Ericsson Hypes 5G After Telcos Slam 5G Hype

The latest mobility report from the Swedish equipment supplier predicts there will be 1 billion 5G connections by 2023 but does little to answer the burning telco questions.

Iain Morris, International Editor

November 28, 2017

5 Min Read
Ericsson Hypes 5G After Telcos Slam 5G Hype

Ericsson obviously didn't get an invite to Huawei's recent Mobile Broadband Forum event in London. If it had been able to sneak in through the back door, it would have heard senior telco executives describing 5G hype as "bullshit" and imploring the industry to focus on the technology's efficiency benefits for operators rather than the futuristic services. (See Vodafone CTO: 5G Is Overhyped & It's Mainly About Cost and Let's Talk About 5G Efficiency, Not Wacky Services.)

Instead, the Swedish vendor has compiled another one of its regular mobility reports that pays lip service to operator efficiency while foregrounding the famous "use cases." One for "augmented reality-assisted maintenance and repair in the manufacturing industry" gets a mention in the third sentence. (See Ericsson Makes 5G Predictions in Mobility Report.)

By contrast, the words "efficiency" or "efficiently" turn up only four times in the main text of the 32-page report: once in discussing the spectral efficiency of not 4G but 5G technology; twice in describing efficiency benefits for manufacturers using "augmented reality-assisted maintenance and repair;" and only once to note the network efficiency improvements that should come with massive MIMO, a 5G technology.

In fairness to Ericsson AB (Nasdaq: ERIC), the mobility report has always been largely about forecasting rates of technology adoption. Nor is it likely that all telco executives are demanding more discussion of 5G's efficiency benefits. But the one who did so in a very publicized way, during a keynote speech at Huawei's event, happened to be Johan Wibergh. Not only is he chief technology officer of Vodafone Group plc (NYSE: VOD), one of Ericsson's biggest customers, but he also used to work for Ericsson in an executive vice president role. He is probably worth listening to.

Figure 1: Give Me More Efficiency Johan Wibergh, Vodafone's chief technology officer, complains about 5G hype at a recent Huawei event in London. Johan Wibergh, Vodafone's chief technology officer, complains about 5G hype at a recent Huawei event in London.

Just because Ericsson's latest mobility report shows little evidence of that does not mean it is ignoring his concerns. Yet churning out hockey-stick growth projections while telco executives continue to fret about technology readiness (and purpose) is perhaps inadvisable when your business is in a rut. Germany's Deutsche Telekom AG (NYSE: DT), it has recently become apparent, is far from happy about progress on 5G standardization outside the new radio area. Even more than Huawei Technologies Co. Ltd. and Nokia Corp. (NYSE: NOK), Ericsson needs to demonstrate it is paying close attention. (See DT Is Not Going Radio Gaga About 5G.)

Unlike either Huawei or Nokia, Ericsson now caters exclusively to telcos, and so its mobility report is presumably meant to be read by them. One way of engaging worried operators would be to use this oddly high-profile publication to address some of their concerns regarding efficiency benefits and non-radio progress. Naysayers would likely dismiss any positive statements as vendor PR, but the prognosticating about trends can hardly be viewed objectively, either, when it comes from the industry's second-biggest supplier.

Next page: Show me the money

Show me the money
As it happens, the latest forecasts seem credible, assuming that 5G technology does indeed get launched in 2019 or 2020. Ericsson's headline prediction is that the world will have about 1 billion 5G subscriptions by 2023, or about 11% of total mobile subscriptions by that date. Bengt Nordström, the CEO of the independent Northstream consulting business, thinks operators will upgrade between 12% and 15% of their networks every year and that it will therefore be seven to ten years before 5G is widely deployed. Given that operators in some emerging markets will probably lag -- Ericsson itself thinks Africa will have no more than 2 million 5G subscribers by 2023 -- the global 5G forecast does not look ridiculously optimistic. (See Ericsson Forecasts Lackluster 5G Take-Up in Africa.)

Earlier in November, Ericsson's new CEO, Börje Ekholm, wouldn't project any sales numbers for 5G for the vendor in 2018 or 2019, instead looking to 2020 or after. "We expect to see some sales, but it will not be significant ... We don't know the timing yet," he said of 5G expectations in an interview with Light Reading in New York. (See Ericsson's CEO on 5G, Managed Services & Keeping Subscribers Happy.)

There are two big questions for an operator audience, and on those Ericsson's mobility report has little to offer. First, what kind of 5G are we talking about here? A new radio that can be attached to an existing 4G network to boost connection speeds and reduce latency? Or an entirely different network architecture that makes use of the cloud, edge computing, artificial intelligence and other groundbreaking technologies to give operators a radically different modus operandi? If it is the former, then 5G will only ever be an "evolutionary" technology, as far as Deutsche Telekom is concerned. Yet the latter will not materialize quickly unless the industry gets cracking.

Want to know more about 5G? Check out our dedicated 5G content channel here on
Light Reading.

Second, how do 1 billion 5G subscriptions assist operators? Sure, the technology will help them cope with giddy rates of growth in mobile data traffic, even if it is just a new radio standard. Yes, it should support new types of connectivity service for enterprise customers, and deliver a boost to industrial productivity. But it probably will not similarly bolster telco service revenues, market watchers predict. If 5G is to spur growth in profits, and satisfy investors, it may have to deliver much greater efficiency in all parts of the network.

The two questions, of course, are related. Only when 5G extends beyond new radio will telcos get more automated and profitable networks. Gauging the full benefits is not easy while so much has yet to be addressed on the technology side. Yet Ericsson could make a start. Providing some insight might help it to curry favor with telcos that have increasingly been drawn to Huawei in the last few years. It needs their approval now more than ever.

— Iain Morris, News Editor, Light Reading

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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