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We’re struggling with the 5G use case right now – BT CEO

BT CEO

The best looking man in broadband, BT CEO Gavin Hasselhoff, sorry Patterson, was back on stage to give a frank assessment of the 5G climate.

We’re struggling to justify it for the moment, seemed to be the message. “The business case for 5G still needs to be built,” said Patterson.

This is not to say it was a doom and gloom session at the Global Mobile Broadband Forum, but perhaps more realism than one might usually expect from the telco industry. The overall tone seemed to be enthusiastic about the upcoming 5G evolution, but a slight tone of scepticism. Let’s not get too far ahead of ourselves.

This is perhaps one of the most promising developments out of this conference; the telcos seem to be brushing aside the 5G euphoria and have feet firmly planting in the real world. We saw a similar message from Vodafone’s CTO Johan Wibergh yesterday, and Patterson laid down some honest truths for the audience as well.

“5G will get its time, but we need to make sure we get the most out of 4G,” said Patterson. “We need to ensure we actually get an ROI out of the 4G networks, while also building a business case for 5G.”

This sense of realism has seemingly been lost over the last few years. Every conference we’ve attended has had glorious statistics posted on the screens, screaming the benefits of 5G and how it will save the industry. But the evidence over the last couple of days is starting to show a bit of maturity from the telcos; let’s not rush into it blindly, they seem to be saying.

For Patterson and BT, this is about three simple ideas. Firstly, making the most out of the assets which are available to the business right now. Gaining a return on the millions and billions which have been pumped into 4G infrastructure and business models.

“There will be a transition from 4G to 5G, but they will co-exist for some time,” said Patterson.

This isn’t simple a case of buying the shiny new ball because it has hit the shelves ahead of the Christmas rush. The slightly muddy one is still fully pumped and has plenty of games left in it. It is a sensible, pragmatic business decision, which keeps a company focused on what is important; making money today, not trying to find the pot of gold at the end of the rainbow.

Vendors are very good at encouraging the telcos to think bigger and better. This is of course their job, but it constantly chasing the perfect business model could turn into a thankless task. If you are chasing the billion-pound promise of tomorrow, there is always a risk of not cashing in on the million-pound reality of today.

The second point made by Patterson is on the operational cost of 5G. This is another aspect of the 5G business case, as it is simply too expensive for the moment. If 5G is going to be everywhere, it requires a significant investment to increase the number of Points of Presence. This rollout will not be cheap, and the vendors haven’t quite figured out the economics of it just yet.

“I’ve been speaking to CEOs around the world, and we’ve all been struggling to make the business case work,” said Patterson.

The final idea is that of the basic need. When you look at the transition from 3G to 4G, there was a requirement to make the internet more accessible. The 3G internet promise fell flat, it was a slow burner which the telcos struggled to monetize. 4G changed the game and made the user experience much more acceptable. This was a genuine reason to spend big on infrastructure deployment.

But what about 5G? Yes, it will make mobile internet better and faster, but how much better and faster do we need it right now. It will facilitate the development of autonomous vehicles, but they are still at least 10 years away. The IoT world can grow out of 5G, but it is working fine in the 4G environment for the moment.

All of these areas will become needs in the future, but they are not right now. Of course, there will be need to runs PoCs, play around with ideas, but 5G should not be considered mission critical right now. This idea seems to be at the centre of Patterson’s dream, and while the team will continue to search for the elusive 5G business case, it is nice to see someone who is looking at today as opposed to being swallowed up by tomorrows buzz.

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3 comments

  1. Dale Roberts 16/11/2017 @ 3:56 pm

    Spoken like a man unprepared for the coming storm. To quote a market research perspective: “IHS Markit speculates that 5G will become a General-Purpose Technology (GPT), a development so impactful that it becomes a catalyst for socio-economic transformation. To give you some perspective, other examples cited as GPTs in our history include the printing press and electricity.” Further, “IHS Markit views 5G as a catalyst that will thrust mobile technology into the exclusive realm of GPTs. IHS Markit evaluated the potential of 21 unique 5G use cases that will affect productivity and enhance economic activity across a
    broad range of industry sectors.” (https://www.edn.com/electronics-blogs/5g-waves/4459035/Is-5G-for-real-).
    Note: “21 unique 5G use cases….”

  2. saurabh verma 17/11/2017 @ 10:33 am

    The view here are very passive, an astute approach from the TSPs could be sensible as there is lot of talk on #5G, but #5G is not just a cellular, its not about betterment of internet or high speed data rather it will make data a utility.

  3. Alan 17/11/2017 @ 3:47 pm

    There were fewer management accountants about when the printing press was invented. 5G will no doubt create a step change in capability, but someone has to pay. Where are all the end users waving their pile of cash around to enable the CSP’s to create the business case ? Sometimes something transformational can drive an indistry shift (e.g. iPhone – I’m sure Steve had a business case for doing that) but it’s harder to build on something that basically works (4G) – at least where it’s rolled out (cities).

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