Mobile Services: Taking 5G to the Max

The pandemic has increased business and user reliance on mobile services and paved the way for 5G. But why is it still so difficult to predict how useful 5G will be?

Smart cities, self-driving vehicles and advanced robotics are just the tip of the iceberg: there’s no doubt that 5G will radically change the world. As far back as 2017, Timotheus Höttges, the CEO of Deutsche Telekom, gave an estimate for a nationwide 5G network in Europe, saying that the costs could amount to €300 billion to €500 billion – for a product whose “return on investment” for the operators was by no means certain. Which responsible businessman would invest such sums without knowing if and how such an investment might pay off?

The return on investment of 5G for the operators is by no means certain.
_{Timotheus Höttges, CEO of Deutsche Telekom}

The world is a different place today than it was before the COVID-19 lockdowns. Our dependence on wireless services has increased dramatically, as has the demand for more speed and bandwidth. It would be negligent to believe that mobile data traffic will decrease again as the vaccines roll out and the world returns to “normalcy.” Slow networks have simply become unacceptable. All operators are working flat out to provide users with better, faster networks. In many ways, the pandemic has been the catalyst to accelerate 5G infra-structure and deployment.

Because it is an application-based technology, we won’t know the full benefits of 5G until it is “here,” which will take another five to ten years. Until then, we see two types of nearterm impact: How existing applications work on 5G networks and how 5G impacts the economy even as it is being deployed.

Even though 5G is application-based, today’s mobile applications will not disappear when the next generation of mobile is implemented. Rather, they will experience a performance boost under 5G, such as faster downloads, improved streaming and gaming, or more reliable video conferencing. Mobile operators which can take advantage of this difference will definitely be among the winners of the development. The other angle from which to look at the short-term impact of 5G, is the benefit to the economy. According to a study conducted for the U.S. by the Boston Consulting Group, 5G will contribute between $400 billion and $500 billion to the gross domestic product there and create up to one million new jobs by 2030.

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Even if these figures already seem impressive: The economic impact of a new mobile network has already been underestimated at least once. Studies at the beginning of 4G deployment, for example, assumed that investment in 4G networks in the U.S. would contribute about $73 billion to $151 billion to GDP from 2012 to 2016 and create 371,000 to 771,000 new jobs. By 2016, however, 4G contributed nearly $445 billion to GDP. Over the course of the “4G decade,” more than 20 million jobs were created in the U.S. alone.

In this sense, the true impact of 5G is likely to be much higher than we are currently outlining.

A Look at the Potential

While the near-term impact of 5G is quantifiable in terms of application performance and GDP growth, it still does not take into account the broader effect of the 5G ecosystem. For 5G to truly take hold, the industry must demonstrate the technology’s “business case.” Why else would investment continue to flow into the sector? How to develop use cases for 5G without using 5G? It’s the ultimate chicken-and-egg scenario. So which comes first, the technology or the application? With 4G, it was the technology. Application versus network was never an issue with 4G because 4G was content-driven. Consumers wanted faster speeds to stream movies, go online and generally use mobile Internet. However, while 4G was a big step forward for the way mobile users consume content, the technology didn’t break through until the emergence of certain applications. Through them, developers learned what the technology could do and products and services emerged, such as Uber, that used 4G to transmit data and locations – and changed our lives.

Beam or not to Beam? Instead of emitting a mobile signal in a circular pattern, which then becomes weaker and weaker at the edges, as has been the case in the past, beamforming allows 5G signals to be targeted in the form of elongated lobes. This means that the transmission power can be adjusted as needed. (source ©: Deutsche Telekom)

With 5G, it’s very different. Unlike 4G, 5G lacks a fundamental network for developers to even begin developing applications. That’s because we don’t yet know what 5G can really do. We also don’t know how applications will use the near-zero latency and IoT capabilities. As a result, it’s impossible to assess the true impact of 5G.

The 5G Economy will go through three phases, says the Boston Consulting Group. Robust 5G networks will serve as the backbone of future economic growth. Rising 5G penetration rates will enable transformation in existing applications. Phase three will bring benefits to citizens and businesses including higher productivity, lower costs, and better health and safety. (source ©: Boston Consulting Group)

The theoretical possibilities are endless. At its core, 5G is about real-time connectivity and connecting everything to everything – the basic promise of IoT, after all. Once the first business model is established that leverages the capabilities of 5G, the ROI will likely be greater than anyone is predicting today. Just as Uber created a ride-sharing market that would have been impossible without 4G, companies that listen wisely to their customers can find the next big niche with the help of 5G.

Who Will Lead in 5G?B y the end of the 2G era, spectrum-related regulations increased licensing costs and delayed investment in 3G in Europe, so Japan dominated and was well-positioned to lead the 4G economy, too. During both the 2G and 3G eras, the US was slow to roll out networks. However, US regulators made important policy decisions, and by 2015, over 50 percent of adults in both the US and Japan had 4G subscriptions — a higher percentage than in most European countries. It remains to be seen who will lead the 5G revolution. (source ©: Boston Consulting Group)

The Next Big Thing

Each new generation of technology has brought improvements with faster and more reliable connections. Since the introduction of 4G/LTE, mobile has changed the way people work, live, get around, or spend their leisure time. But where those advances were already astronomical, 5G will far eclipse them. No one can predict what the future will bring, but the limitless potential of 5G is beyond question. All that remains to be seen is how, when, and by whom this technology’s enormous potential will be fully realised.

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