5G: Lots of Moving Parts, Significant Business Model Uncertainty
“Lots of moving parts” is an accurate way to describe the range of 5G building blocks. In the past, mobile network generations mostly have been about new air interfaces. But 5G is the first new platform that requires core network changes, is built to support both human and machine users at scale, use cases of varying bandwidths and core requirements, and the first to use frequencies that have historically been unusable commercially.
A presentation by Dan Warren, Samsung head of 5G research, aptly illustrates those issues. The coming 5G networks will require new radio access network architectures and rely on a virtualized core network.
Among the biggest uncertainties is whether 5G will lead to significant incremental growth of revenue sources from non-human use cases. The higher capital investment also is an issue, if upside from human use cases is rather limited and new revenues from internet of things is uncertain.
It is possible that new access revenue from IoT will be lower than many expect. Much of the revenue upside lies in the IoT platforms, services and apps, but only service providers with scale will be able to invest in such parts of the ecosystems.
Moving up the stack is a universally-acknowledged way to capture more value, more revenue and profit from the internet and mobile ecosystems. But that is not easy.