STL Partners’ research into 5G shows that operators in the US, China, Korea and Japan are the most enthusiastic in pursuing 5G and backing that enthusiasm with investment. This is characterised by T-Mobile’s CTO Neville Ray “We are all in on 5G, Every dollar we spend is a 5G dollar, and our agreement with Nokia underscores the kind of investment we’re making to bring customers a mobile, nationwide 5G network.”
Operators in Europe such as Orange, Telefonica, Veon, Telkom, BT, Telenor and Vodafone have not neglected to participate in the the 5G jamboree but have been more muted in their approach. Most importantly, they continue to invest heavily in their LTE networks (for example in LTE-A Pro) in their pursuit of a “glide path” to 5G.
BT’s Consumer Division CEO, Marc Allera cautions us to apply lessons from 3G: “3G technology was overhyped, the price was overhyped and the consumer was underwhelmed by the experience. That said, we learnt some valuable lessons, and opened people’s eyes to doing more on their mobile. 3G taught us a lesson in financial prudence while 4G taught us how to deploy rapidly at scale.” FT.com
Operators in SE Asia, South Asia, MENA and Europe are (privately) cautious about the prospects for rapid roll-out of broad coverage. They see 5G as offering compelling cost advantages over LTE for eMBB in denser urban locations and potentially FWA in certain suburban ones (where fibre has not been widely adopted). We set this out in our report June 2018 report 5G: ‘Just another G’ – yet a catalyst of change.
This creates a predicament ove how to expand beyond these 5G islands. Without wider coverage, how can operators catalyse ecosystems to invest in new services (low-latency, immersive or Massive MIMO)? This 5G “go-slow” cycle, set out in the diagram below.
Somewhat counter-intuitively, 4G and edge compute can help to accelerate 5G coverage and device adoption rather than delay it. Through a combination of astutely commercialised edge compute and 4G, operators can create “good enough” capabilities for 5G services to fall-back onto, overcoming limitations in 5G geographic or device coverage. 4G + edge compute will not be as high performance or cost efficient as 5G, but good enough to provide the basis for securing greater demand for services.
- A gaming company wishing to create a distinct gamer experience that requires high-end GPUs mainly found in 5G phones may find that its addressable market is limited (few existing devices). Through edge compute, it could potentially address a broader base of 4G devices, at least for an initial period to secure its success ahead of wider device adoption.
- A maintenance company looking to introduce lightweight AR headsets to its fieldforce would need to be convinced that these could be used acceptably outside 5G coverage areas. The “5G” experience might be enough to convince the company of AR’s potential, but scaled adoption will require coverage.
This is by no means the only way to spur development of new services and the associated ecosystems that will, in turn, drive 5G services demand.