IEEE Future Directions
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After a few posts discussing the technology of 5G it is time to share my feelings on the biz and market implications.
The shift towards 5G will be sustained by an increased availability of radio spectrum.
The flexibility in the management of the available spectrum will increase further the overall network capacity, where with “network” I mean a variety of transport and access structures. The possibility to offer premium services (better performances at higher customer cost) is clearly there, although past experience shows that most customers have a little inclination to pay premium fees, particularly in the mass market that is the major sources of revenues for Operators.
Besides, it is likely that the greater transport capacity (particularly in the access) and the variety of access options and access providers will commoditise further more the data transport.
The flexibility, governed by the terminal, in the choice of the action point will enable third parties, not directly involved in the transport business but rather in the offer of services that can support indirect revenue generation (like buy a coffee, get free access to the network), to take the place of today’s Operators, decreasing their market power and undermining their revenues and their business model.
The possibility to manage the transport and session layer directly in the terminal, be it a smartphone, a vehicle, an industrial equipment, disintermediates the Operators that will no longer be the only one capable of authenticating a call. The Operators will be forced to negotiate access rights –and price- (as in part already happens today for certain types of traffic, form Netflix to Kindle) with multinationals and large users that will hold the power of “volumes” in their hands.
If on one hand the trend towards consolidation of today’s Operators will continue in the coming years, also because the falls of boundaries (regulatory ones) in Europe collapses a market that is extremely fragmented (in Europe we have over 150 “Operators” vs the 4+8 active in the US that have a market size comparable to the European one), it is very likely that opportunities will arise for small and medium enterprises that had nothing to do with the offering of connectivity but that can see for the future a nice fit of low cost abundant connectivity with their portfolio of services/products since the bundling of connectivity will increase the appeal of their offer.
The cost to install an access point, micro cells with high throughput, keeps decreasing turning these installations within the reach of most business, even the smallest ones. The so called “pirate” networks, creating radio coverage outside the control of an Operator will become an integral part of the 5G with its capability of dynamic spectrum management taking place at the terminal level, behaving as a network node.
Quite likely this is not going to happen immediately at the 5G roll-out since it requires a critical mass of 5G terminals, which won’t happen till 2022/2023. For sure, in the second part of the next decade the connectivity for mass market use will be a commodity at marginal cost. This is often true today: many youngsters when are in areas covered by a WiFi access switch on WiFi their smartphone and leverage on zero cost connectivity. My youngest son has been living for the last two years in the Netherlands and stays connected without a SIM card. Just imagine what will happen when alternative radio coverage will blanket the territory providing high bandwidth to everyone.
