The 5G iPhone may not make 5G an overnight sensation

Well, Apple just got into the 5g business that was a long awaited big deal. And many think that their pixie dust is gonna be the match that lights the 5g rocket. But a quick scan of CNET and other headlines after the apple news indicates maybe we're still gonna be on the launch pad for a while or not far above it. Now what. Joining me now is some insights that are going to be proving very prescient even though they are Whitney year ago. They're playing out very accurately now is Michael bryden. Stein, he is partner and associate director at Boston Consulting Group. And he's the lead author of a very thoughtful post from BCG called Five G. We'll take a different kind of launch. Michael, tell me in a nutshell before we get into the parts of this, what about a 5G generation is gonna be different than launching the 4G generation. There are many more options in terms of when work is ready, when which part of it is actually defined, release, standardised And then what to do with it. So it supports a whole range of of aspects of enablement which, which then you know, create new use cases. So what to pick and choose and do Where in our opinion requires a very surgical approach, very different from it has been done with previous technologies. It sounds like 5G does have a lot more moving parts and not evry part applies to every user of it, is that about right? Yeah that's correct, so when want to break it down, First and foremost, every telco or almost every telco has a capacity problem. Traffic demand just increases explode still, and 5g allows to use new spectrum, additional spectrum bands. Very simple, adding more spectrum is cheaper than having to densify your network. So that's not a very sexy reason to deploy 5G, but it's one which every telco looks into, and then of course, you have additional possibilities. To use 5G commercially, to enable new things. Part of it also requires a new core, part of it can be done with with existing core. So you have this magnitude of what can I build 5G for? Starting for smartphone users are a bit more of the same But that already costs something, so how do I get back the money? And another thing which is different to before is before basically 4G, in a Telco they just said network department plan the rollout and once the rollout has been done. The other guys thought about Okay, what can we do with it now? How can we sell it? Now because you have much more possibilities which aspect to use and to roll out and actually how you have to turn this round. actually completely turning around doesn't work it needs to be together. Commercial guys need to think about Okay, what could I sell and where? So make it much more geographically specific, which was also not usually not done before. So you see, there are quite many dimensions. There's so many parts here. I think one of the most interesting things out of your paper that you guys wrote was the usual approach to launching a network first rolled out the technology then design the offers, won't cut it. And we have to move the technology and the use cases in sync. At the same time to get this thing to really take off. You have to bring people to understand technology and think about what do we did Before it's actually here, and that's a different approach than before. many of our clients which see. Its much more this joint approach to really go through this exercise together. You cannot delegate that, or say, Okay, this group, does it or you know. Delegated downwards. Because you have to, you have to handle a lot of uncertainty when exactly Could you be ready? What's the uptake? So it's quite it gets quite transformational indeed and I make an example. So short term and that's also what we see worldwide. Basically 5g especially in non standalone fashion. More, or less brings more capacity. Which means also more speed, especially with higher frequencies where the amounts are larger. Now for mobile broadband, smartphone business, just asking more for more speeds, maybe short term works in some markets, but usually not sustainably. In some markets, this was basically what operate the state is to say, Okay, now, we have unlimited offers because of 5g. And so this is kind of one step up trying to monetize that. But those who really try to make this sustainable try Of course to bundle it to offer new services. Which means new content with it and say, Look, this new service this new content is now enabled. By 5g repeatedly in the in the post you point out you and your team. I saw the phrase two or three times, saying Users and or consumers may be underwhelmed or under impressed in the early phases of 5G because perhaps all it does is increased their bandwidth or perceived speed by a moderate amount which is great. But all those other benefits and new use cases Are coming later. And I'm concerned that 5g is really happening now in consumers minds and in the minds of a lot of enterprise. And then it's going to happen again, and how that is going to be perceived as if they were misled or encouraged to jump on too soon. Do you think there's kind of a perception and positioning problem to be wary of there? There has been marketing race, undoubtedly. And maybe for a good reason depends on the specific situation and market, you know how important it is to, to show or at least to claim a certain, a certain, you know, advancement versus others. But eventually in the early days what happens is that. Which you use the same spectrum for a new technology. Maybe you share it. The technology's called [UNKNOWN] sharing and there is a very good reason to augment rollout with that. But it means effectively there is no real difference which you feel The same spec from spectrum efficiency of the technology is almost the same, not that much faster. So a real speed game comes from really using high high frequency spectrum but that takes time to roll out. The equipment is very costly because it comes with advanced antenna systems. Usually It also requires a backhaul, which can, which can handle the whole traffic. It takes a while. Meaning you have the local, but you don't feel the difference. Yeah, that's a real risk. Secondly, Again, just then adding more speed and for example c band which in many parts of the world really brings a big chunk of spectrum. In the US it doesn't have a big role. There you see on the handset you get much more speed but what do you use it for? And as a customer are you really willing to pay more? To build services on try out different type of content, new novel type of content, which then maybe gets a user hooked on the new technology and actually, seeing the benefit of it. Building that that requires. Two to three years in. So investing in that is really a heavy upfront investment and the prime example worldwide are probably the Korean operators who built own AR studios, more than two years ahead of their 5g launch and they produced own content. So a huge investment. But without that the risk that it just fall back you deliver more speed, more capacity. It's a very expensive product for telcos. But you don't get anything back. And I mean, eventually someone pays for it. And that risk is really, as we hear all the time. It's going to enable new things. And there's often not a lot of details to follow up on that. Are there any other areas aside from AR that you think 5g is going to make possible the way 4g is credited with making things like Uber possible? If I knew what exactly it was, we probably wouldn't have this conversation. [LAUGH] You'd be a very wealthy man. [LAUGH] Exactly. So it definitely requires Experimentation. Now just allow me one more point on that. So the new iPhone has a leader scanner. So it's short range def camera basically built in which I believe might really boosts AR, or mixed reality type of ideas trying out so it's accessible. To a broad range of customers, we'll hop on that and and try it out. So I believe this type of ecosystem idea is required, but it will be through many trial and errors for that such. I mentioned this ecosystem or partnership idea. I don't think one whether it's a telco equipment provider or someone just will have the golden idea and those the power to move everything and push it to market. But in terms of ideas, so short term B2C will be focused. As we now see that that's B2C, that's mobile broadband. Let's say more of the same, but maybe with new content angle or services, I don't know whether it's kokles, I don't know exactly what it is but it's customer facing. In the long run however, the real power of 5G will be to enable Much more b2b type of things. So you can steal much better or control much better work network does. I mentioned slicing before as a tool to do that, but the technology itself enables To be able to connect many more devices, that's one thing that's just the natural limitation of 4G by the standard. And then quite many improvements have been built in, for example, the capability for to control power or to allow devices to switch off and just wake up Much more rarely than before. Sounds very small thing, but many of these things together, for example, better location awareness. So, you know being more precise in self locating. Many of these things together will enable, and I believe that these type of new use, Cases we all dream about. Now, what exactly is I don't know, I think somewhere around location awareness around mixed or augmented reality. There is good. I believe there is a good chance You know, a lot of experimentation will be done. Then 40s later use cases it is all type of control mechanism monitoring, controlling, remote controlling, which of course is very important for industry specific things will appear, which just are easier to do or better to do than before. Maybe it's not completely evolutionary But just he was not worth being done. It's k before. That's an interesting distinction maybe not completely revolutionary, but wasn't worth doing at scale before. That is a breakpoint even though it doesn't sound like a completely new idea we've never heard of, but that is a major step change in adopting certain technologies. I believe. It's also also change. But by naturally starting to use whatever is possible to you know, which gets novel into the market, then it's an experimentation field. We just start using much, much, much more of that I think one of the areas that seems exciting to me is, at least here in the US we're tending toward the idea of using 5G technology to connect vehicles to each other, to traffic signals, to parking availability, to pedestrians, bicycles, so they're all aware of and avoid each other or make each other aware of what resources are out there. That would be fundamentally Transformative for the very idea of driving and having a car. That's just one example. And yet it's hard to sort of imagine it right now because we don't have the ultimate layer of 5G. Available, let alone the cars, the traffic signals, the parking lots, the gas stations, the bicycles and pedestrians all in this mesh. It's this many layered thing you're talking about. That's a good example. So building a 5g network, especially, let's say nationwide in a big country like us, just for. Supporting vehicle of normals or assisted driving. This probably is not going to happen. It's too expensive. But you will have Park network built for one purpose for the other it's multi purpose. Yeah. And in that, that he caking part of it. Or actually know, some things, that some aspects build just for this one use case. I think that's how it's going to happen. So that's one thing. So it is multi-purpose, some things get possible and then you observe that and you try to apply it somewhere else. So this is another example of that us versus a single vertical thing. We have to see many consumers and many enterprises. Perhaps Almost pitch in and do their part to adopt it because it's gonna benefit other parties. And we don't really know yet where that complete mesh of benefits can lead us It seems like. Yep, yep, fully agree and other components the computational computing. Aspect, everything which is happening in cloud computing, in mobile edge computing, I mean, basically bringing the computation part closer to the user and or the storage part. So it's not just 5g. I know it'll vary a lot by region, but as generally as we can talk, do you think there's a real credible place? For telcos to become a very important compute provider out near the edge as they say they wanna be, or are they gonna find that other providers of data and compute are just gonna use their networks as relatively dumb wireless pipe? How do you see that playing out? That's not that's that's not an easy answer. So, yes, I believe there is a risk that authors who are very good in math scale, you know, computing the big the big IP giants that they're going to partially replace or at least Move into the business of telcos and we have seen we see first first steps, you know, especially telco, since the telco space opens up towards the take classical it and talking about open ran and these things. Yeah And it also means the other way around. Classical I mean IT companies, big cloud operators can now move into telco. And one aspect which for me speaks for telco is the asset, just the sheer assets that having the locations distributed, And where to better towers are having actually poles having cables in the ground. The built assets which look pretty prosaic in some cases, like Okay, you got a bunch of antennas and fibre and electricity, you've pulled up to all these small cells. That looks very unsexy. But it is a huge competitive defense moat for the telcos because other companies don't have that. And that's not easy to build or get permission to build, let alone the licenses to the spectrum that those carriers have. Those are those are pretty good defensive walls, right? These are just the two biggest hurdles you mentioned. Yep. And spectrum is the other one. Yeah, exactly. Yeah. I want to finish with something you brought up a few minutes ago. Michael, you talked about wireless 5G to the premise or premises provision instead of fiber. There's an interesting discussion there. of should we Jump up the broadband to our locations in the world via fibre or is it time for 5g to take over? Do you have a general and again this will vary by region. Do you have a general hunch though you seem to be a little bit a little bit sceptical of 5g, knocking fibre out of the premises game profitability and long term sustainability Just needs to be assessed very very carefully. And once again, as we started off in the beginning, it will be hyper specific it will be specific locally and then on the conditions locally so of course if there is just You know, cable, just copper, and it's impossible to to do something better, you know, far distances. I don't know. Imagine a country which is very, very rural. And they're even though a shared medium, you know through through mobile Is challenging, this might just be the better alternative than the nothing than nothing else. So it really depends in some parts we believe it can be a bridge technology. So basically thinking is getting getting the money taking, actually, connecting everything with fiber takes a lot of time. Yeah, anyway rollouts how you spectrum band why, and there is not much usage on it yet. Because adaptation from smartphone is low, why not using it for a while also for fixed wireless access because there you can control the end devices. You can actually give your customer a 5G device so your spectrum band now gets utilized for a while, on the other hand, just rolling out for the purpose of fixed wireless access. In most cases if you have seen the economics are difficult It's very simple, the price per gigabyte capacity installed is much lower compared to a smartphone tariff. So it needs to be done very carefully, and especially where you would sell it for swa clients, but you also have smartphone users on it. You need to be very careful, for example through clever scheduling, to make sure the customer who really pays much more has, the real real good experience. And while you've maybe have for fixed violence customers, something like you get. You get what it's over, but what's left over. So anyway, it needs a very differentiated very, very clever approach to that. I believe there is a place for fixed wireless access. You also see it in many places around the world. But again, it will not replace in general Everywhere fiber.>> Another business you can conduct with infrastructure that you build for another primary reason or market and the premises can then ride on that. Well, I think what I've learned in our conversation is no matter where you look at 5g it's much more of a complicated Orchestrated dance, then it is a walk down a straight line and we've been talking to Michael Bridenstine who is partner and associate director at Boston Consulting Group and he's the lead author of 5G will take a different kind of launch. [MUSIC]