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Analyst Angle: 5G roll outs will be more nuanced than coverage blasts of the past

As commercial 5G roll outs begin in volume during H2 2018 and into 2019, handicapping which operators or which countries will ‘win’ the race to 5G is ramping up

IMHO, this seems to be the wrong way to look at 5G on several levels.

First off, as most in the industry has acknowledged, if not accepted, 5G is more than a new wireless network standard.  Despite the fact that the first 5G standards are focused on 5G NR, true 5G is going to encompass both fixed and mobile networks, from core to access to user equipment. Second, it will be about much more than deploying new hardware. It will be about supporting 5G capabilities via both physical and virtual networks. Third, it be about more than deploying 5G capabilities alongside, or on top of, existing technology generations. In this sense, it will be both an evolution of 4G and a revolution from previous “xG” roll-outs of the past.  

Beyond the networking nuts and bolts, 5G is about business models, and by extension, digital transformation, as much as it is about technology generations and deployment architectures. With previous generations of mobile technology, the primary emphasis was about deploying new technology and quickly as possible so as to support higher throughputs more efficiently. As such, the business model implications were somewhat straightforward.  On the revenue side, it enabled the ability to charge incrementally more for higher data rates and better call quality. On the expense side, some incremental OpEx savings helped keep expenses manageable in the face of exponentially increasing traffic requirements. As with all seem to accept with respect to 5G, it’s not just about supporting higher data rates and incremental cost savings in support of basically the same services; it is about expanding what is possible via ICT services.

Indeed, for 5G to meet its potential, it will have to serve as the key to unlock an array of new business models across a broad swatch of industries.  At present, this new potential is personified by IoT. Fortunately for 5G technology vendors and 5G technology buyers, IoT is such a massive concept that the business models that a 5G-enabled IoT is practically limitless.  However, other concepts that are not solely tied to IoT, such as AR/VR, and an array of ultra broadband services for the enterprise also represent a huge opportunity to leverage 5G to offer new services and capture new revenue streams.

How 5G roll outs will be different?

If 5G deployments will be about more than a race to blanket an operator’s coverage map, what should we expect from initial commercial roll-outs.  Judging by the activities of a few first movers, it appears that 5G is going to be deployed as a means to support an operator’s tactical business strategies.  By way of brief example, let’s look at the early 5G deployment activities of three operators that have been among the more aggressive in telegraphing their 5G plans – AT&T, Verizon and Korea Telecom.

  • AT&T – It is no secret that AT&T covets a beach head as being a leading network provider for Industrial IoT applications across a range of vertical industries.  To this end, the company has been one of the most aggressive in efforts to virtualize its network. These efforts are being done as much to support the company’s IoT, and by extension, 5G strategy as anything else it is doing. Similarly, its work on 5G NR is also being done to enhance its enterprise services play with a decided emphasis on enabling IoT use cases. While somewhat simplistic, this can be summarized as: leveraging its early lead in virtualization to support network scalability and network slicing, which supports 5G use cases, which supports massive IIoT enablement to enterprise customers across an array of vertical industries.
  • Verizon – When Verizon first started talking 5G, it was as a means of enabling fixed broadband data rates wirelessly to customers that didn’t have last-mile fiber connections. These days, its 5G messaging has evolved to include a promise of the densest 5G network of all its competitors. Here, the strategy favors the company’s pervasive fiber backbone and metro networks to enable 5G fixed wireless solutions to be used as a last mile access option for enterprise customers. It also involved leveraging its dense LTE network to site mmWave solutions in high-band spectrum to support ultra-broadband applications such as AR/VR to both enterprise customers and consumers in heavily populated urban centers.
  • Korea Telecom – With the benefit of the 2018 Winter Olympics as a staging ground, KT was one of the first operators out of the gate to showcase the potential of 5G to enhance the viewing experience at sporting events.  Using 5G technologies, KT enabled immersive video experiences that allowed spectators to access views from the perspective of the athletes during competition. Taking a step back from sports to address larger societal preferences, given that country’s affinity for gaming, and immersive video experiences, KT has indicated that one of its primary initiatives during its initial 5G roll-outs will be to use both low-band and high-band spectrum to provide high quality AR/VR video experiences for its subscribers.

In a nutshell, even by viewing the deployment strategies of three leading operators, it seems clear that while 5G deployments are beginning in similar timeframes, the “playbooks” for how to deploy and what to support could vary considerably based on the particular strengths, and business objectives of individual operators.

ABOUT AUTHOR

Jason Marcheck
Jason Marcheck
Founder and principal analyst at Layne Bridge and Associates. Jason is a 20 year veteran ICT industry analyst covering 5G, IoT, cloud and virtualization strategies for clients across a range of vertical industries. Prior to founding Layne Bridge, Jason worked for 14 years at Current Analysis/GlobalData as a research leader and consulting director.

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