Organizations willing to pay more for 5G, whatever it is: survey

5G
Image credit: Yeexin Richelle / Shutterstock.com

Good news for 5G players: most organizations around the world are willing to pay more for 5G, even though they’re not quite sure just what 5G will be used for or when it will be available.

That’s the main finding of a recent global Gartner survey, in which 75% of end-user organizations said they would be willing to pay anywhere from 10% to 30% more for 5G mobile capabilities compared to what they pay now for 4G services.

5G
Source: Gartner (August 2017)

Perhaps unsurprisingly, much of that support comes from businesses in the telecoms sector, said Gartner research director Sylvain Fabre in a statement:

“End-user organisations in the manufacturing, services and government sectors, for example, are less likely to be willing to pay a premium for 5G than telecom companies, which are willing to pay a 5G premium for their internal use.”

That means that operators will still have to price 5G attractively to get the skeptics to sign on, Gartner said. But they’ll also need to demonstrate significant value for money, as only 8% of survey respondents expect 5G to deliver cost savings or increase revenues:

5G is seen principally as a network evolution (59%), and only secondarily as an enabler of digital business (37%). The survey also found that respondents from the telecom sector are less persuaded than those in other industries that 5G will be a revenue enhancer.

As to what they think 5G is good for besides being one generation better than 4G, the survey says close to half of organizations intend to use it for video services and fixed wireless access – but the majority of them expect to use 5G to drive IoT implementations.

That’s not a surprising finding when considering that a number of 5G vendors tend to talk up IoT and 5G as two sides of the same coin (i.e. 5G will enable IoT services, which in turn will drive usage of 5G and justify investment in it).

The problem, says Gartner’s Fabre, is that in reality, most IoT apps will get along with 4G connectivity just fine – as well as short-range technologies like Wi-Fi, ZigBee, Bluetooth and wide-area technologies like Sigfox and LoRa – until at least 2023 in most regions:

“And even once fully implemented, 5G will suit only a narrow subset of IoT use cases that require a combination of very high data rates and very low latency. In addition, 5G won’t be ready to support massive machine-type communications, or ultra-reliable and low-latency communications, until early 2020.”

Fabre said the finding may indicate confusion on the part of end-users about what kinds of apps 5G can serve best.

They’re also confused about availability – 84% of respondents think 5G will be widely available by 2020.

It won’t – even early-adopter cellcos aren’t expecting any kind of wide deployment of 5G until at least 2022. Fabre points out that Gartner’s own forecasts expect only 3% of cellcos will have launched commercial 5G services by 2020. Anything before that will be limited in scope and based on prestandard equipment.

The main takeaway for cellcos, Gartner says in a report based on the survey, is that their marketing departments need a better understanding of their company’s realistic 5G roadmap in terms of coverage and real-world performance so they can communicate that accurately to customers. They would also do well to explain their plans and timeframes to IoT innovators banking on 5G to develop cool new apps, Fabre said.

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John C. Tanner
About John C. Tanner 181 Articles
John Tanner has been covering the Asia-Pacific telecoms industry since 1996. He has two degrees in telecommunications, and worked for six years in the US radio industry in various technical and advisory capacities, covering radio and satellite equipment maintenance, studio networking, news writing and production, the latter of which earned him several regional and national awards.

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