Nokia Gives 5G Hype a Good Dousing

If the 5G hype needed a good dousing, then Nokia may have inadvertently provided it. In all likelihood, the Finnish vendor hopes its latest research about the 5G business case will inflame interest in the next-generation network technology. It might cool the rhetoric instead.

At least the Finnish vendor's findings constitute a few firm points of reference that have been notably absent until now. Some of the biggest operators have sounded either vague or evasive when asked about the 5G business case, making lots of fuzzy remarks about virtual reality and other futuristic services without really explaining why these will be lucrative opportunities. The most forthright players have been the most negative: Russia's Mobile TeleSystems OJSC (MTS) (NYSE: MBT), for example, has been scathing in its assessment of 5G so far, describing it as a "vendor game." (See Russia's MTS: There Is No 5G Business Case and Russia's MTS Knocks 5G as 'Vendor Game'.)

Enter Nokia Corp. (NYSE: NOK), with the results of studies that are presumably supposed to convince the naysayers and provide some much needed certainty for the rest.

Trouble is, the research findings aren't a great endorsement of 5G as a sales opportunity. 5G-to-the-home, which probably means using 5G as a fixed wireless access technology, will deliver "break even" for operators after four years if average revenue per user remains above €40 ($42.90) per month, says Nokia. Use 5G at major events and the payback will come within just one year, according to the company. And, in a nod to fuzziness, Nokia says that "operators can achieve tangible early mover advantages in terms of revenue and market share for services such as in-vehicle infotainment."

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Underwhelmed? You are unlikely to be in a minority. Fixed wireless access is attracting a lot of press attention thanks largely to Verizon Communications Inc. (NYSE: VZ), which is positioning it as the initial "use case" for 5G technology. But it remains as unexciting as last-mile fiber, and it won't get used at all in many communities. "I think that is a use case on the fringe," said a pointedly underwhelmed Neville Ray, the chief technology officer of the T-Mobile US Inc. business that competes so aggressively against Verizon, during the Mobile World Congress earlier this year. "If that is all we are doing with 5G we should be packing our bags and going home." (See The Growing Pains of 5G.)

Or down to the nearest sports stadium, perhaps, for a taste of 5G in all its mobile glory? From a technology perspective, 5G used in conjunction with high-frequency spectrum could be ideal in this kind of "hotspot" scenario. But it sounds relatively niche. And unless it creates opportunities outside pure connectivity, it probably won't do anything for the telco topline.

Industrial Evolution
Nokia was offering some suggestions about future 5G applications at MWC 2017.
Nokia was offering some suggestions about future 5G applications at MWC 2017.

That leaves "in-vehicle infotainment," and the allusion to other Internet of Things (IoT) offerings. While it is easier to see why these could generate fresh sales, Nokia is even woollier about the business case than many telcos, substituting jargon about "early mover advantages" for any specifics. Others, though, have weighed in with their own downbeat take on the IoT opportunity. Revenues from machine-based connections will be insubstantial, they say. And operators will face the usual competition from IT behemoths when it comes to the "value add." Swedish consulting group Northstream reckons most operators will only ever generate about 1% of their revenues from IoT. (See 5G Guru Predicts Rollout Disparity.)

Next page: Clueless or realistic?

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bosco_pcs 4/19/2017 | 3:11:41 PM
Inadvertent or Intentional Good point but not knowing NOK's CEO, maybe its attempt is to up sell 4.5G instead and its 5G dousing is aiming at its archrival ERIC. At least that is the Machiavellian version :)
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