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Mobile Communications September 2018 Viewpoints

Technology Analyst: Michael Gold

Business Risks for Early 5G Deployments

Why is this topic significant?

Several carriers promise to introduce commercial 5G mobile services as soon as humanly possible, some by the end of 2018. But a number of technical and business risks will accompany early introductions.

Description

Now that the 3GPP has published specifications that describe the initial versions of hardware and software of an all-5G communications system, manufacturers and service providers may choose to take steps to deploy services in advance of standardization. Spectrum assignments and other service characteristics that affect hardware will not see full consensus and standardization until 2020. But major infrastructure suppliers are confident enough in the results of their collaborative developments to start building solutions now, with an expectation that inevitable revisions to their work will be tractable.

Service providers promising initial commercial trials or deployments for 5G mobile communications by the end of 2018 or by the first quarter of 2019 include AT&T, China Unicom, KT, LG Uplus, SK Telecom, T-Mobile, Verizon, and Vodafone. Many other companies describe launches starting in 2020, including Bharti, China Mobile, China Telecom, KDDI, NTT DoCoMo, O2, Orange, SoftBank, and Telenor. BT (EE) has set an intermediate date of August 2019 for an initial 5G deployment. Officials from BT and O2 have sparred over the meaning of the term 5G, with O2 describing early deployments as "5G lite." BT countered that 5G will evolve, and initial 4G technology was less advanced than is current 4G technology.

Early 5G deployments will be hampered by limited availability of compatible handsets. Initial 5G demonstrations have used prototype tablets. Other early 5G devices will likely include mobile Wi-Fi routers similar to 4G units that Inseego sells (branded as MiFi and Novatel). Motorola will sell a 5G Moto Mod add-on in "early 2019." It's unclear who will be first to retail an integrated 5G handset. CNET compiled a list of 18 brands that have promised to do so in 2019. Apple and Samsung are absent from the list.

Implications

Mobile-communications-service providers are split on whether to deploy 5G in advance of standardization. Being first in a national market with 5G service might confer some advantages to a brand, but handset availability is likely to be limited even in 2020, after the consensus-building process concludes. The world's first 5G services are likely to emphasize handsets that are not the most desired models as well as non-handset devices that are far less popular than handsets.

Ericsson recently forecasted that 1 billion 5G handsets will be in service by 2023—a number that is large but nonetheless accounts for less than one-sixth of the more than 6 billion unique mobile-service customers Ericsson expects worldwide by that year. Ericsson's aggregated forecast for cellular-connected tablets, notebook computers, and Wi-Fi routers is modest, consistent with a fairly steady market penetration of about 5% of customers worldwide.

Impacts/Disruptions

Early implementers of 5G could face some of the types of challenges that NTT DoCoMo experienced when it aggressively accelerated 3G deployments in 2001, well ahead of its peers worldwide. Problems emerged with handset size, weight, battery performance, reliability, wireless coverage, and cybersecurity. The early deployment also ultimately slowed NTT DoCoMo's efforts to offer a handset that could automatically roam to 3G networks in other nations. Japan's measured approach to 5G deployments may have been influenced by its experience with being first to market with 3G.

Scale of Impact

  • Low
  • Medium
  • High
The scale of impact for this topic is: Medium

Time of Impact

  • Now
  • 5 Years
  • 10 Years
  • 15 Years
The time of impact for this topic is: 5 Years

Opportunities in the following industry areas:

Cellular services, cloud services, software development, communications-equipment manufacturing, computer manufacturing, data centers, enterprise computing, information-technology management

Relevant to the following Explorer Technology Areas:

A Technology Gap in Early 5G Deployments

Why is this topic significant?

The benefits of 5G services will depend on how carriers implement the technology. Early 5G service deployments will not support all of the capabilities necessary for carriers' stated goals for delivering emergency communications, shared virtual reality, and advanced Internet of Things applications.

Description

During June 2018, dozens of carriers worldwide endorsed the first proposed 5G core-network specification, which aims to standardize an integrated information-communications infrastructure. The standard will also help networks sustain highly reliable wide-area connections having ultralow delays, and support astronomical numbers of Internet of Things devices. The standard also promises to create economies of scale for equipment supplies, facilitate collaborations among software suppliers, accelerate service creation, and enable noticeable improvements to interoperability among competing networks.

Some carriers in China, the European Union, and the United States plan to start deploying 5G radios and selling 5G devices during 2018 to 2019. But apparently, all carriers in that category plan to integrate new 5G radio systems with existing 4G core networks. So far, only China Mobile has expressed concrete intentions to deploy all-5G networks, with initial commercialization slated for 2020.

Implications

Even without new 5G core networks, new 5G radio technology provides operators with a road map for increased data rates for channels that use the same amounts of spectrum that 4G services use. The result will be significant increases in capacity to serve customers. Locations that suffer from data-traffic overloads and spotty service availability will see relief. Experiences that resemble virtual reality will be possible when users choose their own perspectives for ultra-high-definition 360-degree videos. New radios will also transform supply chains and industry practices. Services will make increased use of centralized software-defined radio functions, cloud-based management of radios, and compact antenna systems indoors and outdoors.

But many of the promised benefits of 5G networks require more than new radios. Champions promise that new core networks will yield superior capabilities and business innovations. All-5G services with both new radio technology and new core networks will be key to enabling critical communications in emergency vehicles, or any moving vehicles. Likewise, all-5G networks promise to allow two relatively distant users of wearable devices to share virtual- and augmented-reality environments, which can be unpleasant or useless when data delays are excessive. Also, the massive scale of machine-to-machine communications that 5G champions envision will require all-5G networks. Moreover, standards for all-5G networks will be key to making all of these applications interoperable when users of competing cellular services connect to one another. And standards will be equally important for enabling infrastructure vendors to supply interoperable technology building blocks for 5G core networks.

Impacts/Disruptions

To avoid high initial costs of all-5G technology, service providers will modify 4G core networks to approximate the software-defined networking and cloud-computing aspects of 5G core networks. The result will enable an increased measure of outsourced and agile business and network functions. Service providers will even take steps to reduce delays in 4G networks, though they will not likely achieve 5G-like benchmarks. And competing proprietors of 4G core networks will likely achieve only limited interoperability with one another.

Scale of Impact

  • Low
  • Medium
  • High
The scale of impact for this topic is: Medium

Time of Impact

  • Now
  • 5 Years
  • 10 Years
  • 15 Years
The time of impact for this topic is: 5 Years to 10 Years

Opportunities in the following industry areas:

Semiconductor manufacturing, telecommunications-equipment manufacturing, electronic-products manufacturing, agriculture, construction

Relevant to the following Explorer Technology Areas: