When 4G / Long Term Evolution (LTE) was introduced it promised us a lot more speed, Voice over LTE, a whole network infrastructure based on the internet protocol (IP) and less latency. Moving on to 5G use cases — what is the benefit for me as an end consumer? Well, actually in the coming years, there won’t be a big benefit for then.
Where are we on the 5G timeline?
The standardization institute 3GPP developing the 5G standard finalized Release 15 that specifies the core network architecture in December 2018. 5G pre-deployments and tests have been conducted since 2016 with first commercial deployments in late 2018 (e.g. Verizon). 2019 was the year of first 5G smartphones and further commercial deployments. Release 16 will be frozen and completed in mid 2020.
5G use cases – It’s all about the industries
3GPP and the ITU define three main areas of use cases: enhanced mobile broadband, massive machine-type communications and ultra reliable low latency communication. Enhanced mobile broadband use cases will mainly be adopted by the tourism and media industry. Here, 5G use cases serve as enabler in augmented / virtual reality scenarios. Adopters for massive machine-type communication use cases will be the retail industry, the utility sector and the oil & gas industry. Lastly, the manufacturing and automotive industry will require low latency and mission critical services with uptimes higher than 99.999% per year and build use cases around inter-vehicle communication, autonomous driving, factory automation and connected plants.
From a consumer perspective, you don’t need a gas meter or smart home equipment for those types of bandwidth, latency and reliability. That’s why the most benefit will be for the enterprise world.
So, yes, it will offer more speed (up to 10Gbits per second) in high spectrum, but the real benefit at least for telco players lies in monetizing the use cases for specific industries such as manufacturing or automotive: Think of a connected car scenario (Vehicle-to-Vehicle), where communication needs to happen in real time below 2 milliseconds and in a reliable manner. Additionally, 5G supports massive amounts of devices, however, a 4K video network doesn’t require the same quality of service as SIM-card enabled gas meters. To solve this trade-off, a concept called “Network Slicing” was introduced my the NGMN Alliance. Release 16 will specify that concept in more detail, but operators and industry players (!) are eager to implement slices for specific use cases.
Think about the new revenue streams a telco player could have when monetizing different service levels! This is going to be a very interesting discussion, since companies like Daimler or Siemens stated publicly that they want to build their own 5G networks.
Barriers in front of profitability
The hype around 5G use cases is pretty similar compared to 3G and 4G back in the days. Most use cases, however, can be realized with LTE Advanced (Pro) as it offers gigabit speeds and a decent latency even below 2 milliseconds. So it is not necessarily about the network infrastructure that can be monetized, but rather about the fact that the value of 5G moves towards the software layer.
According to market analysts such as Technology Business Research (TBR), financial viability is seen as the main barrier. Especially, when you take a closer look on countries such as Germany, where spectrum auctions are ahead and will likely be very expensive (just like 10 years ago with 4G). Furthermore, the three telecommunication operators filed a lawsuit against the public entity that sells the spectrum (in Germany: “Bundesnetzagentur”), because of the high public requirements to build out a nationwide 5G network and national roaming. As Deutsche Telekom calls it: “That’s like providing private jets for everyone.”
On the other hand, 5G use cases might bring huge cost savings due to a more flexible and automated network architecture that is based on virtualization. Concepts like network slicing require Network Functions Virtualization (NFV) and Software Defined Networking (SDN). The latter allows separation of control and data plane, while NFV essentially means running virtualized network functions that run on top of standardized hardware instead of proprietary appliances.
According to Vodafone and Deutsche Telekom, 3G will be the first to disappear in the coming 3 years. 2G (EDGE) will stay for a little while and serve as voice fallback.
In terms of 5G use case adoption, the first deployments were in 2019. Verizon actually started their first commercial 5G Fixed Wireless Access (FWA) offering in late 2018. FWA could be an interesting solution for countries like Germany where regulation and legacy infrastructure slows down fiber roll-out. In large urban areas, especially in Asia, 5G use cases will appear first due to the exponential increase in data traffic and population density. At the same time, further 5G smartphones will appear this year from Asian manufacturers. Apple will most likely release a 5G smartphone this year. They had been late to the LTE game as well in the past and prefer to release a technology when a high maturity level is reached.
Stay tuned for further articles on 5G use cases and the world around telecommunication.