5G Projections are Likely to Be Wrong; Only Issue is How

Whether fifth generation mobile networks actually will develop as some expect is a big question. Few of the digital generations of mobile actually have developed as originally foreseen.

Supporters of 2G missed the appeal of text messaging.

When proposed, 3G was supposed to lead to a wave of application development. Eventually, it arguably did, but not in the way supporters had forecast. Originally, it had been hoped the big wave of innovation would substantially benefit carriers. Instead, the applications largely were developed by third parties.

Now 4G might be said to be in search of the “killer app” that will define it. It might be safe to say we do not yet know, and that most present guesses might turn out to be as wrong as earlier expectations about 2G or 3G were mistaken.

It might also go without saying that prognosticators frequently have been mistaken about companion developments on the handset or infrastructure sides of the business. Some might have assumed that the European leadership in handsets during the 2G and 3G eras would continue in the 4G era, and that has not proven to be the case, so far.

Application development, meanwhile, has largely shifted to the United States and Asia. For that reason, industrial policy around 5G is growing heated. Success in that realm probably also is uncertain, if only because there is so much uncertainty overall.

Most projections of mobile service provider future revenue tend to show many new types of services beyond basic Internet access or connectivity. What tends to vary is the precise combination of new services and revenue streams that will drive results.

The unsettling background, from a service provider perspective, is the end of the closed telecom market, and the need to operate in an open Internet ecosystem. Almost by definition, serious innovation will be necessary.

Many would agree with the notion that mobile service providers and telcos might have to replace as much as half their present revenue in about a decade.

Traditionally, however, telcos also have tended to push for regulatory change seen as helpful.

How much help potential regulatory changes could provide also are issues. European service provider executives believe regulations have been too stringent, and must be relaxed.

Executives also tend to believe European markets are too fragmented, and that consolidation is required to build scale.

But service provider executives in Europe also want more regulation of over the top competitors.

None of that will prove decisive unless the business model issues are successfully dealt with.