The 5G path is not straightforward. It’s not just a case of more Gs are better, though some of the hype is based on this idea.
There are some intriguing possibilities. The upsides are not yet all clear, but neither are they all garbage. The way forward is nuanced, and we see our job at STL Partners to make it comprehensible and better still, actionable.
What’s hot?
Korea has an exceptionally advanced market and a government that is fully behind the acceleration of the country’s use of TMT.
China’s government is also driving its industry forward hard, and the US market is making highly competitive noises, while some other markets in the middle east appear committed too.
Behind this vanguard are the majority of operators in other markets. Many are mounting ‘hero’ trials and launches, but most are carefully holding onto their wallets. This won’t change until they feel certain that the hype justifies the cash or have their hands forced by another operator launching hard in their market.
So, what’s the model?
“What is a viable business model for 5G?” has been a consistent challenge for the industry.
At a high level over the last few years, we have moved from being moderately sceptical about the need for 5G to the view that it’s an inevitable evolution, with the added benefit of having attracted a great deal of interest from governments and enterprises.
Nonetheless, we see it as very different change to that from 3G to 4G, which essentially delivered an important general cost and performance upgrade to mobile data usage.
We see 5G as a relatively modest development in user functionality to start, probably arriving in ‘islands’ of availability constrained to some extent by investment appetites. It also brings operators potentially attractive cost benefits, although some of those are arguably tied to changes in core networking and architecture as much as they are in the end-user radio network.
And then there is the new and different stuff: the potential for fixed wireless access (FWA) in some contexts, and the super low latency applications of 5G which are much harder to envisage. (NB We’ve looked already at the general opportunities for 5G private networks, with more specific analysis by industry vertical to come.)
Yet the difficulty in making sense of these new opportunities makes achieving an understanding of them even more interesting, because of their potential to produce surprising new opportunities – or save a lot of wasted investments.
On our path to date, we’ve covered:
- 5G’s impact on cloud and done a huge amount of work in the emerging space of telco edge cloud
- In terms of network technologies and broadcast applications, we’ve looked at spectrum, network slicing, fixed wireless access, and 5G indoor applications and their issues.
- Under applications, we’ve looked at its impact on autonomous cars, AR & VR, and Enterprise Verticals, and we’ve also looked at different business model options (network sharing and 5G MVNOs).
- And at an overview level we’ve looked at the lessons from the precedent of 4G and produced ongoing strategic commentaries (e.g. 5G: ‘Just another G’ – yet a catalyst of change’
What’s next?
We believe that the key to understanding what will happen in 5G will be to coherently piece together the demand and supply-side impacts, the ecosystems involved, and their interactions.
This will create the more dynamic outlook needed to understand and prosper from the adoption of 5G, rather than the more linear ‘replacement and upgrade’ models of 4G.
So next, we are looking at:
- The relationships between 5G and NFV/core network developments
- Further potential Edge gaming applications
- Next steps for telcos, including an updated view on Fixed Wireless Access (FWA) options
- Broader impacts including global 5G energy outlook and spectrum
- In–depth analysis of the potential long-term impacts in industry verticals, starting with Manufacturing and Healthcare
- How should regulators & governments should play 5G
5G and the Coordination Age
We will of course also be looking at how 5G fits in the context of an overall strategy for telcos and others in the Coordination Age.
At a high level, 5G is one of the tools for the job, building on other tools and capabilities that telcos are developing, like NFV, IoT and agility in general. We see all of this as the preparation for something new – a new purpose for telecoms, useful new roles to perform and value to deliver. We will be publishing more about this in coming months.
So if you want to know more about 5G, the Coordination Age, or get involved in our research programme, please get in touch via contact@stlpartners.com.