CES 2019 is over. It was labelled as the 5G CES because of the expected emphases and launch of 5G. In reality, as several observers are noting with surprise there was plenty of hype and nothing of substance.
I fully share the feeling although I am not surprised at all. On this blog I noted over and over that 5G will not be a reality before next decade (which, I agree, is not that far away).
Most likely is the whole system that have to take the blame for the hype bordering on fake news. The financial world is eager for inflated expectations and these may become a must for companies to sustain their shares. Besides, when one starts boasting, the other (have to) follow suit.
In Italy two years ago one of the local telecoms provided a demo to the press at its research labs showing a drone allegedly controlled via 5G. That was a good way to show the low latency of 5G. Of course, there was no 5G involved (it did not exist) and the drone was controlled by a normal WiFi. Yet, that was enough to have the headlines boasting the first 5G connectivity in Italy. Of course competitors were following suit, announcing 4.5 G (which is just a new version of 4G that, by the way, does not even implement the full slate of features of 4G, something that is expected to happen in 2022/2023). Matera, a city in the Southern part of Italy, was duly labelled the first 5G cities, where the reality, again, is that there is no 5G yet and the all shenanigans was sustained by placing a few antennas in the central part of the city…
In the US Verizon claimed supremacy on 5G by deploying wireless loop to connect a few fixed premises, again using their own way of implementing the NR (New Radio) that is not 5G although it will eventually merge, morph, into 5G. AT&T decided to label their new terminals with 5Ge, e meaning evolution -that is a 4G that will evolve, with different terminals to 5G. The move was flagged by a nice tweet from T-Mobile showing the placement of a patch on a phone with handwritten 9G and the caption “We didn’t know it was so easy!”.
What should be most worrisome is all these demos of 5G showing the great new services you can deploy! If these demos are done using 4G (as they are) it means that you don’t really need 5G for them (apart the need for extra spectrum to sustain broader adoption). It also means that customers will be unlikely to pay a premium on 5G services, since they can get the same using 4G. And this is what is really scaring Telecom Operators. They have learnt the lesson from 2G to 3G and 3G to 4G where trying to place a premium on the use of the newer network did not work and pretty soon they were forced to charge the same, whatever network would be used.
Actually, this is very basic economics. If the new network does not provide unique services that customers are willing to pay there is no way to charge more for its use, particularly so as new tech generation is cheaper than the older one so Operators have an incentive in moving to the new one. As there is plenty of competition in the market, and differential is mostly price, any Operator moving to the new tech will face lower cost and this will prompt a decrease in price. The others will have to follow suit.
There is even less reason in the shift from 4G to 5G to claim a premium price… Operators know this pretty well and they are scratching their heads to find viable ways to get a return out of the investment in the new spectrum and the network upgrade required.
The Mobile World Congress is just round the corner and along with more hype we may expect to see the announcement of 2 or 4 5G smartphones to hit the market later in the year. 2 or 3 model is a ridiculously low number, if compared to the thousands hitting the market every year. For sure not nearly enough to push Operators to accelerate 5G deployment. Of course the slow deployment is not fostering smartphones manufacturers to invest in producing 5G models, it is the usual chicken and egg situation.
5G is coming, that’s sure. It will just take some time, as it was the case for its predecessors. And as it becoms reality we will start dreaming about 6G, now that will be the solution to all problems!