During 2019, more than 50 operators launched commercial 5G networks. For most of these, the key driver has been brand building, the hunt for market leadership, and being among the first to implement 5G. And these launches have in turn triggered rapid competitive responses. For many network operators, 5G adoption will focus on delivering better, faster mobile broadband with greater efficiency, especially in the near term. Most operators will look to take advantage of new features and new spectrum, as soon as this becomes feasible from a business perspective. And, beyond all of these, many operators are eager to translate the new 5G capabilities into innovative revenue streams and new customers.
In mature markets, capacity and cost are driving adoption
Operators in some of the more mature 4G markets are moving to 5G sooner, in part to avoid a ‘capacity crunch.’ For example, Finland has the highest consumption of mobile broadband per capita in the world at over 20GB/month/person. It’s manageable still to meet this demand today, but there’s only so much spectrum available, and in certain high-usage areas, operators are aware they will soon run out of capacity to support the demand.
"Operators in some of the more mature 4G markets are moving to 5G sooner, in part to avoid a ‘capacity crunch.’"
What many operators are also discovering is that 5G can be significantly cheaper in terms of total cost of ownership. It is more spectrally efficient than 4G – by some operator estimates, it is a tenth of the cost to transfer a gigabyte of data over the air with 5G than with 4G. And some operators have already been able to deploy 3 times the capacity at the same cellular site using 5G, without having to lease more space.
For operators with less mature 4G networks, there is less impetus and less financial motivation to go to 5G early, although all are studying the early 5G market with keen interest.
Asia-Pacific countries are setting trends with 5G service launches
5G service launches have been spearheaded by operators in South Korea and the US, with a number of significant launches also following in Western Europe, Australia, and the Gulf States. In the majority of cases the 5G service offerings have been ‘vanilla’ mobile broadband or Fixed-Wireless Access. Some operators – particularly those in developed APAC countries – have kept a focus on providing new service offerings that leverage 5G’s capabilities, with a view to driving up revenue per user. South Korea is a good example of this, where operators have packaged a rich variety of AR, VR, gaming, and video-related services with new 5G offerings. Initial results show a significantly higher uptake of such services over 5G compared with the uptake over 4G. There are likely to be cultural factors that influence consumer attraction towards different types of services across the globe, but it is generally accepted that new services and bundles will be key to generating additional revenues and driving uptake.
There’s also a great deal of interest in enabling a wide range of enterprise use cases, not only in APAC countries, but in the US and EU. Potentially, these use cases will probably be driven faster in APAC, particularly in China, largely due to scale. China Mobile alone plans to achieve 70 million 5G connections by the end of 2020. With that sort of scale, costs will be driven down quite rapidly, also on a global level; which effectively drives up 5G adoption overall.
"China Mobile alone plans to achieve 70 million 5G connections by the end of 2020."
In general, governmental support for 5G and digital initiatives may be a positive factor, enabling APAC countries to move a bit more quickly to get 5G solutions out of the innovation lab and into the market. In the US and the EU, there is a lot of work going on in innovation labs and foundries to test new 5G capabilities, but there can be a bit of a lag between innovation and service execution.
The role of the larger ecosystem
In February 2018, NTT Docomo, the predominant mobile operator in Japan, launched a 5G Open Partner Program. They have already signed up over 3,000 companies across the ecosystem and are working with them to explore a variety of different 5G use cases, not just in terms of technical implementation, but from a business model and value proposition standpoint. They've built a 5G trial network and they focus on testing both the technical and, perhaps more importantly, the business aspects of different 5G solutions. Together, Docomo and their partners are working out what 5G can do to provide real business value.
To support the needs of different industries, a number of 5G-focused open associations, forums, and initiatives have been launched, and Nokia has a strategic focus in working actively to drive the goals of each. One of these is 5G-ACIA (5G Alliance for Connected Industries and Automation), which is tasked with ensuring that 5G addresses the needs of the industrial domain, from automated enterprises and manufacturers to infrastructure and network providers. Another is 5GAA (5G Automotive Association), which looks at the needs of the automotive industry, including the standardization of things like cellular vehicle-to-everything (V2X) communications.
We also need a variety of outside (i.e., beyond telecoms-centric) technologies to enable 5G. For example, the cloud-native networking capabilities of 5G, which enable operators to dynamically instantiate functions for 100s of use cases within a single network deployment, cannot feasibly be managed manually. We need automation and AI/machine learning for the control and management systems associated with that capability.
Another critical and integral part of 5G is security, which is embedded into the 5G design at multiple levels, including analytics, machine learning, and a trusted framework for collaboration to enable sharing information like threat intelligence between ecosystem partners.
The time is ripe for us to increase our focus on industry initiatives that explore where the real value in 5G is, focusing not just on the technical capabilities, but on the business-side value. And it’s important to note that this value is not only found in the connectivity component of the solutions and services. For example, in IoT, the connectivity aspect of many of the use cases, particularly metering operations (for example, utility metering in a building, campus, or city), tends to commoditize and reduce in value over time. Where the value can be found in many 5G use cases, especially in industrial and enterprise applications, is in providing the intelligence, automation, management, and actionable solutions on top of that connectivity.
"The time is ripe for us to increase our focus on industry initiatives that explore where the real value in 5G is, focusing not just on the technical capabilities, but on the business-side value."
The ‘race’ to 5G?
The term ‘race to 5G’ has been used frequently. However, that triggers a question: What are you winning? In the end, 5G needs to work globally. Looking at it as a competition may help with motivation at the local level, but this also risks fragmenting the industry and the way 5G is implemented.
Nokia’s mission is connecting everything, everywhere. And the promise of 5G is very much aligned with that mission. Our focus is end-to-end across the full scope of 5G, by providing key solutions for everything from the radio and core network to transport, platforms, and services. And we believe that it’s critical to serve the entire global market, from operators to industries and enterprises.
For 5G to succeed, it really needs to be a global solution, adopted by all, with similar standards, even if it happens at different paces in different countries.