Does Ericsson's 5G-for-Healthcare Biz Case Need Surgery?

Iain Morris
News Analysis
Iain Morris, International Editor

"I feel like I'm in a Hollywood movie," said renowned surgeon Prokar Dasgupta, donning a haptic glove during a demonstration of 5G-powered remote surgery at King's College in London earlier today.

It looked like something out of a Hollywood movie, too. With up-and-down movements of his arm, Dasgupta, a professor at King's and a urology surgeon at Guy's Hospital, was able to control a robot on a nearby table -- even if he wasn't quite ready to carve into a live subject.

Such technologies could revolutionize the healthcare industry, says Dasgupta. Instead of traveling to city-center hospitals for operations, patients could undergo surgery at local facilities. Medical professionals could train the next generation of surgeons remotely, rather than in the same room. Hospitals would ultimately morph into data repositories, storing information about patients equipped with "medical-grade" wearables, according to Vishnu Singh, the head of Ericsson's ConsumerLab market research division.

5G Pioneer
Renowned surgeon Prokar Dasgupta is a strong advocate of using 5G technology in a healthcare setting.
Renowned surgeon Prokar Dasgupta is a strong advocate of using 5G technology in a healthcare setting.

But it will not happen without 5G, says Dasgupta, delivering a withering assessment of older network technologies in a healthcare setting. "It is not fast enough and it is not secure enough," he said about 4G technology. "5G is the solution."

Ericsson AB (Nasdaq: ERIC) is clearly delighted to be able to call on such a prestigious advocate of a technology it desperately hopes will fuel sales growth in the next two or three years (assuming the Swedish vendor is still around by then). According to his Wikipedia entry, the Daily Mail newspaper rated Dasgupta one of the top ten prostate cancer surgeons in the UK back in 2010. Getting him to bang the 5G drum is about as good as endorsements come on the healthcare side.

Yet his enthusiasm only reinforces the impression that the real beneficiaries of 5G -- as with previous network technologies -- will be the end users rather than the telcos that roll it out.

How telcos can profit from 5G in a healthcare setting is arguably an even bigger conundrum than other business case challenges surrounding the next-generation mobile standard. The investments needed to support low-latency, ultra-secure 5G networks on a nationwide scale are unlikely to be insignificant. But without that underlying infrastructure, Dasgupta's vision will be hard to realize. (See The Growing Pains of 5G.)

The revenue case does not look compelling, either. Connectivity revenues have continued to fall despite heavy investments in previous next-generation network technologies. The 5G standard is expected to create new service opportunities in the much-hyped Internet of Things (IoT), some of which will undoubtedly relate to healthcare. Yet Northstream, a Swedish consulting and market research business, reckons IoT will only ever account for between 1% and 3% of revenues for most telcos. It is skeptical partly because the revenue contribution from a lot of machine-based connections will probably be negligible, and also because it thinks most IoT revenues will be captured by traditional systems integrators focused on "solutions" rather than connectivity. (See 5G Guru Predicts Rollout Disparity.)

Ericsson, unsurprisingly, is bullish, saying the "addressable market" for 5G operators in healthcare alone will be worth about 3 billion ($3.9 billion) in the UK in 2026. That represents about 8% of what UK operators made in total in 2015, according to regulatory authority Ofcom. In all likelihood, though, operators will have to become more than just connectivity providers if they are to see most of the healthcare-related revenues. Across eight global industries that Ericsson has examined in collaboration with consulting firm Arthur D. Little, connectivity and "infrastructure provisioning" accounts for only about a third of the overall revenue opportunity for a 5G player.

Next page: Toward a 5G hospital

Toward a 5G hospital
This push outside pure connectivity will put telcos in competition with the systems integrators and IT specialists that Northstream touts. The good news, from a telco perspective, is that many healthcare professionals see telcos as important partners, says Ericsson. According to a new report put together by Singh's ConsumerLab division, 86% of "cross-industry" decision makers want operators to go beyond connectivity and take more responsibility for systems integration, as well as app and service development. The bad news is that most operators have so far struggled to make that jump, which could explain why so many decision makers cited this as a need in Ericsson's survey (900 were interviewed in total, says Ericsson).

And while Dasgupta champions 5G for remote surgery and its "real time" capabilities, existing technologies, including WiFi and 4G, can probably satisfy many service needs, including hospitals' mainstream connectivity requirements. Singh reckons 5G will prolong battery life in wearable devices, but concedes that today's networks could turn hospitals into "centralized [data] repositories" with the right industry collaboration. Amid concern about the confidentiality of patients' medical records, the use of WiFi provokes jitters about data security, says Dasgupta, while acknowledging that WiFi has been "excellent" in the healthcare industry thus far.

If healthcare professionals are so enamored with 5G, could hospitals take ownership of some 5G networks? Ericsson rival Nokia Corp. (NYSE: NOK) is building public safety and private mobile networks for government authorities and enterprise customers, rather than service providers, and thinks most sales growth will come from "adjacent" vertical markets in the next few years (although the healthcare industry is not one of its targets). Ulf Ewaldsson, the head of digital services for Ericsson, has hinted at similar enterprise ambitions if Ericsson can first restore profitability at its core business. And Hanna Maurer Sibley, Ericsson's head of network products, accepts that 5G network ownership is an issue that needs addressing in the healthcare sector. "There has to be a partnership and who owns what has to be ironed out," she says. (See Nokia to Create Standalone Software Biz, Target New Verticals and Ericsson's Ewaldsson Takes Aim at Telco 'Conservatism'.)

For healthcare professionals like Dasgupta, the sales opportunity is quite obviously a secondary consideration. "If this is just about making billions then we have a problem," he says. "It has to be a business that adds up but it cannot continue to be a business that is taking away from patients." If 5G can lead to the kind of radical changes and efficiencies that Dasgupta envisages, then suggesting that hospitals become 5G operators, as well as data centers, does not seem quite so bizarre.

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

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