5G pathway: the business opportunity and what comes next

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Enrico Salvatori, Senior Vice President and President of Qualcomm Technologies EMEA takes a look at the 5G Pathway and what this means for operators and industry.

5G is, in essence, an exercise in unlocking greater network efficiencies; efficiencies in latency, bandwidth, throughput, and processing. Despite the extent to which 4G has already impacted how society functions at large, the changes to 3G’s network architecture were modest. The main, real difference was that it was faster – it let you get more down the pipe. 5G on the other hand is something completely new, introducing significant innovations to both radio technology and network architecture. It presents a true platform on which to innovate, with its potential blossoming once it reaches full maturity with stand-alone networks and infrastructure. This is thanks to its technology makeup.

This year 5G standalone (SA) networks will be built with virtualisation and network slicing capabilities by design – taking advantage of the full bandwidth spectrum and almost limitless opportunity that comes with it. Testing and demonstrations are underway on 5G SA and the door it opens for operators should not be underestimated. Their technology, businesses, and operating models are going through significant change as they set themselves up to be both primary benefactor and beneficiary of 5G as a platform. This is not to say it is only operators who stand to win here. Quite the opposite. In fact, it is only once the success of wider industry is established, which is in turn dependent on consumer adoption of 5G, that operators will see the full fruits of their labor. Recent modelling by analyst house Analysys Mason has estimated that post-network roll out, 5G enabled business and services will add 210€ billion* in benefits to Europe – spanning public and private sectors.

So, how will this all come about?

Shedding 4G’s legacy systems and simplifying the technology mix

Currently, we have a system that is grounded in 4G hardware and software. Gradually this is being combined with an additional dedicated dual-band n78, 3.5GHz service which is responsible for a large portion of the 5G coverage we’ve seen so far. This is relatively costly and time intensive for the operators, requiring physical installations and with coverage limited by physical manpower. To get around this and drive network availability in the short-to-midterm, the solution and next step is Dynamic Spectrum Sharing (DSS).

DSS affords an accessible and substantial leap in coverage through relatively straightforward software deployments which allow 5G to run through the existing 4G network bands. This year we have seen the activation of thousands of DSS enabled cites across Germany, Spain, UK, and other countries and more due to light up over the coming months. This alone will have a profound impact on 5G adoption by both individual consumers and business, as 5G coverage is being increased by orders of magnitude. Very quickly we will have a more widely accessible network, with a 5G connection becoming the consumer norm.

Yet, with all this considered, DSS has only achieved part of the exercise; improved coverage. It is only once we are running purely off a dedicated 5G Core (5GC) network that no longer switches back and forth between 4G and 5G, that 5G’s full capabilities come to the fore.

DSS’s second reason for being, therefore, is to lay the groundwork for a user switch to 5GC. DSS availability and coverage significantly helps drive initial user adoption of 5G by having 5G run concurrently with Long-Term Evolution (LTE) bands. This allows a legacy LTE device to connect through a given band and base station to the existing 4G Evolved Packet Core (EPC), while a new 5G device can connect through the same band and the same base station to the new 5G Core (5GC). This in turn allows operators to gradually switch said LTE dedicated bands to dedicated 5G without having to ‘clear out’ all the LTE users in a “flag day”. Instead the can let the two technologies run concurrently until enough devices are 5G capable. This ‘“concurrency” is a vital step, enabling 5G in frequency bands and marking an important market penetration milestone as when carriers switch to 5GC they are only able make use of bands that already run 5G.

It is also why consumer market adoption is so central to 5GC roll out as new services cannot be switched on until the market is ready and large, not to mention the consumer revenue significantly helps toward this largely industry focused roll out of 5GC. As such there has been a concerted and deliberate effort by the entire industry – from network operators, OEMs, and throughout the entire value chain – to bring 5G consumer technology down the price curve, and get 5G in the hands of as many people as possible.

Changing how we think about connectivity

As alluded to before, the true magic of stand-alone 5G, however, is in network slicing and virtualisation. Once the 5GC migration is complete, the vast breadth of available bands combined with 5G mmWave technology unlocks near unlimited network slicing, allowing for a much more modular operator service for both the consumer and private organisations alike. With this shift will come a swathe of new business models and revenue stream opportunities for the operators, providing a menu of new connectivity options for customers to choose from. All of which is enabled by the software-based architecture of virtualisation, where previously new hardware would have had to be added.

Some instances will be use case specific, such as industrial automation. We know this requires dedicated, private network bands that can guarantee very high reliability, latency, security, and quality of service – all of which play to 5GC network strengths. Those same demands have a large downstream benefit on production output. According to modelling by analyst house Analysys Mason, 5G enabled smart production and logistics is forecast to add 70€ billion in benefits to Europe alone. Unsurprisingly, Germany is the largest contributor to GDP here, generating 25€ billion of this. Carriers may, for example, use network slicing to provide specific reliability, quality of service and control to car manufacturers for telematics, entertainment and in-vehicle services. It will be interesting to see the slicing services that emerge for the consumer industry where carriers and content providers can innovate to provide unique experiences and service differentiation to customers.

Edge compute capabilities will blossom allowing for a myriad of individual business services – each of which could license its own dedicated band slice from the operator. Alternatively, service bundles may be packaged together, with new business or consumer subscription models allowing for access to a menu of new services that span a set number of bands. The possibilities and combinations are endless.

In the same way that 4G gave birth to a whole new raft of companies taking advantage of the new connectivity capabilities, 5G will do the same, and then some. Rightly or wrongly, almost all of the emphasis on 5G to date has been on peak performance rates, citing huge gigabit transfer rates, and so on. However, one of the main benefits 5G brings is in raising the baseline for reliable data throughput. 5G mmWave technology takes this yet further still, and is perfect for stadium and high population density scenarios where connectivity is essential.

Think of all the apps that 4G underpins, spanning food delivery, social media and entertainment; an entire universe of mobile commerce. 4G now underpins so many fundamental aspects of our lives, it’s easy to forget that this accessibility is all relatively new. But each of these examples was built on the minimum that 4G has to offer. Each of these apps needs to function to an acceptable standard in non-perfect scenarios, at minimum connectivity. 5G goes further and significantly raises that bar, providing dependable access to multi-gigabit speeds that will up-level user experience and expectations, as well as the types of services and entertainment apps that will be available.

The stimulus we need

In short, 5G affords a wealth of opportunity for each and every stakeholder throughout the value chain, from consumer through to network operator. The level of potential economic stimulus 5G offers Europe is critical, serving as a true innovation platform to provide critical infrastructure needed to achieve a resilient, inclusive and sustainable economic recovery. So, as consumer demand continues to rise and the switch to 5G standalone comes into focus, operators are primed and ready to pivot and profoundly transform their operating models to take advantage of the near unlimited business potential. We will see the birth of new businesses, technologies and even industries that fundamentally change the way we live our lives.

* Source: 5G action plan review for Europe, produced by Qualcomm Technologies, Inc. and Ericsson, in collaboration with Analysys Mason. Published November 2020

Enrico Salvatori is senior vice president & president of Qualcomm Europe, Middle East and Africa. In this role Enrico is responsible for Qualcomm’s EMEA strategy for ensuring that OEMs and operators drive 3G, 4G and 5G adoption throughout all of EMEA, in both developed and emerging markets. Enrico also provides strategic direction and oversight for all Qualcomm business development and operational activities throughout the region.