IEEE Future Directions
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I mentioned a few times in this posts series that the “terminal” is possibly the most important factor in the evolution towards 5G in the economic space.
Whoever will buy a smartphone, or a car, or a home or a vacuum cleaner in the next decade will buy, unknowingly, a network node that will contribute to extend the overall transport capacity of the communication fabric (I feel that fabric best describes the communications infrastructures of tomorrow). This extension, its architecture and the variety of players involved are bound to kill current business models and will reshape the telecommunication sector. As I mentioned in a previous post in the transition from 4G to 5G we are going to see an evolution from a technology standpoint and a revolution from a business standpoint.
Obviously, talking about biz and market for 5G requires to consider, also, the manufacturers business. Here, as well, there are dark clouds on the horizon for the incumbent telecom manufacturers. If you look at the big backbones their capacity is so big (and the volume of investment to upgrade them so limited) that they are basically future proof and will not create a significant business for manufacturers to thrive on. Yes, there will be a need for more powerfull switching nodes but their number will be small comparing to the volumes the telecom manufacturer industry has been shaped for in the past.
The number of antennas will increase significantly, here we will see volume matter, by at least an order of magnitude but not necessarily antennas will be a reserved turf for telecom manufacturers.
For sure there will be a growing market for the “edge nodes”, terminals of various kinds that provide local intelligence and distributed control. Here companies like Qualcom along with terminal manufacturers are likely to take the lion share of the business.
Here, as well, it is not a consequence of 5G. The process that is shifting the value from the core network to the edges has started at least ten years ago, several companies that were behemoth on the market at the turn of the century, and at that time seemed poised to live forever, have disappeared.
IoT have already reached the 20 billion mark, we have three times more IoT than people on the Earth, and their growth is a given (50 billion in 2020, over a trillion in the following decade) but the question is the amount of biz they can generate, and here there are more hopes than facts.
Manufacturers are churning out sensors, chips, transistors at an unprecedented rate. In 2017 the electronic fab industry will produce an equivalent of 100 transistor per each ant on Earth (based on E.O. Wilson estimate of 100 quadrillion -1017 the number of ants on the planet, estimates vary depending on the myrmecologist you are asking, but you get the idea…).
The fight is not on the production of transistors but on the creation of value out of those transistors. Intel is moving aggressively in this area, lower value IoT are controlled by Chinese manufacturers (mostly based in Wuxi, China). Some estimates point to a global spending on IoT in 2020 exceeding 1 trillion $ (1.7 trillion according to Chris Pearson, head of the industry trade group in his keynote in Tokyo at the Global 5G event).
Often it is claimed that 5G will be key in managing this IoT explosion, which is true but not because 5G is sort of magic, nor because it is designed for IoT. 4G is pretty good for IoT, since it provides native IP connectivity (which means very low cost in the communication hardware required).
5G will bring microcells support thus connectivity with lower power budget, an extremely important aspect for a number of IoT categories. Again, you can have microcells with 4G but 5G is an umbrella that can manage a diversity of cells and access gateways, thus decreasing the price per unit, a crucial factors when we are considering IoT business.
Overall 5G enthusiasts point at an economic value generated by 5G of the order of 3.5 trillion generating 22 million jobs by 2035. This might very well be true since those numbers are not on top of other “G”s but are replacing, in 2035, the other “G”s and we have comparable figures for 3G if we take into account the expansion that the wireless systems had, and will have, in the world (figures provided by a study of Boston Consulting Group in 2015).
It is no question that 5G will generate wealth, it is the global economy that is now based on wireless communications, but there is nothing special in 5G, just a good, expected evolution of technology that might fuel a disruption in the economics of wireless.
The shift from 2G to 4G has brought a 12,000 times increase in (averaged) speed and a decrease of 99% in the cost per MB transmitted. Both factors have fuelled adoption, usage and development of services in a virtuous self-sustaining evolution. This will continue in the next decades but the level of “pricing” and revenues is reaching a threshold that puts at risk the current business models of Operators since these were based on scarcity and premium pricing, aspects that are less and less applicable.
The whole world economy is evolving, as result of technology evolution and market adoption. To sustain this evolution regulatory choices are probably more important than technology itself which will remain an enabler.
