5g is the biggest change in mobile networks we've ever seen.
But it also requires a big investment in new infrastructure, lots of new technologies that go with it.
And of course, we all have to buy a lot of new devices both personally and out there in our businesses.
All this coming at a time of unprecedented economic upset and general uncertainty.
Now what?
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Leo Gehrig's can tell us, he's a research analyst at ABI Research.
One of the research firms I follow the most, they have really great technology insights.
And we're going to talk now about what's happening with 5g momentum in this unprecedented year.
Leo, in general, where do you think we stand on them on the thermometer of how well 5G rollout is doing in this unusual year.
Certainly in the network rollout well it suffered to some extent from from the current situation because of labor shortages, because of Regulatory decisions around health and safety at the workplace.
However, on if you look at network deployment or commercial rollouts of 5g networks on long term, so say 20, 2021, 2022.
We don't really expect major Major long lasting effect, even though that so even though there are short term disturbances, certainly that will certainly also carry into 2021 to some extent, unfortunately In the long term, we see that regulators, especially if regulators really see the need for further digitization,
Those aren't things that they're going to be.
I would imagine pulling back from radically they'll stay the course on that big vision.
From a spectrum allocation point of view.
Regulatory is real regulations, realise The need for faster digitization and faster allocation mechanisms and more under a critic allocation mechanisms for spectrum.
So that sounds almost like leading to my next question which is Do you think there's a portion of this?
Global uncertainty that we've all had to deal with by going home working remotely, shopping online.
Has that given 5G any kind of a boost.
Do you think because online is becoming so much more critical?
And yes, I think it has already to some extent and it will have certainly Even more going into the future.
Cuz there's one aspect that you have to consider, obviously, and you have to be realistic about this.
5G is very much about mobile.
It's very much a mobile technology.
So it's about people on the move.
Now, with this current situation and the current response to To a pandemic like, like covid-19 and governments urging people to stay home.
This initially doesn't doesn't really benefit something something like 5G as an enhanced mobile broadband.
It does.
It certainly does a lot on fixed wireless access and it does a lot on.
On fixed broadband at home and we see that when looking at network traffic that has dramatically increased by like by something like say 40%
Yeah amazing.
However in the long term, this will also benefit 5g dramatically and because people Because 5G will enable these services that people got used to like.
What we do just now is doing interviews remotely or keeping keeping in touch with your family remotely with your family and relatives remotely.
Doing education remotely doing entertain using entertainment opportunities remotely.
5g and with with enhanced mobile broadband, whether enabled is when enable taking all of these services outside of the house where you have broadband access and transform this into a truly mobile experience.>> We've often thought about kind of a second class status for mobile.
It's like okay, it's certain things I can do on my phone on 4g.
Other things we've always felt like, I've got to find Wi Fi.
I've got to get on my wired desktop.
Do you think that mobile is going to suddenly be elevated to have first class status?
You're certainly right.
It's that 5g will elevate The importance of mobile phones.
And you'll see this for example, when you look at cloud gaming, you will be able, 5G will enable consumption of more sophisticated games on
On even mobile devices and well elevate, I think there is it becomes most clear or clear the most really that and these serious games that were traditionally associated with Play Station, with a gaming console, even for those games, for those sophisticated game titles The mobile phone will become a platform that these games could be, could be consumed on.
Yeah, and that, of course, is a major shift for a gaming sector that's not only going through a revolution to move online in general these days, but the idea that it would also move online and move toward mobile devices
In at least some significance.
That's pretty that's a pretty big change for for a sector that I think often gets too little credit for how important it is for driving tech revenue.
We always think gaming is gaming, right?
It's optional.
It's just strictly fun.
I don't know why people always look at gaming as being kind of, you know, not as important but it does drive a lot of tech adoption, right, especially in the consumer focused.
Domain media and entertainment domain is certainly one of the most promising use cases for 5G and also one of the most one of the easiest use cases to.
To show the consumer where 5G or how 5G can benefit in that domain.
Yeah, and that's interesting because so much of what I think proven difficult about these large organizations that are pushing out 5G is that, they're running into pretty high levels of satisfaction with 4G I don't think we can honestly say we are screaming for something better than 4G, I think as consumers, we're open to it.
So what does that tell the enterprises out there that are that are developing this whether, it's entertainment or gaming or some new online service.
What do they have to do to get 5G to be relevant to people in a population that's fairly satisfied with what we have?
Whenever I talk to my friends, I mentioned I worked for the Arab work and With 5G they immediately come back with me or to me with a question yeah, but what does it offer?
Yeah, I can buffer my video I can stream my video a bit faster than I used to and I think That that shows one thing that the consumers that is still a lot of education necessary for 5g can actually do to the consumer demand because the benefits of 5g in the consumer domain is that it will enable a completely new set of use cases and new technologies, services for for consumers.
So, Even though obviously that there will be some enhancement to existing services video streaming, gaming and moves can move gaming more towards a cloud gaming cloud based experience.
I think the real value for is especially for the consumer.
In the enabling completely new use cases by for example, enabling technologies like augmented reality virtual reality, things like that or even transforming stadiums or event locations into into smart locations.
When it comes when consumers can really can really benefit on these new of these new use cases.
We were talking recently to the 5g automotive association and they talk about how 5g in vehicles, even if it's only in a certain portion of them, will allow those vehicles to become sensors.
For the general good of infrastructure, parking, traffic flow, and even collision detection and prevention.
So we start to see a lot of big amorphous benefits from 5G.
It sounds like it's a different story than hey, your individual phone will do individual things better.
It seems to be much more of an us story.
And 4G was almost more of a me story.
Am I crazy there?
You're hitting exactly the point there.
And because you mentioned that your discussion with the 5g automotive association which was excellent and by the way, But it's important to mention that the that revenue the larger part of revenues from from 5g will come from the enterprise domain and in the long term will not come will not necessarily come from the consumer domain and the quite the country that that enterprise revenues will be necessary to justify 5g network deployment or the initial, investment decision into 5g.
Now that's interesting is that because enterprise does that go along with the idea that this is really an IOT revolution more than a end user device revolution.
It certainly is both I would say, but the main differences that the enterprise use even though the revenue potential in the enterprise use cases will ultimately be much larger than, in the consumer domain.
It is much more of a long term solution.
So if you wanna put an analogy around it, targeting the enterprise revenues is really a marathon rather than a sprint race, while the consumer revenues or revenues in the consumer domain, connectivity revenues.
Present, the more immediate revenue opportunities and you will need both in order to justify the whole, the whole adventure or the whole 5g deployment.
You will When the tough both winters combination
Interesting so we could perhaps envision this to use a metaphor is that consumer revenues will launch the rocket but enterprise gets us all the way to the moon.
Exactly, exactly.
And Especially for the telco industry for network operators, they will have the they will need the revenues from from the connectivity in a consumer focused domain or in the consumer domain as the backbone for To offset a longer term deployment solutions and the enterprise business, really.
As you look at the next few years, so we're looking at the mid term I guess, what do you think are the biggest hurdles in general to enterprises Embracing 5G and bringing us new services with it cuz that appears to be the big picture not improving our existing services but bringing us new services.
What are the biggest hurdles?
Is it the physical install?
Are there still spectrum issues?
Is it just the sheer dollar investment?
What do you think are the hot buttons?
[LAUGH] All right.
There are there are certainly a few hot buttons.
And I don't necessarily think it's the infrastructure it's not the hardware infrastructure.
At least is is the mixture is a mixture of the two Of the issues that you have mentioned.
So look at spectrum allocation policies.
Thus their own issue that is somewhat unresolved.
And you'll see there is a struggle between or regulators creating this kind of struggle between enterprises wanting to get their or setting aside some spectrum for enterprise usage.
And operators that are advocate, advocating against that those decisions.
The other thing is really to make 5G work or to make the whole picture of 5G work in a much broader sense is a strategic issue I think.
And that touches upon what I said already.
Because ultimately, in order to realize the revenues or the revenue potential that comes with 5G, you need to target both the enterprise Domain as well as the consumer domain.
And that's why, that's why I think a major strategic hurdle also lies how to, how to reconcile both of these domains.
Sounds like 5G is a much more complicated business model than 4G was.
That is exactly what we are seeing because With 5g, even even 4g was was still very, very consumer oriented and
yeah
and the majority of revenues came from the connectivity business and the consumer domain with 5g that that is starting to shift is vitally important that the telco industry
Targets are meant to price revenues and they're realizing that as well.
So that's where they're realizing they need to move towards the enterprise, but By moving towards the ends, President realised that the picture within the enterprise domain is much more complicated.
And then in the consumer domain because you've got different verticals with different requirements, you've got different Which also has different implications on the business models and the monetization strategies?
All right, this is interesting because in some what I'm hearing from you is an answer to one of the biggest questions we get from consumers anyway, which is they hear so much excitement around 5G Big Picture, and then they can't quite make the connection to how it's gonna radically improve their life in this foreseeable future.
And they don't understand, understandably, that it is so much of an enterprise story going on with big benefits coming down the road and not just a Hey buy this new phone and your life is going to change.
Exactly.
Which is not really the story.
One of the challenges that I think we need to overcome is that with the benefits of 5G, especially when you're talking about societal benefits, you were talking about connected vehicles in a minute ago and there, one of the central challenges is that the benefits that a connected vehicle brings are not immediately Monetizable or not that they're not easily understandable.
So it's really a long term overall improvement, whereas you can't really you it's difficult to make the claim and say, yeah because this one vehicle Was equiped with 5G and RV to X capabilities, it saves lives, save five, ten people that would have been caught in a road accident.
Yeah it's not that transcational.
It's very difficult.
Yeah, intresting.
As we close last thing I wanna ask you, do you have?
5g phone you're there in in in Greater London.
Are you using one yet?
And not yet.
Me neither is here to tech experts and neither of us are on 5g and I think 5g is in my market I haven't even looked which I find so interesting.
I use 5G phones in demonstration settings and when there are technical demonstrations for me to sample.
But I haven't had a fire under my **** to go buy one, or even find out if I've got 5G-
Really?
In my area, no.
It's interesting, but I think part of that really is that we haven't really seen that much network in terms of network deployment last year and until 20 Until the beginning of this year, I think this will or we expect this will, this will radically change this year and even and even in 2021.
So commercial network deployments will continue to ramp up rightly
Okay, so 20 and 21 are obviously fertile ground disruption aside
Yeah
With other global issues.
[LAUGH] All right, Leo, thanks for your time.
Leo Gehrig's is a research analyst at ABI research his specialty is 5g
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