Bottom Line: Service providers, technology vendors and even some nation states have incentives to promote 5G. This has the potential to set a dangerous precedent for 5G and create misaligned priorities and overly optimistic expectations.
In June 2016, Tom Wheeler, the Chairman of the Federal Communications Commission (FCC) in the United States, presented his vision for 5G and “why American leadership in 5G must be a national priority”. Other countries, most notably Australia, China, Japan and Korea are also aggressively pursing 5G for similar reasons.
Korea plans to showcase 5G at the 2018 PyeongChang Winter Olympics, Japan at the 2020 Tokyo Summer Olympics and Australia at the 2018 Commonwealth Games. Mobile operators in China, Korea and the United States are already testing 5G with the objective of being first to market with commercial services using pre-standard technology.
The mobile industry has a vested interest in promoting 5G, to buoy stagnant service revenues and declining 4G network expenditures. With 5G, technology vendors like Ericsson, Huawei and Nokia hope to drive equipment sales, and operators aim to increase network value with heightened scalability and throughput, latency, and reliability.
Combined, the vested interests of mobile industry players and nation states are strong catalysts to fuel 5G sentiment, and skew market reality even though compelling 5G business cases are conspicuously absent. 5G targets several specific use-cases, including enhanced mobile broadband, ultra-low latency and mission critical connectivity, and network slicing capabilities to segment resources according to service demands.
5G delivers enhanced mobile broadband, but with some caveats
To enable enhanced mobile broadband (EMB), 5G aggregates wide radio channels, in sub-6GHz spectrum or harvests spectrum in higher frequency bands between 10 and 100GHz (i.e. millimeter and centimeter-wave). EMB capabilities are being touted for the mobilization of high throughput services, such as 4K and 8K video. But this is not without challenges. In particular, if EMB is delivered:
Traditional telephony services require connection latencies in the order of 100 milliseconds, and 4G-LTE Advanced is capable of achieving 10 millisecond connection latency, which are adequate for most applications. However some applications, such as those for autonomous vehicle connectivity and the tactile Internet require connection latencies in the order of 1 millisecond, which is being enabled by 5G. The tactile Internet spans a broad range of nascent services with complex value chains, such as entertainment, transportation, industrial operations and healthcare – including ominous applications such as remote surgery. Companies like Darqui, Gravity Jack, Magic Leap, Metaio, Oculus, and ScopeAR are delivering tremendous innovations with augmented reality (AR), which we believe will be important drivers for tactile Internet applications. However, today it is unclear if and when these players will require 5G capabilities.
Industry heavy-weights like Google, and large automotive manufacturers have been making significant headway with autonomous vehicle capabilities, including vehicle platooning, which requires low latency vehicle-to-vehicle (V2V) and vehicle to infrastructure (V2X) connectivity. While this is well suited to 5G, the automotive industry has already developed dedicated short range communications (DSRC) for low latency V2V and V2X connectivity – albeit with relatively low data rates.
Although mobile industry advocates are promoting 5G as an alternative to DRSC, many automotive industry players are suggesting DRSC be used for low latency connectivity and mobile broadband technologies for high bandwidth in-vehicle infotainment solutions. If this approach were adopted, the low latency capabilities for 5G would not be required for autonomous vehicle applications.
For many years the mobile players have anticipated market upside opportunities by offering priority network capacity at a premium. While a compelling concept, priority access is difficult to achieve at scale with current network technologies. This is particularly the case, when there is the need to dynamically dedicate network resources for mission critical applications, such as those associated with public safety. As a result, many dedicated public safety networks, such as FirstNet in the United States, are being deployed using 4G-LTE.
Priority network access is inherent in the design of 5G, to the extent that it is even incorporated in the proposed radio waveform. With these capabilities, commercial 5G networks can be reliably designed to prioritize mission critical functionality, such as public safety. However since mission critical network designers are necessarily conservative, we believe that it will take many years before 5G solutions are accepted as an alternative to dedicated 4G-LTE networks.
The Internet-of-Things (IoT) is expected to proliferate in coming years and herald a massive growth in the number of connected devices. Traditional cellular technologies that have been designed for mobile users are constrained in the number of devices that can be supported by each base station and incorporate unwieldy core network functionality that is not required for machine type communications. However, low power wireless access (LPWA) network technologies, such as Ingenu, and 3GPP standards, including LTE-M1 and M2 have been modified to support massive connection densities, with significant improvements in device energy efficiencies.
Although 5G intends to support up to one million connections per base station and enable tremendous device energy efficiencies, it is questionable whether it is needed. Instead, LPWA and 4G-LTE might be sufficient.
By capitalizing on advancements with network virtualization and resource orchestration, the 5G standards introduce a concept commonly referred to as network slicing. With 5G network slicing, end-to-end network resources can be allocated according specific service and user demands. We believe that this is a compelling feature of 5G, however it is difficult to implement in practice given the complexities in business and operational support systems and the heterogeneous network environments over which services will be delivered for the foreseeable future.The devil’s in the detail
When evaluating the prospects for 5G, it is tempting to focus on its role in extending the success of 4G, rather than the potential for it to miss market expectations as was experienced with 3G. In some markets, like the US, Korea and Japan, where consumer “techno-lust” is prevalent, mobile operators are likely to benefit from targeted 5G deployments. However in most markets we believe that operators don’t necessarily benefit from being first-movers in 5G and should have measured and pragmatic 5G implementation strategies.