As 5G arrives, the biggest impact will be on business

Although 5G has gone from hype to reality, the technology isn't close yet to taking over its predecessor. And 5G's biggest impact will be on business.

Huawei opens 5G innovation centre in London

Mobile industry trade organization GSMA has released its annual analysis into the global state of the mobile economy, and unsurprisingly, the report is dominated by 5G-related trends. Like many other industry experts, the GSMA predicts that 2020 is the year that 5G moves from hype to reality – but only if network operators persuade customers that upgrade from 4G is worth the effort.

Although the statistics published by the GSMA show that one in five mobile connections will be running on 5G by 2025, which will make for 1.8 billion connections, the report stressed that "4G is still king". More than half of global connections are currently supported by 4G, and the proportion is set to grow to 56% by 2025.

From a consumers' perspective, a desire to upgrade to 5G is by no means automatic, although attitudes to the technology vary from one country to another. European, Japanese and US customers "seem more content with 4G for the time being," read the report, with only about 20% of the public intending to upgrade; in China, 70% of respondents indicated that they planned to switch to 5G.

What's more, many users are unaware of the actual potential of 5G. The majority of respondents said that they expected the technology to deliver improved mobile data speed, while only about a third acknowledged that 5G could bring "innovative new services". 

SEE: IT pro's guide to the evolution and impact of 5G technology (free PDF)

It is true that many applications of faster connectivity will be benefiting industry, rather than consumers, and the argument that 5G use-cases will mostly be about businesses is now a familiar one. Indeed one of the 2025 predictions from the report is that "5G becomes the first generation in the history of mobile to have a bigger impact on enterprise than consumers."

Many enterprises, however, are still reluctant to upgrade to 5G because they can't see what the technology will bring that 4G cannot. 

"While a majority of enterprises recognize the benefits of speed gains brought about by 5G," said the GSMA, "other improvements (such as network slicing, edge computing and low-latency services) are not widely appreciated, with many believing that 4G remains 'good enough'".

The public's lack of awareness is not the only obstacle standing in the way of faster connectivity; the GSMA's analysis stressed that challenges persist at the level of deployment itself. Unleashing 5G, indeed, comes at no small cost: operators are expected to invest around $1.1 trillion worldwide in the next five years, of which 80% will be dedicated to 5G networks.

Yet it can hardly be said that revenue has been flowing in as of late for network providers. Operators, indicated the report, have been struggling against the tech giants. While Apple, Amazon and Alphabet have each added between $100 and $200 billion in revenue since 2010, mobile operators have been either stagnating, or experiencing much slower growth than before.

To survive, network providers will have to find sources of revenue outside of their telecoms services. The report suggested looking into fields like pay TV, media and entertainment or advertising.

But despite the challenges facing 5G, the GSMA predicted that the technology will contribute $2.2 trillion to the global economy by 2034, with major use cases emerging in the fields of autonomous vehicles and smart manufacturing.

Low latency and ultrafast connectivity will effectively revolutionize factory floors, from remote real-time monitoring of robots and processes to the use of 5G-powered simulations in augmented reality to better train the workforce and increase productivity.

"The ultimate goal for smart manufacturing would be an autonomously controlled factory," read the report. An early example of the benefits of smarter factories is the mobile phone plant operated by Changying Precision Technology Company in Dongguan City in China. Opened a few years ago, the factory replaced 90% of its human workforce with 60 robot arms working round the clock. The results are convincing: automation led to a 250% increase in productivity and an 80% drop in defects. 

SEE: 5G projects are still slow to take off. Technology isn't the only problem

To enable similar results at a larger scale, the GSMA stressed that efforts will have to come jointly from industry and government. Public policies need to be geared towards enabling faster and more efficient deployment of the technology, for example by simplifying and standardizing planning procedures and regulations for site acquisition.

The report showed that almost 70% of network providers indicated that limited access to radio spectrum was the greatest barrier to their planned network investment in 5G. Governments should make sure, therefore, that operators have easier access to the frequencies they need to run their networks. 

Spectrum allocation is an ongoing problem in Europe, where operators still have to pay huge amounts of money to access limited resources. European policy hurdles can partly explain the geographical discrepancies in 5G uptake predicted by the GSMA. While in the US and China, estimated the organization, about half of the mobile connections happening in 2025 will be 5G, the same statistic drops to 34% in Europe. 

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While in the US and China, estimated the organization, about half of the mobile connections happening in 2025 will be 5G, the same statistic drops to 34% in Europe.   

Image: GSMA