Friday, March 17, 2017

TIA 5G Survey Suggests Potential Business Model Trouble

A new study issued by the TIA finds that 33 percent of respondents expect their companies will be offering commercial 5G by the end of 2020. However, there is a lack of consensus regarding the competitive advantage that might be gleaned from being first to market.

Some 48 percent of respondents said “being first to market” was unimportant or “only somewhat important” for their company’s competitive position. About 35.5 percent of respondents believe it is very important to lead deployment, though. Another 6.4 percent extremely important.

In general, operators in technologically advanced and mature markets place greater emphasis on being the first to launch 5G, while those that operate in less technologically advanced or less mature markets do not, the study, conducted by Tolaga Research, and sponsored by InterDigital, found.


source: TIA

Almost a third of respondents plan to launch pre-standard 5G products, one way of determining 5G deployment “high perceived value.”  Australia, China, Japan, Korea, and the United States are in that group.

That is probably a reflection either of market maturity (5G promises revenue upside--and significant upside) as well as expectations of higher initial demand for internet of things products and services that will be supported by 5G.

But the survey also suggests the business models for 5G are fluid and even unknown, to a large extent.

About 56 percent of respondents believed mobile broadband services would be “significantly transformed.”

Only 30 percent of respondents believed that machine-type communications will be significantly transformed by 5G, and 50 percent expected that ultra-reliable and ultra-low latency services will be not be significantly transformed by 5G.  

That will be a problem, if the views prove correct. Only 56 percent of respondents believe 5G will fail to significantly transform mobile broadband. If so, 5G will be an expensive way to possibly transform 4G mobile access.

Worse, should respondent views prove correct, is that 70 percent seem to believe M2M will not be a key benefit of 5G, while only half think low-latency new services will be transformed.

Ignoring for the moment the impact of that specific terminology (“transformed” rather than “enabled,” for example), most executives are signaling trouble for the business model.

If 5G promises big new revenues in IoT and M2M, and operator executives seem not to believe that will happen, there could be serious business model issues, of the “still a dumb pipe” variety. There is only so much incremental financial value to be wrung from 5G access speeds. Most of the revenue upside is going to come (observers currently believe) from IoT apps and services.

If 5G mostly is a “faster dumb pipe,” then the capital investment is likely to produce paltry returns.

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