The world’s first commercial 5G services promised a “great leap”, something that is still crystal clear in my memory. I remember two things from that time. I was interviewed on the launch that took place days before the planned launch date “by order” and the two parties racing to launch were from countries known for sending innovation out into the world. As it happened, the day went down in history without many of the details on how the “great leap” would be achieved. It was the case that some people thought 5G would change the world, and that was how most people came to hear about it even though many did not see an immediate need for it. Optimism was high within the telecoms industry, but spectrum and new revenue streams were likely the reason behind the push for 5G.
Fast forward two years to the current day, the “great leap” is still up in the air seeking a safe landing with much of the earlier intense anticipation for 5G, having been met with a dose of reality. It is hard to call it “hype” if going by the same standards used to assess 3G and 4G, but no one can deny the remaining presence of an expectation gap. While we did expect 5G to go global eventually, we did not expect it to have made so much more progress and so fast. It feels like more has been achieved in these past two years than within the entire duration the industry has been tinkering with 4G. It is positive that the expectation gap with 5G is not as big as it used to be with 3G and 4G. People are slowly finding a need for 5G and lower per Gb pricing is just one example.
It is still about need and timing
The COVID-19 pandemic put industries through a period where change was necessary, and 5G was within reach as part of the solution. However, to say that COVID-19 expedited 5G in totality is not entirely true. In fact, 5G development in certain areas, e.g. new rollouts and standards development, was impacted by COVID-19, and only some verticals, e.g. healthcare, have benefited immediately from 5G although change is on the horizon for many other verticals. It seems COVID-19 has made the justification for 5G, where there was one, stronger. For example, 5G was on track pre-COVID-19 to solve the issue of lack of staff, regardless of whether it was due to qualification, location or cost, with automation. With COVID-19, necessity was added to the list – as a shift to robotics, contactless and online was triggered to avoid close contact – and the timeline was brought forward.
Complementary to 4G, 5G has every chance of succeeding
Being software-based and potentially open-source and cloud-based too, 5G offers flexibility with less complexity at more attractive per Gb price points. It is timely that OSS/BSS for 5G has finally caught up to remove bottlenecks in rolling out innovation and new business models and enable the necessary charging and billing functionality to aid in 5G monetization. The potential to enable new industries that have no legacy is tremendous. The latest release allows for the creation of more value-added solutions, and this can drive economic growth. When this happens, the technology adoption gap between developed and developing countries and the corresponding per capita income gap will narrow. This is the outcome that local governments seek.
As a complement to 4G, 5G fits nicely where it can power real-time and mission-critical solutions, especially from the cloud. For example, the Guangzhou 5G Smart Transportation City implementation powered by ZTE, China Mobile, the Guangzhou Municipal Transportation Bureau and 10+ other companies is now benefitting over 20 million people, various vertical industry players and local government agencies in Guangzhou City, China.
If 5G is so great, what is slowing it down?
Everyone has to start somewhere. Some succeed, and some fail. It is only a failure in a long journey if we do not get it right before we reach the end. It will be a long journey with 5G. We have not yet succeeded. We face a supply and demand gap coupled with a host of execution challenges, but there is still time for the industry to get it right. On the supply side, we have overzealous techies that are very good at facilitating and enabling everything. Their favourite reasons for the slow progress with 5G are the lack of spectrum and the delay with the never-ending evolution of standards. The chances are high that either 6G will extend backward or better 5G sequels such as 5G Advanced, 5.5G, 5.75G or 5.90G will be introduced. I wonder if it is really plausible for 5G to take off faster if we could focus all available spectrum in the world on 5G while we keep making it better.
In my opinion, technology is only not good enough, and spectrum is only not enough if one is not clear on what one is solving for. Some businesses have solved needs with the most basic technology, e.g. Rainforest Connection, and there are telco groups, like Telenor, that can do better on connectivity even with less spectrum than competitors. Within other verticals, there are companies that are doing well with designs that show understanding of future mobility needs, e.g. Volkswagen.
What is needed is a greater understanding of the current state, digitizing and digital transformation, and commercial considerations, e.g. understanding that purging legacy technology to make way for new technology is never an easy sell. Business cases have to take into account the risks associated with high one-time capital expenditure. Assuming costs are lowered with 5G, there are also regulations, people and process considerations. The use of the price of a human life as justification for 5G, e.g. in mining in China, can help sway the decision, but it is a fact that long term change is being driven by regulation and not businesses volunteering to address human rights.
Whilst the telecoms industry is now more realistic with the use of technology and is applying it where it is needed, e.g. Globe’s early implementation of FWA in 2019, 5G requires expertise in other verticals to understand where best to apply 5G. The business cases for 5G use cases are either too complex or too simple. The telcos now face a dilemma. They need to decide where to focus, where to develop expertise in and where to stay a connectivity provider. Some say telcos have an identity crisis. While there is some truth in that, there are also signs of desperation as cloud providers and third-party private network providers encroach on the 5G pie.
While they are not known for their expertise in creating solutions, the large players amongst them, like Singtel and Telekom Malaysia, can sell the solutions to the enterprises they already serve. The questions telcos need to answer are if they can get their value proposition and enterprise strategy clear, and from there, how will they scale. Telcos can no longer just sell to businesses that will buy—strategy matters.
The next stage of growth requires different skillsets
In closing, I think that we are on the right path with 5G, thanks to the dreamers, innovators, makers and doers of the world. I particularly would like to applaud Huawei for its Blade AAU and Openet for its Evolved Charging Suite 8.0. A good plan can become a great plan with a few tweaks that I say that it is time for the visionary, strategists, disruptors and orchestrators to step forward and take on the task of sending this good work out into the world. The future with 5G is unfolding within a rapidly redefining world.
The next stage will be bigger and broader, and it will need different skill sets to succeed. It is time for us to re-evaluate our 5G strategies to get it right. It is good that local governments support 5G. It would be ideal if Asia’s economies can benefit from a plan, e.g. to “Make Asia Great” and a roadmap to leverage 5G because when the “great leap” lands on progress, we can all, in retrospect, appreciate the race to launch 5G that we won.
By Quah Mei Lee, Associate Director at Frost & Sullivan
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