It is fairly well known now that the ‘traditional’ cellular investment thesis breaks down when run with both 5G financial and engineering numbers, driven by ongoing traffic growth, insufficient cost efficiency improvements, and weak top line growth. Whilst some say that traffic growth may slow once we plateau on video, this is uncertain. Virtual reality is growing, HD video is developing, and new vertical applications will drive up volumes.
What can we learn from the past 20 years in the industry? Europe was successful in developing leadership in 2G & 3G, with strong collaborative efforts developed by vendors, policy makers, and others driving innovation. Now that we have a truly global industry with increasing shifts towards software-enabled networks, with value largely in the service plane, more of the same won’t do and won’t work economically. Blind ambition founded on past successes or with national interests and industries in mind won’t work either.
The 5G ‘fabric’ is directionally correct. With global standards and R&D, ‘more of the same’ essentially boils down to global ‘competition’ over national labour rates which drives problems for the vendor community. Vendors following a ‘me too’ strategy will fail unless they are able to compete on the most basic labour rates. Policy makers and industry as a whole will do well to leverage collaboration towards new disruptive models which have real potential to bring revenue innovation. For example, concerted efforts across verticals, with policy maker support, to drive innovation in e-health, e-government, e-cities, and e-automotive could actually be interesting.
Key challenges will include development of new partnering and financing models, leverage of available assets and resources to improve efficiencies (e.g. spectrum and asset sharing, overcoming valid regulatory competition concerns), and movement to new operational models (e.g. as v-RANs and v-Cores develop, the CTO role will shift towards a CIO model, with very different skill requirements).
Bottom line: success in 5G is more about disruptive business models enabled by heterogeneous architectures with effective cross-sector integration and new vertical services than it is about ‘linear’ progression on traditional cellular themes such as capacity and coverage.