Why 5G means new business models and user benefits

5G wireless technology will enable business opportunities that will bring new services and better performance that extend beyond the smartphone.

4g versus 5g horizon sunrise
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While everyone is focused, and rightly so, on what 5G will mean to the billions of users of smartphones, there is a less visible but equally as important side to 5G that will have profound effects on consumers and enterprises.

5G will enable new business models that will bring new services to a vast number of people and companies. Further, it will provide a profitable adjunct to network operators that can add a significant contribution to their bottom line and may even be able to partially subsidize consumer services that will be highly price competitive longer term. And, finally, it will open up new competitive markets for internet services that have long been non competitive or marginally competitive.

Although about 90 percent of the U.S. population is covered by some sort of wired broadband internet connectivity (via cable modem, DSL or fiber), there is a substantial number of people who can’t get internet broadband due to lack of a viable financial model for operators making a major investment in wired infrastructure in those locations.

Further, in many areas, it’s a monopoly situation where you can get broadband service from only one provider. Wireless broadband access has recently emerged as an alternative to both the lack of rural connectivity and as a competitive option to monopoly solutions. However, previous attempts to deploy extended Wi-Fi or even 4G solutions for this purpose were not optimal. With the availability of 5G, there is a real opportunity to create a compelling wireless broadband experience, with the high capacity, high speed and low latency necessary for modern broadband uses (e.g., entertainment, gaming, multimedia, etc.).

How attractive is this? Recently Qualcomm announced that more than 30 manufacturers of Fixed Wireless Access (FWA) commercial systems will be adopting its Snapdragon X55 5G modem solutions in 2020, and will be creating customer premise equipment (CPE), which is essentially a cable modem box equivalent. [Disclosure: Qualcomm is client of the author.] The companies include major suppliers like LG, Linksys, Netgear, Nokia, Samsung, ZTE, etc. Indeed major carriers like Verizon and AT&T have already started to deploy 5G-based FWA equipment for internet broadband connectivity to users in select areas. I expect this to be a major growth area over the next two-three years, as the 5G network gets built out, and price competition drives adoption.

Further, 5G wireless will make it much more attractive to supply rural and non-densely populated areas that are not financially attractive for wired investments, opening broadband to millions of underserved consumers. Finally, with significant available capacity, 5G will allow a compelling user experience not available over other wide area wireless access.

Network Slicing (NB IoT)

IoT and smart devices of all types can create an opportunity for having a truly smart environment around us in consumer and industrial situation. Indeed, smart cities with sensors for traffic control, smart lighting, public safety and so on is a major growth area of IoT. Industries like shipping/transportation, healthcare, retail and agriculture can all benefit from a more sensor-installed and data-driven environment, particularly as back-end processing fueled by machine learning and AI systems become more accessible. But the key challenge is creating low-cost and reliable wireless connectivity for the many millions of devices that will be deployed -- many of them being mobile. Connecting each sensor to a wire may not be financially feasible, even if it’s possible.

5G is built on a network function virtualization (NFV) model that allows operators to segment the wireless network into as many “slices” as needed and with varying characteristics. Essentially, this means that operators can create a limited services and speed but very affordable connection for those millions of devices that actually transmit very little data, but could be connected if the fees were in the low dollar per month range or even less.

Older cellular systems really didn’t have the capability to do this efficiently. But narrow band IoT, an easy-to-implement feature of NFV-based systems, can provide this feature, and 5G has the capacity to extend this to millions of devices even in densely populated areas. I expect a proliferation of NB IoT devices in commercial settings over the next two-to-three years as operators make connectivity cost effective, and cities and industries see the compelling benefits in deployments.

Private networks (enterprise managed networks)

Many companies already outsource their internal wireless networks (typically built on some version of Wi-Fi), to alleviate the necessity for them to manage and maintain that asset. They find it both expedient and a better use of limited resources. While 5G has been primarily influenced by the need for mobile, it also offers major potential in private managed networks, particularly for higher frequency mmWave systems.

Having a 5G private network will not always be a viable or attractive replacement for an internally deployed (or even externally managed) Wi-Fi. But managed network services do offer enterprises a way to achieve a cloud-like capability in their wireless networks that gives them new flexibility and opens more competitive services from a variety of providers, and often without creating a lock-in that is typical with internally deployed systems. Many companies see installing and managing their own provide networks (typically Wi-Fi) as a burden and it’s not always very easy to upgrade to new technology. Indeed, most enterprise Wi-Fi are two or three generations behind the latest standards, which can cause security, capacity and bandwidth challenges.

I expect to see operators of 5G networks push to deploy managed private networks in a variety of enterprise and public sector markets, Further, since these may be built on top of existing, broader-based 5G, they can be priced competitively. Even proprietary solutions unique to specific companies/venues can still be priced affordably due to the advanced management capabilities inherent in 5G. This will be a growth area over the next two or three years.

Bottom line: 5G is an important upgrade to mobile networks and offers a compelling user experience. But we shouldn’t forget that it also opens up a number of new services that network operators can provide, and that these services will likely grow quickly. Enterprises, in particular, should evaluate if these new service offerings can provide a compelling new business model to advance services, and/or offer a way to upgrade and improve internal infrastructure for cost savings and/or enhanced performance.