Can the telco sector get off the ‘G-train? Telecom stands on its own in its addiction to big-budget generational upgrades that threaten the industry's viability.

So says Rakuten Symphony CMO Geoff Hollingworth. In a Linkedin post, he argues 5G has been a failure, that it will never achieve ubiquitous coverage and it's time for the mobile industry to invest in customers rather than networks.

"We are already repeating the narrative into 6G with the same concept of ubiquitous coverage mindset. We are not segmenting for actual coverage and actual market reality when comparing to cost, time, and need," he warns.

As an executive at Rakuten's network solutions arm, Hollingworth is hardly a neutral - but he's not the only one savaging 5G these days. 

"The current cost for 5G is breaking the bank, to the extent where 6G might not be affordable," he goes on to say. "None of this is good for an industry that is supposedly powering the global GDP and defining the future state of all countries."

Few operators would dispute the underlying truths. The mobile industry is unique in being locked into a $500 billion technology forklift every ten years.

No exit

But there's no obvious exit from the cycle; too many forces conspire against it.

One is the operators, who have been gulled into spending on these costly, speculative upgrades. It's an easy story for them to sell to investors, consumers and themselves – more bandwidth, more capacity, more capabilities, etc., and while it's worked well enough for the past 30 years, the wheels are now coming off.

Hollingworth says the industry has always assumed cellular was the only way to deliver coverage.

"We must embrace that there are other better ways to solve for coverage, depending [on] the use case and the coverage type required. We have less of a coverage problem and more of a seamless access problem, as one moves from indoor to outdoor city to outdoor suburb to rural."

Then there's geopolitics. South Korea and China in particular are determined to lead the charge to the next G - for national glory and, in China's case, geopolitical advantage.

South Korea 'won' the 5G race even though its new networks only covered patches of Seoul. Now it's targeting a launch of 6G as early as 2028. China has set 6G as a national strategic priority, while of course, whatever technology China is in, the US wants to be in first. So we've already set the scene for a 6G pile-on.

But an even more powerful factor is that the technology suppliers are hooked on these network do-overs.

Not only do we have a small band of vendors to choose from, but they are each heavily, if not overwhelmingly, dependent on their telco customers. Even the two big Chinese vendors earn about 60% of topline income from carriers.

Contrast that with aviation, another industry with a tiny group of suppliers serving a limited universe of customers. It is not shackled to a regular capital upgrade, nor are aerospace firms chained solely to the civil airline business. Boeing's revenue, for one, is divided between commercial, defense and services, with services being the biggest source of profits these days.

If there’s a silver lining in this tale it's the capex drought, which represents telcos' financial exhaustion after their 5G binge. The plunge in equipment sales, along with the slow but steady virtualization of networks, is a disruptive threat to the vendor community.

It may take years, but one way or another the network gear business is going to become integrated with the rest of the ICT sector. Eventually no company's fortunes will be tied to the endless cycle of mobile generations and operators will invest as they need.