As the telecoms industry prepares to congregate in Barcelona once more, the pressure to deliver returns on 5G investments is greater than ever.
At its Mobile World Congress pre-brief, Swedish kit vendor Ericsson anticipated the underlying theme of this year’s big get-together by focusing on how it expects 5G to eventually pay dividends. While you would expect no different from a company whose raison d’etre is flogging goods and services that enable mobile communications, Ericsson seemed acutely aware that its customers will have hoped for more substantial new revenue streams at this point in the cycle.
Four years into the 5G era, the technology is still struggling to find an identity. 3G was about the introduction of mobile data, which matured in the form of 4G, but what is 5G all about? We will be posing that question to everyone we meet at the show next week and expect to get a different answer each time.
Yes, 5G offers even faster and more capacious mobile broadband, but there is still a shortage of use-cases that require more bandwidth than 4G has to offer. IoT became conflated with 5G but has existed as a concept for decades and, as Qualcomm’s latest roll of the dice indicates, is still finding its feet as a commercial proposition.
The most novel technology associated with 5G is ‘ultra-low latency’, which significantly reduces the time it takes data to get from A to B over the air. In principle this opens up a host of new opportunities but, if the big European operators are any guide, MWC will once more feature utopian, but niche, use-cases along the lines of remote surgery, sentient cars, and virtual parallel universes.
We expect one of the most common answers to the 5G existential question to be that it’s about connecting everything to everything. That’s all well and good but to what purpose? Through its acquisition of Vonage, Ericsson is betting that the broader developer community will eventually answer that question once they’re able to tap into the network, but that will take years to play out.
So an underlying theme of MWC 2023 is going to be the need for patience. New generations of mobile technology are always overhyped by desperate marketers, inevitably resulting in an anti-climax. It feels like we have been wading through the Trough of Disillusionment ever since 5G was first released into the wild and the hope of everyone assembled in Barcelona will be that the ascent up the Slope of Enlightenment is now well underway.
There is evidence to support that hope. Fixed Wireless Access seems to be gaining real traction, especially in larger developed countries like the US. The private networks space is seeing plenty of action, as 5G’s B2B identity continues to take shape. The problem for those marketers, however, is that business use-cases aren’t very exciting and, of course, are met with indifference by consumers.
Even more yawn-inducing are the various claims to greater efficiency and automation. In the absence of ARPU growth they represent another form of return on 5G investments for MNOs but notional opex savings are largely offset by increased demands on the network. That’s why there will be lots of talk about public sector interventions at the show, as well as other potentially margin-boosting initiatives such as Open RAN and the public cloud.
Telecoms dysfunctional relationship with Big Tech will cloud (pun intended) conversations at the show. On one hand European operators insist that, as the source of much of the traffic they carry on their networks, US Big Tech should contribute to the cost of building and maintaining them. On the other, they are increasingly reliant on the likes of AWS to realise the potential of 5G. Those hyperscalers must be conscious of this paradox and it will be interesting to see how high a profile they choose to have this year.
Another elephant in the room will be geopolitics. Last year’s event coincided with Russia’s invasion of Ukraine, resulting in the former becoming a pariah. In a telecoms context at least, the US seems determined to impose a similar status on China, thus undermining the global consensus and collaboration required to make mobile technology work. We expect the likes of Huawei to strike a defiant pose once more, but there is an incongruity to the presence of Chinese companies in a continent that increasingly shuns them.
While we’re still trying to work out exactly what the point of 5G is, we seem sure it’s of paramount strategic importance, thus ensuring its increasing politicisation. That will be the case even more so with 6G, discussion of which at the show could be viewed as evidence that we’re already looking past 5G and onto the next thing.
Maybe 5G doesn’t need to have a point. Indeed, there’s a good argument that talk of Gs in general is simplistic and counter-productive. The telecoms environment is more convoluted than ever, which makes defining it extremely challenging and for most of the people and companies that will attend MWC next week the point of 5G is simply to generate commercial activity. If we come away with a better sense of how that is achieved then then the show, and 5G, can be considered a success. But that’s a big if.
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