5G: Separating Fact From Fiction

August 07, 2018
5g myths

There are a few myth about 5G that I came about in discussions with executives, investors, smart city officials and other parties active in technology development and planning for new services. Two examples:

  1. Don’t bother deploying a certain IoT technology – for example LoRaWAN or similar technology – because 5G will serve all these applications (e.g. street lighting, smart parking, etc.)
  2. Don’t bother with fixed wireless access in rural areas. 5G will make current fixed access services redundant.

You get the drift: 5G is the mother of all technologies; it will serve all applications, so don’t bother with anything else!

Vested in 5G myths

5G is not a silver bullet. The incumbent wireless ecosystem, including vendors and operators have vested interest in propagating this myth. It helps putting their competition on the defensive and potentially eliminate competitors completely. FUD (fear, uncertainty and doubt) is a powerful weapon that is often used in and out of industry. It paralyses clients and prevents them from deploying a technology. Nowhere is this type of FUD more damaging where the client is not technologically savvy about – as, for example, in an enterprise or a smart city organization. There are so many different technologies, with such a level of complexity, that having internal expertise along such wide continuum is difficult.

5G Realities

To set some things straight, here are a few realities about 5G that are worth noting:

  1. There is no common definition on what 5G really is. In the United States, 5G today is largely a fixed wireless access play that complements fiber services in urban and suburban areas. In Japan, Korea and Europe, it is about mobile broadband services. In China, it is about IoT services. The wide definition of 5G opens the door for anyone to claim 5G operation without having a true 5G network.
  2. There are no common timelines for 5G deployments. It will take many years to unfold. Moreover, 5G deployments will be spotty: focused on specific geographic areas, especially at the beginning. 5G is a capacity play for the most part, focusing on network densification, spectrum aggregation and scalability in connected devices.
  3. There is no common global frequency band for 5G. It is true that the 3.5 GHz is most promising to become the first global 5G band. However, there are enough regional variations that indicate a fragmented market. Spectrum will shape how, where and when 5G gets deployed.
  4. Service providers are not sure about the 5G business case: they still don’t know how to monetize it. US operators such as Verizon and AT&T announced plans to deploy 5G as early as this year, but the scope is unknown. Operators in the rest of the world, including most ironically Korea where they are very bullish, have questioned 5G monetization potential.
  5. 5G will rely on the existing 4G subscriber base to achieve economies of scale. Mobile broadband is the first and only application that can drive initial scale for 5G. Deployments will follow the most advanced markets, and in the dense urban areas. By contrast, some service providers deployed LTE in rural areas when it first came out (e.g. Germany): this will not be replicated in 5G.
  6. You need a 4G network to run a 5G network – at least in the early years. A standalone 5G network will not commercially be available until after the first iteration or retrofitting 4G networks with certain 5G upgrades. Unlike 4G technology, greenfield operators and service providers will not be able to leverage 5G in the early years.

Don’t freeze!

There are many myths associated with 5G – all serving to either forestall market development of competing technologies or create excuses for failed business models that pin hope on 5G for salvation.

The 5G ecosystem will take time to mature and for economies of scale to take hold. I would reason that 5G will take longer to develop than 4G did. The cost of any new technology is high and comes down over time as it matures. 5G will be no different. I see no reason to put off projects in anticipation of 5G, especially as we can model the cost structure and return on investment with reasonable accuracy.

Frank Rayal is a technologist and market expert with over two decades of experience working with equipment vendors, service providers and wireless ecosystem players. He is a founding partner at Xona Partners, a boutique advisory firm specialized in new business incubation in the technology sector.

frank rayal

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