Vodafone CTO: 5G Is Overhyped & It's Mainly About Cost
LONDON -- Global Mobile Broadband Forum 2017 -- Vodafone's chief technology officer has downplayed expectations that 5G will quickly lead to new business opportunities for telcos and said the next-generation mobile technology is largely about cost efficiencies.
Speaking at a mobile broadband conference hosted by Chinese equipment giant Huawei Technologies Co. Ltd. in London, Johan Wibergh warned the industry against initially "overhyping" 5G and said it would benefit operators in the first two years of rollout mainly by helping them to slash operating expenditure when providing mobile broadband services.
"The increased efficiency that you get from massive MIMO and radio that can handle up to 100 megahertz means 5G is about ten times more cost efficient than 4G," he told conference attendees during a morning keynote session. "We should be talking more about this because at first it will be about mobile broadband, and cost is a challenge with growing data volumes."
Cheerleaders for the standard have argued that 5G will support a range of exciting new applications, including robots and self-driving cars. But some investors and analysts remain skeptical that it will lead to an increase in service revenues for the operators introducing the standard.
"There is little to support the idea that enhancing networks with 5G will increase revenues," says Bengt Nordström, the managing director of the Northstream consulting group, pointing out that telco revenues in western Europe have been declining since 2008 despite the rollout of higher-speed technologies.
"For me 5G is about efficiency," adds Nordström. "It is a tool to become even more streamlined and maintain margins in a market that will probably continue to decline."
Acknowledging there was skepticism about 5G in the investor community, Vodafone's Wibergh said that greater promotion of 5G's cost benefits would help to overcome those doubts and secure backing for the technology.
But he urged regulatory authorities not to overcharge for the spectrum licenses that operators will need to support 5G services. "Some countries are fortunate and don't have to pay much [for spectrum]," he said during his presentation. "If spectrum costs are high there won't be cost benefits with 5G."
Wibergh also sounds worried that growing 5G hype will result in disappointment when the technology finally arrives in 2019 or 2020. Noting that mobile network technologies usually have a ten-year lifecycle, he said there was a risk of misleading customers about what 5G will be capable of delivering in its early stages.
"We need a balanced discussion to get the right message across," he said. "If we don't talk about when things will happen, you will get a message the audience won't understand. If you talk about cost efficiencies and the things you can do in the first two years, you will get a more realistic scenario."
When it comes to spectrum availability, Wibergh today revealed that Vodafone Group plc (NYSE: VOD) plans to turn off 3G systems in some European markets in 2020 or 2021, allowing it to "refarm" spectrum for use with more advanced mobile broadband technologies. "We have refarmed quite a lot of spectrum already," he said.
The UK-based operator has already made some investments in pre-5G mobile technology in Spain, where it installed ten massive MIMO basestations in central Madrid during a recent event.
One of several technologies designed to boost mobile network performance, massive MIMO introduces many more antennas into receiver and transmitter devices than older MIMO technologies.
In Italy, meanwhile, Vodafone has already launched a test 5G network in Milan, where its goal is to install a total of 120 basestations by the end of 2019. It is now testing as many as 41 different 5G "use cases" with a total of 21 partners.
Wibergh's message about efficiency chimes with the overarching strategy at Vodafone, which earlier this week reported a sharp increase in six-month profitability and raised full-year earnings guidance thanks to cost-saving measures. (See Vodafone Ups Guidance on European Growth.)
"Their results are beginning to harvest from investments in networks a few years ago," says Nordström. "They are in good shape."
— Iain Morris, News Editor, Light Reading