The Revolutionary Evolution of Wireless: 5G Technology
The suit-clad executive leading the business meeting is speaking in a language you’ve never studied – but you can understand every word, thanks to hearables that can translate languages in real time.
You’re watching the Indy 500, but you don’t feel like a spectator; the asphalt disappears under your feet as the edges of the Indianapolis Motor Speedway blur around you. The rumble of the crowd sounds distant compared to the roar of engines as a 1,600-pound machine rockets past you at 150 mph.
Downloading a full-length, HD movie is done as quickly as…well, reading this sentence.
Sound like a futuristic dream conjured by science-fiction writers? This is what the future could look like with the power of 5G technology.
5G will not only be faster than 4G; it will be 10 to 100 times faster. Whereas 4G has peak speeds of 50Mbps, 5G is expected to ascend to 20Gbps. In addition, 5G technology will reduce latency from 50ms to 1ms. It will spur leaps in the coverage, capacity and density of wireless networks. It will power a surge in Internet of Things technology and usher in a new era of technological capabilities: autonomous vehicles, remote surgery with real-time reactions and much more. But even people on the forefront of this innovation aren’t sure what effect the new generation of wireless platform will have on various markets and industries.
In fact, we went to the change-makers themselves and asked 204 stakeholders directly involved in 5G network development at telecommunications companies with more than 1,000 employees. What are the challenges and opportunities associated with 5G technology? When will we begin seeing mainstream adoption? Our participants answered these questions and more in the 5G Technology Trends Report. Here are some of the highlights:
More than Half Think 5G Will Be Mainstream in Two Years
Companies are already churning out phones with 5G capabilities. AT&T and Verizon have both announced plans to carry a 5G phone starting in the spring of 2019. Last October, Verizon launched 5G in pockets of four cities across the U.S. Although this is only a diminutive demonstration of the potential of 5G technology, it does hint at the possibility of becoming mainstream in the not-so-distant future.
In Jabil’s survey, 60 percent of respondents answered that they think 5G will be mainstream within the next two years. Just over 20 percent expect it to take three years, 11 percent think it will take four years and only 5 percent forebode it will require more than five years. Download the full report.
Closer analysis revealed a generational gap in these forecasts. Younger people were more likely to anticipate that 5G technology will achieve common usage sooner; 79 percent of millennials asserted that 5G will be mainstream within two years as opposed to 59 percent of Gen Xers and 34 percent of baby boomers.
5G Technology is Making Some Headway
Despite optimism about establishing 5G in the next couple years, most telecommunications companies – 56 percent – are still in the architecture or planning stage of implementing 5G network solutions. While larger, more prominent service providers – such as Verizon and AT&T – are more advanced in rolling out their 5G solutions, smaller, lesser known companies may struggle to gather the resources, expertise and partners needed to get such a forward-thinking, complex technology off the ground.
Almost one in four companies are in the service development or field trial stage, and 19 percent are at initial deployment. This indicates that some companies may be on pace to reach the two-years-to-mainstream projection.
North America Expected to Lead 5G Adoption
When 5G technology finally gains a foothold in common culture, 67 percent of participants believe that it will start in North America. The second-highest answer – Europe – trailed North America considerably at merely 12 percent affirmation.
United States-based communication service providers are currently leading the charge in commercial 5G deployment. According to a study by Ericsson, all major U.S. operators are planning to roll out 5G by late 2019. Already, Verizon’s commercial 5G FWA service launch is underway, and AT&T is on the brink of introducing 5G mobility services, meaning that the U.S. market will be an early proving ground for 5G New Radio (NR)—a unified, more capable 5G wireless air interface—and its commercial viability.
It’s no exaggeration to say that the race to be the first country to implement 5G could be the “Space Race” of the 21st century. Given the plethora of advances that 5G will unleash, first-adopter countries could sustain a decade of competitive advantages. According to Nokia, being the first to bring LTE to market gave North American first-movers a $6.6 billion advantage over the second movers within five years. It is no stretch to say that being the first to provide 5G will equal or even exceed this.
Interestingly, even though North America is expected outpace the rest of the world in 5G development, China has outspent the U.S. by $24 billion in 5G infrastructure since 2015. China has built 350,000 new cell sites, while the U.S. has built 30,000 in the same amount of time. According to a Deloitte report, China plans to spend hundreds of billions of dollars in 5G-related spending.
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Business Applications Will Drive 5G Technology First
Nearly three-fourths of participants said that 5G will be adopted for business applications before personal ones. 5G has substantial implications for multiple industries: more efficient remote surgery, autonomous vehicles or the Tactile Internet. For an example of the business applications of 5G, let’s look at just one of the three primary 5G NR use cases identified by the Study on New Services and Markets Technology Enablers project: enhanced mobile broadband (EMBB).
EMBB will provide faster data rates and enable quicker video downloads, but ultimately, it will supply an increasingly seamless user experience that will exceed contemporary service quality and enable 360-degree video streaming, truly immersive virtual reality and augmented reality applications and much more. In turn, these capabilities will allow commuters to access cloud-based apps en route to work, remote workers can communicate with the office unhindered and power “smart offices” where all devices are wirelessly and smoothly connected. Virtual meetings will have 360-degree video, real-time interaction and even real-time translations for participants speaking different languages.
There are Short- and Long-Term Gains for 5G
Participants expect faster, better video to be the top driver of broad 5G adoption over the next two years, followed closely by the Industrial Internet of Things (IIoT). However, longer term – meaning over the next three to five years – respondents predict that smart cities (50 percent) will lead the charge to adopt 5G, surpassing the second choice (connected vehicles) by almost 10 percent.
Doubtless, a factor in this discrepancy between long- and short-term priorities is the amount of structure required. Video and the Industrial Internet of Things may require some tweaks to their respective devices, but to implement 5G in smart cities and connected vehicles will require prodigious industrial shifts. Additionally, smart cities and connected vehicles are still conceptual to some degree.
Three Factors Driving the Need for Adoption
At this point, while I’ve lauded some convenient and enjoyable potential uses of 5G, you might be wondering what the significant factors pushing 5G technology adoption are.
The telecommunication leaders participating in our survey cited several reasons why 5G will need to be adopted. Ninety-five percent stated that 5G technology will deliver new business models, and 89 percent said that the transition to 5G will create opportunities for new telecommunication companies. With the advent of 5G technology, telecommunication companies will be saturated with new services, new ecosystems and new revenue streams. Partially, it will do this by opening the door for new technology, which will naturally enable companies to address new value chains and revenue from the digitalization of industries.
Companies will also be able to provide services targeted at particular economic or industrial sectors as well as specific user groups. This will cause disruption in the current business model, which primarily offers a standardized service with a variation of pricing plans.
Eighty-eight percent of participants asserted that 5G capabilities are needed to enable the next “killer app.” Although researchers are buzzing over the possibilities with artificial intelligence and virtual reality, no one can identify exactly what this application will be or look like. The very nature of 5G makes it difficult to predict. Whereas previous generations of wireless were aimed toward solving a specific need, 5G is less directed toward a specific application demand and is more derivative of the overall demand for higher efficiency and more bandwidth.
However, one potential application that has telecommunication companies buzzing is network slicing. Essentially, this new network approach will offer personalized services to groups or individual customers. The slices can be developed quickly and managed dynamically to create services that merit a premium revenue. A Nokia-sponsored survey on network slicing found that it boosts operating margins by more than 5 percentage points.
Many Challenges Bar the Progress of 5G Technology
As many benefits as there are, not shockingly, an undertaking of this magnitude poses some challenges. Forty-one percent of our participants agreed that technology challenges are the most difficult, followed by business model challenges (36 percent) and operational challenges (23 percent).
The most daunting technology challenge, according to 53 percent of survey participants, is the sheer complexity of 5G. The ultimate vision is that 5G will provide both mobile service at gigabit speeds and wireless fixed broadband, empowered by new radio access types and spectrum bands that coalesce to form a single 5G network. Modern operation practices and systems cannot maintain the level of service demanded by 5G, meaning that 5G technology will considerably complicate current wireless networks.
The second-highest struggle was scarcity in the availability of spectrum (49 percent). Right now, regulatory agencies are opening spectrum, mostly in millimeter wave, which causes problems because the technology and industry hasn’t quite caught up. You can’t waltz out today to buy a 39-gigahertz radio and hang it on a pole outside your house, much less buy a 39-gigahertz mobile phone you can press near your brain. In addition, the millimeter wave simply hasn’t reached a point yet where it is cost-effective and ubiquitous. The technology is not pacing the need or desire.
Ninety-five percent of telecommunication companies must also contend with operational challenges. The top operational snag, according to 63 percent of survey participants, is the lack of availability of 5G-enabled devices. However, as previously mentioned, companies are already starting to produce 5G-capable phones, and as we approach the likelihood of 5G becoming mainstream, more companies will follow suit. Half of respondents also struggle identifying the physical locations to install 5G equipment (e.g., network mapping) and the expense of investments and lack of back-end infrastructure to support the radio network tied for the third-largest obstacle.
Finally, 94 percent of participants listed business challenges in offering and utilizing 5G technology. Although Ericsson estimates global 5G smartphone subscriptions to be at 54 million by the end of 2020 and 551 million two years after that, one in two companies are wrestling with the process of figuring out how to create a subscription model for 5G. Forty-four percent clash with over-the-top providers continuing to steal revenue and 43 percent are weeding through governmental regulations (such as net neutrality).
Given the number of challenges companies face in delivering 5G solutions, it follows that 99 percent of respondents affirmed that they will need something from their partners or suppliers. One of the most effective ways to overcome a challenge is to bring in additional expertise and resources. Partners can fill gaping hole in a company’s capabilities. The number one need was cost-effective equipment, followed by more standardization in between vendors for interoperability, a common problem for Internet of Things markets.
Evolution or Revolution? Experts Disagree.
Experts are almost evenly split on what the future of 5G will even look like. They agree it will be valuable, but they speculate as to just how valuable it will be; 51% say that 5G will deliver incremental advances over 4G that will create some changes for telecommunications, 49% envision 5G as a superior technology that will dramatically transform telecommunications. In this case, optimism seems to go hand-in-hand with experience; larger companies, executives and baby boomers are the most positive that 5G will make a dramatic impact.
Both sides argue valid points. 5G will crack multiple industries, greatly enhancing current technology and opening the door for a myriad of new capabilities. But, at the same time, it isn’t replacing 4G. 4G, 5G, Wi-Fi, 6G…they are all part of an evolutionary cycle. 5G will force industries to innovate, but it will do so in tandem with the previous generations of wireless.
Rather than choosing revolution over evolution or vice versa, maybe the best way to look at 5G is as both – an evolutionary revolution. Or a revolutionary evolution. The next few years will uncloud the mysteries surrounding the future of 5G technology.
Download the 5G Technology Trends Survey Report
Insights from 200 telecommunications decision-makers on 5G adoption, predictions, opportunities and challenges.
Published January 23, 2019