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How much is an extra G worth? £158 billion perhaps

Research from Vodafone UK suggests 5G connectivity could add as much as £38 billion to the UK economy over the next five years, and £158 billion over the course of a decade.

Although some will struggle to understand why a faster internet connection means cumulative benefits of more than £158 million, this is a failing from the telecoms industry. The ‘bigger, meaner, faster’ mentality to selling connectivity prevails today, with more work needed to be done to educate on the reliability, security, latency, efficiency or capacity gains. 5G can inspire new business models, it is much more than simply faster internet.

“5G will play a vital role as the economy recovers from the Covid-19 pandemic,” said Vodafone UK CEO Nick Jeffrey. “It is crucial to recognise the role that fast and reliable connectivity will play in unlocking the digital potential that exists in every nation and region across the UK. 5G will provide new and exciting opportunities for businesses of all shapes and sizes and across all sectors.”

Interestingly enough, the 5G euphoria is heightening at a time where appreciation for telecoms networks has never been higher. The COVID-19 pandemic has forced almost everyone into a new working and social dynamic, with the internet as the enabler, and it does appear some of these trends might be sustained.

Recruitment firm Robert Walters has suggested 29% of employers have not yet defined a return to work strategy, and 83% of firms have said managers would be encouraged to have employees to work from home more often. The simplistic attitudes of traditionalists still exist, but if these managers are worried staff won’t work suitably unless under a watchful eye, perhaps their management skills should be questioned or maybe they haven’t hired a responsible employee in the first place.

While broadband networks have shouldered the majority of the burden during this period, mobile connectivity will become increasingly important as normality returns, or some of these remote working trends continue. The growth of fixed wireless access (FWA) services and tethering laptops on the move are certainly areas to keep an eye on, but it is the new operational and business models in enterprise which is of the biggest value to the UK.

Firstly, you have to consider the productivity benefits of 5G. Whether this is greater efficiency inspired by industrial IOT, or Industry 4.0, the introduction of AI to power work procedures or simply having faster and more reliable access to data, the benefits are spread throughout the UK.

Potential productivity benefits of 5G mobile networks, (£, millions)
Region 2020-25 2025-30
North East 1,100 3,600
North West 2,200 11,600
Yorkshire and the Humber 2,500 7,800
East Midlands 2,200 7,000
West Midlands 2,800 8,900
East of England 3,200 10,200
London 9,100 28,800
South East 5,700 17,900
South West 2,800 8,700
Wales 1,300 4,200
Scotland 2,900 9,300
Northern Ireland 900 2,700

These are the productivity gains, but you also have to consider the savings which can be realised through a different approach to operations. For instance, Vodafone estimates the NHS could save as much as £1.25 billion through the take-up of smart health devices and associated data capabilities, valuable budget which could be redistributed elsewhere as a result.

The health sector could see a number of different benefits, the connected ambulance or remote GP appointments for example, but this is one segment which is incredibly traditional and very poor at implementing new technologies. There would have to be a major overhaul to realise the benefits here.

On the other end of the scale, the retail industry could be the first to benefit. Personalised pricing, or ‘magic mirrors’ which recommend accessories for clothes are two areas which are relatable today, but with VR and AR promised to make a splash in the 5G pond, there could be plenty of new ideas tomorrow.

What is worth noting is that this is only potential for the moment. While it is being sold as a guaranteed gain for the economy, the benefits of 5G will not be evenly distributed around the world. Those who scale 5G networks the fastest are more likely to see the creation of wealth concentration clusters, the Silicon Valley of tomorrow if you will, home to the 5G internet giants to direct profits back to the domiciled nations, just as Netflix, Google or Apple does today.

Who is leading the 5G race? 5G subscriptions by country (thousands) 2020-23
Nation 2020 2021 2022 2023
UK 3,590 12,522 25,302 40,881
US 9,898 53,736 106,873 198,223
Japan 4,097 9,624 20,389 45,575
China 196,284 394,886 654,390 950,908
Germany 925 3,157 10,021 23,205

Source: Omdia Knowledge Centre, World Information series

Having a scaled 5G audience allows innovators to validate ideas, generate cash for on-going operations, fine-tune business models, before launching into the international markets. Being the first to launch 5G means little, but being the first to have nationwide networks, mass market adoption and a broad spectrum portfolio is certainly a head start to capture the newly created wealth around the world.

To realise this potential, barriers to entry should be removed, and while the fibre objectives of the UK Government will certainly help, Vodafone is suggesting more could be done to supercharge the 5G economy. The UK is in a strong position right now, but this is where the wheat will be cut from the chaff, the time when we figure out which governments have the aggressive ambition to fulfil the 5G vision.

A ‘smart by default’ strategy should be put in place for Government procurement to ensure public sector authorities are taking 5G and IOT adoption seriously, while local Government authorities should also be empowered to fund their own initiatives. Vodafone is also championing the dark fibre revolution once again, while the idea of vouchers or tax credits could be used to incentivise businesses in the right direction. The Shared Rural Network is a promising initiative to close the digital divide, but continued Government funding will be key.

One final area concerns the supply chain. Yes, OpenRAN should be considered an option to diversify the supplier base, increase competition and add resiliency, but more certainty is needed for the existing vendors. The longer the UK is caught in the back and forth of political tension between China and the US, the more difficult it is to work with Huawei with absolute certainty there won’t be any devastating financial consequences.

Uncertainty is the enemy of progress and clarity is currently at a premium in the telecoms policy arena.

  • 5G Networking Digital Symposium

  • Telecoms.com LIVE: Getting the Best out of 5G

  • 5G Network & Service Strategies

  • 2020 Vision Executive Summit

  • Industrial IoT World

  • TechXLR8

  • BIG 5G Event

  • IoT World Europe Summit

  • 5G World

  • 5G Latin America


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