• Raghu

What's driving investment in 5G ?

Updated: Jan 22, 2019

PwC research suggests that nearly two-thirds Operators have said that CAPEX is driven by technology, not business commercial objectives. PwC also indicates that this is a worrying trend in an increasingly competitive market.

Capital Management, PwC Report

For starters, when the operator was busy focusing on enabling every device with IP, the end user service was forgotten. Before 3G/4G/LTE, an internet user was a reference limited to a person in front of a laptop/computer. An internet user could chat with anyone in the world, make an audio/video call for free to anyone else on the internet and had access to million other services. Operators while playing a key role in migrating this internet user to the phone, never really offered the means that matched the internet. IMS had been around for more than a decade and Operator never saw that technology as a key enabler. Eventually, it was OTT that really solved that piece of puzzle and Operators have been playing catch up ever since.

Another area of complete failure has been "IoT". Here is another quote from Gartner - "Gartner predicts 6.4B connected things will be in use worldwide in 2016". NB-IoT technology was finalized in 3GPP in 2016-17. Not many operators have implemented it yet. The IoT device manufacturers are still refining the final models. IoT never took off the way it was projected and we, as the world, undoubtedly are nowhere close to 6.4B connected devices even in 2018. But this is surely an opportunity missed. The IoT market has moved to LoRa and SigFox while operators are left high and dry once again watching someone else walk away with the money which could have been rightfully theirs

However, we think there's more to it than that meets the eye. Sure, transformation to 4G/LTE has been faster than expected. The 3G technology was half-baked and never realized its true potential. But that is not the only reason why operator CAPEX never reaped the benefits they were intended to.

For starters, when the operator was busy focusing on enabling every device with IP, the end user service was forgotten. Before 3G/4G/LTE, an internet user was a reference limited to a person in front of a laptop/computer. An internet user could chat with anyone in the world, make an audio/video call for free to anyone else on the internet and had access to million other services. Operators while playing a key role in migrating this internet user to the phone, never really offered the means that matched the internet. IMS had been around for more than a decade and Operator never saw that technology as a key enabler. Eventually, it was OTT that really solved that piece of puzzle and Operators have been playing catch up ever since.

Another area of complete failure has been "IoT". Here is another quote from Gartner - "Gartner predicts 6.4B connected things will be in use worldwide in 2016". NB-IoT technology was finalized in 3GPP in 2016-17. Not many operators have implemented it yet. The IoT device manufacturers are still refining the final models. IoT never took off the way it was projected and we, as the world, undoubtedly are nowhere close to 6.4B connected devices even in 2018. But this is surely an opportunity missed. The IoT market has moved to LoRa and SigFox while operators are left high and dry once again watching someone else walk away with the money which could have been rightfully theirs.


Gartner IoT prediction

This was also an opportunity to introduce subscription-based models that encompassed different devices and sell connectivity as a service. But Operator had too many moving parts and not all of it could influence. Hence, it's still an ongoing opportunity where not all is lost.

We are currently poised at a very nascent stage of technology with the network (5G), Devices and applications all in early stages. This, for the first time, presents a unique opportunity to Operators. The operator can collaborate early applications, work out a new business and revenue sharing model and drive device companies to finally align for delivering end to end quality of service (QoS). This is a win-win situation and an operator failing to read this will probably have to wait for the next technology wave to ride on.

Korean and American Operators are leading the charge here. Mature JPAC and US Telecom operators realize this opportunity and are heavily betting on 5G.

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