Why 5G? Where Is the Value?

5G has the potential to affect every industry, every company and every person on the planet -- that's the driving force behind coverage of the topic in Heavy Reading research and Light Reading news reports and events.

As we launch our new 5G community site, I think it is worth revisiting some questions. What is 5G for? Why do we need it? And, crucially, how can the industry generate value from 5G?

On the face of it, it is a simple analysis: The industry works, more or less, on a ten-year cycle. 4G-LTE is a great success and a new generation of mobile network technology is due somewhere around 2020. If the industry follows this pattern for 5G, it would not be a disaster, and would probably be at least moderately successful.

The more difficult questions are: Will this be enough? Why should established industry patterns hold? And what happens if they don't?

With 5G we believe there is a great opportunity to rewrite the industry playbook for a new era. Let's keep what really works from the established processes -- global standards, high-volume product, price elasticity, and so on -- and look to apply it to new use cases with the potential for massive growth.

The idea is to insert 5G into diverse industrial value chains and facilitate entirely new categories of service -- the Tactile Internet, autonomous vehicles and remote healthcare, to pick just a few examples -- so that operators can earn a cut of the value generated by these services. We can think of this, broadly, as the transition from communications services to communications-plus-industrial control services. If it works out, the industry can add an entirely new market segment.

This is an ambitious target. The diversity of technical requirements generated by different customer types will cost money to develop and maintain, with uncertain prospects for a return. A robotics company may say it requires millimeter location accuracy to operate robots on factory floors, but how much of the value it creates will accrue to the 5G connectivity provider?

The industry, justifiably, is concerned about escalating R&D investment and product development costs for use cases that may never deliver a payback in any meaningful way. The history of wireless communications is littered with such examples.

So how to square this circle? The opportunity is too good to leave on the table, yet the risk of attacking on all fronts is too high.

I think there are three important ways the industry can use technology to make efficient use of the vast intellectual and financial capital it will commit to 5G development. These are:

  • Lean design: Precisely because future requirements are uncertain, the more 5G can be developed to be extensible in the future, the better. The industry has improved in this regard -- LTE was less encumbered by over-specification than 3G was, for example -- and it is very encouraging to see proposals for the new 5G radio interface(s) take this into account.

  • Multiple 5G implementations: What you build for factory-floor automation will be different to what you deploy for fixed wireless residential access, or high-speed mobility. The key will be able to support many 5G implementations on a common technology base to capture economies of scale. This does, in some ways, break the "one network to rule them all" principle beloved of mobile operators, but it is a price the industry will have to pay.

  • Constant iteration: The wireless industry may sometimes appear slow and cumbersome, even though in practice the rate of progress within each major generation of technology is phenomenal. 5G needs to accelerate this and adopt processes and technologies that enable even faster development cycles. A software-driven model -- including one based in the radio access network (RAN) -- is important to this and could even signal the point at which the familiar ten-year industry cycle starts to fragment.

    This is not an argument to neglect mobile broadband services. This remains the core of the operator business and 5G technology has great potential to enhance the customer experience and to improve network economics. But it is a call not to only rely on a business that is subject to intense competition and pricing challenges when some truly great opportunities for growth in adjacent industries exist.

    — Gabriel Brown, Senior Analyst, Heavy Reading

  • SeniorSt62314 3/25/2016 | 12:37:58 PM
    No technical reason Hi,

     I guess the author missed the main essence of the topic. He should address question, what are the drawbacks of LTE which 5G is solving or promised to solve. 

    gudguy1 3/24/2016 | 1:29:29 PM
    Re: 5G - Smart'er' communication 'nuff said - you got it.  Virtualization, SDN & NFV - need all these components if we are all going to be successful and productive as we move forward.
    jbtombes 3/24/2016 | 1:24:07 PM
    Re: 5G - Smart'er' communication Where's the value? 5G is not just about speed, whcih makes for more interesting stories. Much of its value prop lies in (and depends upon) virtualization and SDN. 
    gudguy1 3/24/2016 | 12:30:54 PM
    5G - Smart'er' communication Agree with your article. 
    Although, 2020 was an original number for 5G rollout at the Olympics in Korea...  Now, we have Verizon stating that they will start rolling out 5G in 2017. We will see....
    Because of that, AT&T has now jumped into the fray after sitting on the fence dithering as to what to do; they plan to work with Ericsson & Intel for this endeavor.
    Either way, in any year, there does have to be value in it for everyone, especially the providers of this new thing. It is going to boil down to who can bring 5G to market the fastest now, globally - and there are a good number of competitors out there.

    As Dan Jones indicated in his posting - I want my jet pack too.  And I want my jet pack to talk to my smart'er' watch, and my smarter car, and my smarter tablet, etc...
    DanJones 3/22/2016 | 11:57:30 AM
    Can we know yet? I definitely think the sheer power promised by 5G could lead to some applications and use cases we haven't even imagined yet.
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