
must confront a whole new set of challenges on the road to 5G glory. Company
are increasingly focused on figuring out exactly what people and businesses can
do with this almost unfathomable amount of mobile bandwidth.
At this point, the focus is not primarily on the technical
issues; it's the business issues. The challenge is to figure out how 5G can
make money for the telecom industry. As the head of Korea Telecom put it
earlier this year, "at the 2018 Olympics, we demonstrated many interesting
applications. But we don't yet know what the "killer application" for 5G will
Gartner reported that 2017 represented the first year-over-year
decline since 2004 in smartphone sales for the critical holiday
quarter. And the announcements we've seen this year confirm that smartphones
seemed to have hit an innovation plateau.
This malaise extends beyond gadgets. Verizon's annual revenue in 2017 was below its peak in
2015, while AT&T reported that annual revenue in 2017 was down
from 2016. Intel and Samsung have returned to growth thanks to stronger chip
sales, but Qualcomm has reported three straight years of sales declines.
Meanwhile, equipment maker Ericsson eliminated 10,000 jobs, while rival Nokia continues with thousands
of layoffs that were part of a $1.3 billion cost saving programannounced in early
But rather than whining, the telecom industry is riding a wave
of 5G announcements that include network launches, chipsets, equipment architecture,
and even some progress on endpoint devices.
"This industry badly needs 5G," said Stephane Teral, executive
director of research firm IHS. "They are trying to revive the industry. The
idea is to pull the whole infrastructure business out of its funk."
AT&T, Verizon, and Sprint have all announced timetables for
commercial 5G rollouts in the U.S. ranging from late 2018 to 2019. China Mobile and Japan's NTT Docomo are targeting 2020 for their 5G launch. On the chip
side, Qualcomm has been making an aggressive push, including
signing deals with 19 phone makers and 18 carriers for 5G. (Qualcomm's 5G traction has also made it the target of a hostile
takeover bid from Broadcom.) And Intel has partnered with PC makers to develop
5G-enabled laptops for 2019.
In December 2017, the 3GPP industry group formalized the first
set of standards for 5G, which were sufficient to let hardware and chip
companies start building equipment. A second set of standards will be finalized
In past transitions, such as those from 3G to 4G, industry
players waited until standards were finalized before initiating more serious
development standards. But the existing 4G LTE, or "long-term evolution"
networks, were designed knowing a new standard would come along eventually. LTE
will allow carriers to evolve their current networks to 5G rather than build
new networks from scratch.
That also means that with standards coming together quickly,
players across the industry have already been conducting trials before the
final standards were locked in.
This allowed "the chip guys" to start building the silicon based
on the lower layer of the spec before the upper layer got finalized. In the
past, it was 18 months after a standard was completed before commercial
deployments. Now it will be within six months. It's a major acceleration from
This accelerated timetable for 5G, however, has left many
players scrambling to develop the products and services to leverage the new
This is not an unusual dilemma. With any network transition,
whether it's mobile networks moving from 2G to 3G or home networks moving from
dial-up to broadband, it's not obvious just how people will use all that
bandwidth. But in the past, the basic market appeal "Whatever people were
already doing, they would be able to do it much faster and more often," was
compelling enough from the start to justify the massive infrastructure
"5G is a different kind of beast. While the current 4G LTE
offers theoretical speeds of up to 100 Mbps, 5G will eventually offer 20 Gbps.
But the technical appeal for 5G goes beyond that. 5G will allow a nearly
limitless number of connections within a small area, and delays in data
transfer, known as latency, will virtually disappear. That combination of
speed, density, and fluidity is what potentially makes 5G much more radically transformative than other recent network
Everyone questions what you're going to do with it and why
anyone would need it. So, it's going to be very interesting to see how people
might be able to use 5G's capabilities.
It's exciting. But it also means the telecom industry faces an
unprecedented degree of complexity to realize the full potential of 5G and make
it a business success. Where as past upgrades were about faster smartphones and
tablets, 5G will be driven by the development of thousands and thousands of
devices and endpoints that connect factories, self-driving vehicles, fields of
robots, and virtual reality services that no longer need to be tethered to a
PC. And, of course, there will be hundreds of more uses that no one has even
Given this trend, we offer the following forecasts for your
First, as 5G is
deployed wireless internet speeds will, for the first time, exceed that of
cable broadband and, potentially, fiber optics.
This will allow users to flip through high-quality video
content, including 4K, 3D, and virtual reality, with the same or better
experience as watching cable television. When we experience flipping through
ultra-high definition video on mobile devices with virtually no buffering, most
of us have an 'a-ha' moment, in the same way many of us did when we first
checked email on our phones. It will fundamentally change how we think about
Second, the "internet
of things," or "IoT," will have broad industrial and city-wide applications for
the first time.
Not only will consumer products such as fridges and thermostats
be increasingly connected to the internet via the "consumer IoT," but
large-scale and complex processes such as industrial agriculture, supply-chain
coordination, fleet management, and city traffic flow will increasingly be
guided by connected devices as part of the "industrial IoT." Importantly, 5G
will provide the necessary bandwidth for connected vehicles to send and receive
the huge amounts of data at the speed required for effective vehicle
coordination, thereby representing a vital component in the development of
autonomous driving and urban air mobility. The integration of wireless
communication with transportation signifies a potentially large new revenue
stream for telecom companies.
Third, 5G technology
will reduce network latency to one millisecond; which is faster than the speed
at which humans perceive auditory, visual and physical responses to be
Consider that 4G LTE latency is currently between 20 and 50
milliseconds. The perception of immediate response, especially when combined
with haptic feedback, will enable new wireless applications such as remote
surgeries and remote driving and flying. Additionally, truly immersive virtual
reality and gaming experiences available on demand will allow users across the
world to interact with each other in virtual worlds in real-time. This
ultra-reliable and low-latency communication will underlie what is increasingly
becoming known as the "tactile internet." And,
previous wireless technologies, 5G will have a much greater impact on other
industries than it has on telecoms and gadget makers.
Since the roll out of 5G will occur over a number of years and
at different rates in different countries, some of the use cases will only
become technically possible at scale in the early- or mid-2020s. Other use
cases may be limited or otherwise shaped by government regulations.
Nonetheless, the broad range of new economic opportunities-and threats-posed by
5G will significantly impact not only telecommunications, but other areas such
as health care, consumer and industrial products, energy, and utilities. As
such, the winners and losers at the industry and company level may be markedly
different from those that resulted from previous wireless transitions.
instance, Germany wants 5G networks to enable "in-home patient monitoring," for
applications such as home dialysis machines. In the industrial space, companies
like Fanuc in Japan are talking about smart factories, which could see smarter
inventory management as well as maintenance and repair scheduling of machines.