5G Stuck in Slow Lane Beyond Consumer Biz

Iain Morris
1/15/2019

Signs of progress
It would be wrong to argue there has been zero progress during the past year. During an impressive demonstration at its UK headquarters in Newbury, Vodafone Group plc (NYSE: VOD) completed a holographic call over a 5G connection in September, beaming a full-size 3D image of England soccer captain Steph Houghton onto the main stage. In November, BT took reporters to Wembley Stadium to show off 5G as a broadcast replacement for costlier, satellite-based systems. South Korea's SK Telecom (Nasdaq: SKM) is perhaps the standout performer: It has already used 5G not only for broadcasting but also to support process improvements at a car parts factory in South Korea, it claims. (See Vodafone's Holo Demo Dazzles Crowd, But Is It a Viable 5G Use Case? and South Korea's 5G Lead May Bring Industrial Advantage.)

But there are doubts that 5G is really needed in some of these scenarios. While Vodafone talked up the low-latency attractions of 5G at its holographic demonstration, a signaling delay of 60 milliseconds would not disrupt a holographic call, according to James Crawshaw, a senior analyst with the Heavy Reading market-research business. Where low latency is a requirement, a combination of fiber and WiFi networks might suffice, although there are no latency guarantees with WiFi, Crawshaw notes.

Beam Me Up
A holographic image of England soccer captain Steph Houghton chats to a young sports fan at Vodafone's Newbury headquarters.
A holographic image of England soccer captain Steph Houghton chats to a young sports fan at Vodafone's Newbury headquarters.

BT's 5G broadcasting service would certainly not require the latency guarantees that come with Release 16, according to Matt Stagg, the operator's sports director of mobile strategy. But that does not mean 4G is good enough, he insists. With 5G's network slicing capabilities, BT would be able to carve out a broadcasting service that always delivers a minimum level of bandwidth. Such guarantees, which 4G cannot provide, will be critical to broadcasters desperate to avoid service disruption.

Remote production for live broadcasting might just be the most compelling, non-consumer 5G use case so far. Stagg certainly thinks so (although he is hardly impartial), and there is clearly a large TV sports market that would see advantages in lower-cost technology and more dynamic coverage. But the opportunity on its own is probably not big enough to be a real game-changer for telcos. Similarly, providing low-bandwidth connectivity for devices such as smart meters and temperature monitors seems unlikely to generate all that much in additional revenues. (See IoT Boom Won't Pay Off for Mobile Operators.)

A New Approach to Broadcasting?
BT Sport Presenter Matt Smith participates in a demonstration of 5G technology at London's Wembley Stadium.
BT Sport Presenter Matt Smith participates in a demonstration of 5G technology at London's Wembley Stadium.

Concern about 5G progress outside the usual customer setting was in evidence at last week's Consumer Electronics Show in Las Vegas. After a keynote presentation from Verizon Communications Inc. (NYSE: VZ) CEO Hans Vestberg had focused on how 5G would affect industries such as healthcare, journalism, gaming and video, GlobalData analyst John Byrne said the industry still "has a lot of work to do to get to a lot of the advanced use cases that have been envisioned for 5G." Verizon is hoping to provide some impetus by offering an award of up to $1 million to innovators that come up with new 5G services. (See CES Is Only a 5G Scene-Setter for MWC.)

In the meantime, 5G remains primarily about smartphones, other mobile gadgets and broadband in fiber-deprived communities. It may be essential as rising consumption of Internet services gobbles up space on today's 3G and 4G networks, and some consumers will undoubtedly rush to make use of 5G technology. That will be good news for the makers of consumer gadgets, especially if 5G shortens a device replacement cycle that has recently lengthened. But the experience of 4G suggests that 5G will not boost telco revenues if it is merely an improvement on what came before. Three UK boss Dave Dyson is one top executive to have downplayed the prospect of any 5G sales boost from existing mobile customers. (See Three UK to Go Big on 5G for Home Broadband.)


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In this context, technology executives have preferred to champion 5G as a more profitable standard. It will, they say, cost much less to support a 5G connection than a 4G one, bolstering margins. Indeed, Johan Wibergh, the chief technology officer of Vodafone, has previously estimated that 5G will be ten times as cost-efficient as 4G. Others doubt the improvement will be quite as much. But even if Wibergh is right, the spectral efficiency of the technology is unlikely to have a major impact on the bottom line, given all the other moving parts in a telco organization. Automation, which some 5G technologies may facilitate, promises more substantial savings, as staff numbers are whittled down. (See Vodafone CTO: 5G Is Overhyped & It's Mainly About Cost.)

Telcos are under some pressure. Share price movements across the industry suggest investors have not yet bought into the story that 5G will be a big new sales opportunity for operators. One possibility, of course, is that telcos lose out to innovative, fast-moving Internet companies in the 5G business market, much as they are perceived to have done in the consumer world. But if features like network slicing and latency are as important as the telecom industry claims, then operators should be able to profit. Unearthing the viable use cases for a non-consumer 5G deployment must be one of the industry's biggest priorities this year.

— Iain Morris, International Editor, Light Reading

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daveburstein
daveburstein
1/19/2019 | 6:24:23 PM
Right on target
Well done. I have confirming datapoints for most of your ideas. This is one I just found "Autonomous vehicles will be fully capable of operating without C-V2X" Don Butler, Ford

On URLLC & 1 ms latency, have you heard any operator committing to build it in the next six years or so? I haven't.

Dave
petercf
petercf
1/16/2019 | 6:28:15 AM
Re: 5G - Operators need to learn to sell into verticals
Gabriel,

 

I have seen AT&T assemble a manufacturing vertical last September, and believe Orange SA is doing likeiwse.

 

I guess Vodafone should do soemthing given its expertise in M2M/IoT

 

Peter
Gabriel Brown
Gabriel Brown
1/16/2019 | 3:39:42 AM
Re: 5G - Operators need to learn to sell into verticals
Good comment pertercf. It's a tough challenge for operators to build teams to support verticals over the long-term --  e.g. how often does the electricty grid operator want a new comms supplier? Vendors, integrators and consultancies with specialist sector knowledge will be essential.

Iain -- headline here is a "bit previous" in my opinion. Considering 2020 was ear-marked as the start of 5G and that a cycle is normally 10+ years, what did you really expect?
petercf
petercf
1/15/2019 | 12:38:58 PM
5G - Operators need to learn to sell into verticals
From work I have done the big stumbling block at the moment is that many, if not most, operators don't understand how to package, sell and deliver a 'service' - just handsets.

That's means MNOs need to re-learn or start from scratch to build a sales-marketing-delivery-billing-support teams, in discrete vertical silos "who understand that vertical including the business models that might work". If MNOs can't do that then they need to engage with Systems Integrators who can, this latter will mean the price goes up and/or the margins won't be as large.

As for 5G and autonomous vehicles, then no autonomous vehicle system will need to be standalone at the core of the vehicle + vehicle to vehicle for collision avoidance. I believe 5G has everything to play with connected vehicles and as a support to the autonomous systems to provide external data when needed.