UK Govt to Spend Loose Change on 5G

Iain Morris
3/8/2017
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Government ministers might know very little about 5G, but they do know that it sounds important (much like artificial intelligence) and that mentioning it makes them seem far-sighted and in tune with the technological and economic realities of the present day.

So it came as little surprise when Philip Hammond, the UK's rather uncharismatic finance minister (or chancellor of the exchequer, as he is more pompously known here), brought up 5G when announcing his budget plans for 2017 earlier today. "I am allocating... £16 million [$19.5 million] for a new 5G mobile technology hub," Hammond told the UK parliament, before quickly moving on to discuss roads and other more familiar infrastructure.

While politicians were scratching their heads, and asking colleagues what this 5G thing is all about, Light Reading was pondering what Hammond's commitment actually means.

Happily, the government has today also published a 70-page document outlining its 5G strategy. Less happily, this document is mainly an exploration of the economic, regulatory, spectrum and security considerations that surround 5G. Only several pages are dedicated to explaining how the £16 million investment will actually get used, and they do so quite vaguely.

The "hub," it seems, is going to be a "cutting edge facility," presumably where the telecom industry's brightest sparks can meet up for a chinwag about 5G and carry out all sorts of whizzy wireless experiments. There will also be a "5G Innovation Network" that will begin trials of 5G applications in early 2018. The aim, naturally, is to light a fire under 5G development and ensure the UK remains at the forefront of technology innovation blah blah blah.

What's hard to figure out is why any of this is strictly necessary, and why taxpayers should have to fund 5G research when they are already paying for it through their mobile phone bills.

The UK, after all, is home to a few big telecom players with substantial research facilities, including BT Group plc (NYSE: BT; London: BTA), the former state-owned fixed-line monopoly, and mobile specialist Vodafone Group plc (NYSE: VOD). Mega vendors including Ericsson AB (Nasdaq: ERIC), Huawei Technologies Co. Ltd. and Nokia Corp. (NYSE: NOK) also make plenty of noise in the UK market. Only last August, BT and Nokia said they would team up on 5G research, using BT's Adastral Park facilities in Suffolk to carry out 5G trials.

On top of all that, you have the 5G Innovation Center at the University of Surrey, which is collaborating with the whole gamut of stakeholders on 5G research and development.

Private-sector players will obviously welcome any public-sector financial help they can get, no matter how paltry it might be. Yet the question remains: What will the government's 5G "hub" do that other research initiatives aren't? It's possible that Theresa May's Conservative government has something up its sleeve that BT, Vodafone, Ericsson, Nokia, Huawei and Nokia have not even considered. But it seems pretty unlikely.


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Taxpayers aren't going to get worked up about this: £16 million is such a pathetic amount that Hammond could easily lose it down the back of his sofa and no one would notice (to put things in perspective, UK public spending is expected to be more than £780 billion ($948 billion) in the current fiscal year). But that makes the whole venture look even more pointless.

As accounting firm Deloitte said in a research note distributed earlier today: "5G technology will cost billions of pounds to develop."

Deloitte wasn't criticizing the government, it should be noted. Oh, no. It wouldn't so much as dare after a leaked Deloitte memo last year, claiming the government had no real strategy for leaving the European Union, landed the company in trouble with May's administration.

"A small investment now can go a long way to positioning the UK at the very center of global 5G investment," continued the accounting firm in its note.

Well, we're not convinced. A £1 billion ($1.2 billion) commitment to 5G would have made everyone sit bolt upright and take plenty of notice. But that level of public spending -- on a technology for which the entire investment case remains highly questionable -- was never going to materialize (and rightly so). (See 5G: Another Next-Generation Disappointment?)

So instead, we have a token financial gesture that allows the government to say it is doing something futuristic on networks.

As an aside, we thought it would be interesting to see what else £16 million gets you in the UK these days. They include: Vodafone boss Vittorio Colao for just under two years (based on his 2014 compensation); around 0.3% of HS2, a new railway line that will run from London to Manchester and Leeds; about 40% of the UK's National Tennis Center in London; and a residential property next to Harrods in central London.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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kq4ym
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kq4ym,
User Rank: Light Sabre
3/20/2017 | 9:12:23 AM
Re: I'll take the flat
An interesting look at the Brit way of thinking on 5G. Noting in the report: "Only several pages are dedicated to explaining how the £16 million investment will actually get used," does seeem to indicate that maybe the folks don't quite get what 5G is to be used for, and the advantages that could be had. 
Alison_ Diana
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Alison_ Diana,
User Rank: Light Sabre
3/8/2017 | 4:13:45 PM
I'll take the flat
Although having an apartment next to Harrod's would be a lot more expensive in the long run. I mean, it's been years since I've been there, but don't they still have just about everything available? Seriously though, I'm with you 100% on this Iain. If the British government wants to get involved in 5G, the best thing they can probably do is get out of the way of industry.
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