As the first wave of commercial 5G deployments start to take hold, excitement is building for what 5G could mean for our increasingly connected communities. Without question, 5G is helping set the stage for incredible changes and innovation, but it remains a new landscape, with varied and sometimes conflicting interpretations of what 5G is and what markets to expect from it. But on the other hand, it is clear, that the upcoming economic and societal benefits will enable a revolutionary level of service, with connectivity that will create entirely new business models, increase productivity and allow new industries and innovation to emerge.
The state of 5G
The development of 5G is coming at a critical juncture as the importance of fast and consistent network connections has never been greater. Whether at work or at home, enterprise and consumers alike demand a fully connected experience, wherever they are, whenever they need it. On 5G, typical mobile activities that require buffering today will happen instantaneously. But as seen below, 5G is about more than speed alone. It also promises the ultimate capacity, reliability, and ultra-low latency required for mission critical services and the growth of massive IoT.

One of the most important 5G aspects is life improvement and the ability to save lives since we expect:

• Technicians will able to remotely operate heavy machinery in locations unsafe for humans and as a result limiting industrial accidents.
• Cars will be able to self-navigate. In addition, connected cars will be able to communicate with traffic lights and other vehicles, potentially eliminating traffic jam and limiting car accidents.

On the other hand, will there be a killer application? Augmented reality (AR) could be one of the killer applications among others, driving innovation for 5G, mainly into mobile AR gaming. 5G makes AR more immersive, as graphics are faster and more spectacular but also lower latency dramatically improves game play. But 5G, coupled with a list of mazing new services such as amazing new AR experiences, 4K video, video surveillance, smart stadiums and eHealth, autonomous vehicles and cloud robotics, becomes a dilemma for operators, that need to offer advanced, guaranteed services to support it:

1. Shorter delays, minimizing the lag in time in large data transfers.
2. Increased connectivity, shaping a 5G ecosystem where multiple devices could be connected
3. Faster speed capped at 1Gbps at consumer’s device and even beyond.
4. Mobility, allowing continuous 5G service and new applications on-the-go.
5. Improved connection density, more connected devices, enabling the growth of IoT technologies.

These could reshape industries and change the classic thinking models in the long run, enabling new business models even with partnerships and sharing revenues.
Operators’ dilemmas
With the major investment in networks required for 5G, operators expect a return on that investment and 5G presents opportunities for a variety of innovative (mainly) industrial use cases, from massive IoT to critical links for vehicle or drone control. However, particularly in the near term, operators expect the main opportunities to remain in the provision of retail mobile broadband connectivity and dependent consumer services such as UHD video and cloud gaming. In addition, business model innovation, will allow network slicing monetization, taking advantage of new commercial models with differentiated slices, and support use cases from massive IoT to enterprise tenancy for critical industrial services.
The new 5G ecosystem contains many new opportunities that allows innovation and new synergies. But there are also 4 dilemmas, as described in the rest of the article, where most operators need to respond and implement:

1. Convergence: Content Strategies
2. Leveraging content to drive revenue
3. 5G as a wireless last mile alternative
4. Infrastructure sharing

1. Convergence: Fixed-wireless synergies

The last few years have seen a continuation of mergers between fixed and mobile operators.  For example, in the UK the incumbent BT acquired the largest mobile operator EE in 2016, Vodafone Netherlands merged with cable provider Ziggo and is in the process of acquiring various other parts of Liberty Global’s European cable operations (Germany, the Czech Republic, Hungary and Romania).
The rationale for such mergers in the 4G/LTE world is clear – converged operators benefit from being able to sell packages of fixed voice and broadband, TV/video and mobile to the same customer. TV and video services can translate easily from the fixed network at home to the mobile service – adding features and value to the end user.
 
Such synergies will become even more pronounced in the 5G era. In addition to enhancing network capacity to meet continuously growing demand, 5G has broadcast capabilities baked into the specification. Together with the combination of speed and capacity that 5G supports, this will enable further cross fertilization between fixed and mobile services. While LTE enabled video services over mobile, 5G supports broader use of ultra-high definition video services that customers are increasingly used to receiving over ultra-fast fibre-based broadband lines as well as making way for new innovative media services. In the longer term these will encompass VR (Virtual Reality) and AR based services.

2. Leveraging content to drive revenue

In the 4G world, operators benefited from growing use of data through growing consumer data consumption and explored different strategies to promote and benefit from the rising interest in mobile video. These strategies will also apply in the 5G world as operators seek to encourage users to upgrade to faster speeds with larger data bundles and tap additional revenue opportunities arising by offering services– either their own, or those of partners – to their subscribers.
Where strategies will diverge from the 4G era is in the use of network capabilities unique to 5G.  Network slicing and dynamic resource allocation will support more innovative or demanding services – such as the low latency requirements of real-time cloud gaming services. Depending on how network neutrality rules are applied, these optimised services can be pitched to service providers or consumers at premium price points.

3. 5G as a wireless last mile alternative

Through both content/services and network synergies, convergence is therefore a key part of operator strategies in the 5G world. There is one additional factor relating to the blurring of the lines between fixed and mobile network operators that is already playing out in many countries, and which will accelerate with 5G: 5G will make wireless an increasingly competitive last mile technology alternative to fixed line networks.  Earlier this year, Randall Stephenson, CEO of the main US incumbent AT&T described 5G being used as a “fixed broadband replacement product” in the three to five-year timeframe.  Verizon has a similar vision, first deploying a version of 5G as a fixed wireless solution in 2018.

4. Infrastructure sharing

With expensive spectrum acquisitions and the high cost of deploying these deeply capillarised, dense networks, operators will look to make savings. Under Government direction, all operators in South Korea have agreed to share passive infrastructure for 5G as it has pushed for the country to get a head start with 5G. In part this is intended to boost the position of national champion Samsung as a vendor of 5G equipment.
Vodafone recently (May 2019) ascribed their first dividend cut, of 40%, to the cost of building out 5G. Those costs are likely to accentuate a shift towards network sharing – and indeed Vodafone has deals in place for 5G active network sharing in the UK, Spain and Italy and looks set to seek deals across Europe. Network sharing can take many forms from sharing of passive infrastructure through to wholesale access – with the network slicing embedded in the 5G specifications opening new options in how such access can be managed.
Conclusion
5G is not just another G, but it rather aims to trigger a new wave of global innovation. While 5G presents a range of opportunities for operators, the services will, at least at first, be more evolutionary than revolutionary. More disruptive innovation will arrive but will rely on several developments. Both operators and innovators need to engage in new opportunities that will challenge innovation and face tech dilemmas as digital disruptors. That will allow them to bake innovation into the core of their business model related to the 5G evolution. To accomplish that, companies need to trust the new network architecture and collaborate closely with network operators in all levels to create and ensure a safe and entertaining digital living.
To be published on Connect-World: North America II (2019)