Friday, 15 February 2019 10:05

Business case for 5G still unclear, survey finds

Business case for 5G still unclear, survey finds Pixabay

A survey of chief technology officers who are directly involved with 5G projects at 46 telcos around the globe indicates that most are still not sure about the strength for the business case, the management consulting firm McKinsey says.

The company said survey participants opined that 2019 would be mostly spent on preparation and planning for the new technology, with 61% of the operators saying they expected peak rollout between 2020 and 2022.

The survey found that while confidence in the technology itself was high, it was unclear how soon it would lead to new products and services for which people were willing to fork out money.

Hence, initially, most of these firms saw enhanced mobile broadband and IoT devices, rather than fixed wireless access or mission-critical applications, as being the most used.

"From a global perspective, the survey suggests some new trends in regional leadership. Although North America is in the lead, with the two top operators already launching 5G commercially, Asia is keeping pace," McKinsey said. "In Europe, however, there exist more doubts about 5G, which is a sharp departure from some earlier rollouts, such as 2G and 3G, when the continent led the technology’s introduction."

The 46 CTOs were contacted by phone and online; 20% were from attacker operators and 22% from mobile-only players. A quarter were from multi-region operators; 25% were in Europe, 20% in North America, 20% in Asia and the remainder in the Middle East, South America and Africa.

While many said they saw IoT as a 5G priority, the survey found that "they really see this latest wireless advance primarily as an opportunity to cement, gain, or regain network leadership".

Such competitive positioning was seen as the top priority for 5G, followed by customer experience and capacity, with some seeing the latter as a second objective.

IoT was not considered a core objective for 5G, McKinsey said, showing that the existing IoT capability was sufficient for most use cases.

"While we hear a lot of talk about the use of 5G for fixed wireless access, only 22% of operators identify this as their first or second priority for 5G, the same as IoT," the survey said.

Another finding was that as momentum towards 5G went, the technical teams were leading the business teams, and not, as usual the other way around. "The reasoning behind this could be either that 5G is viewed as so important that it just has to move forward or that the 'working' commercial teams — those below the chief executive level — haven’t pushed for it yet," McKinsey said.

About two-thirds of the CTOs surveyed said they had questions around the financing of 5G, while about 60% said they were still grappling with finding a business case for the technology. The business case was made even more difficult because of the prevailing belief that 5G would increase costs.

Practically all the survey participants said they expected network sharing to increase, mainly due to the expectation that 5G would mean a rise in costs for operators. Further, 90% of those surveyed said they expected to adopt new business models like neutral hosts, though where these hosts would be involved was as yet unclear.


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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.



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