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UK Govt to Spend Loose Change on 5G

The UK government's budget commitment to 5G is unlikely to advance the technology in any meaningful way, but it ticks a few important-sounding boxes.

Iain Morris

March 8, 2017

4 Min Read
UK Govt to Spend Loose Change on 5G

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.

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

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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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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