Wide Divergence on 5G, IoT, Edge Computing Near Term Impact
It is not too hard to find skeptics about revenue upside for mobile operators in 5G, internet of things or edge computing, because it is hard to demonstrate the business case in a near term sense, in most markets. That seems to have been true at the recent Mobile World Congress trade show as well.
Despite clear evidence that mobile operators in the United States, Japan, South Korea and China are charging fast into 5G, with firms in each of those countries believing 5G leadership will lead to broader benefits, many operators in other nations are less optimistic about the near term business case.
In some cases, that skepticism or agnosticism also has other roots: recent and major investments in 4G, uncertain spectrum allocations or the general state of the mobile business (very low growth) in general, which raises the risk of big new investments in 5G.
Add to that divergence the sense in early-adopter countries that 5G is about industrial policy, while perhaps not a plausible possibility in most countries, and the split of opinion is easy to explain.
Optimists might point out that business model fuzziness also was a characteristic of both 3G and 4G, so some amount of uncertainty is perhaps typical of next-generation mobile platforms in recent eras that have seen revenue growth drivers migrate from voice to messaging to internet access for revenue growth, and which now will have to depend on additional new growth drivers in the 5G era beyond internet access for people on smartphones.
It also is fair to say that early adopters in 5G vary by continent, with mobile operators in the United States, Japan, China, South Korea moving early and aggressively into 5G, while European, African, South American and broader Asian operators are more circumspect.
In some instances, the hesitation is related to the recency of 4G investments. In other cases the difficulty of the mobile business model in general makes a major upgrade cycle unpalatable.
There are divides, by continent, on the matter of internet of things upside as well, possibly because many observers see the biggest early revenue cases developing in North America and parts of Asia.
So it might not be surprising that mobile operators in the United States and East Asia are more optimistic about the near term 5G and IoT business cases (as IoT upside will be dependent on 5G, in important cases).
In Europe, the IoT opportunity often is included in discussions of the “fourth industrial revolution.”
One hears the term of art used less in the North American markets, perhaps suggesting different perceptions of where opportunity lies. In a broad sense, users of the term fourth industrial revolution seem to use it in a sense similar to “digitalization” and a bit more reliant on applying artificial intelligence to business processes.
Other touted revenue platforms such as edge computing are simply early in development, as edge computing requires new lead apps such as autonomous vehicles to drive such requirements.
Some observers also note the nebulous discussions and status of artificial intelligence within the service provider community at the moment, though, perhaps surprisingly, AI is seen by some as having more relevance for mobile operators than 5G, IoT or edge computing.
The point is that near-term optimism about 5G, internet of things and edge computing--if not complete conviction at the same level--is higher in a few markets than across most of the globe.
In part, that is because 5G business cases are part of the broader IoT and edge computing trends. Without significant IoT growth, it is hard to make the case either for 5G or edge computing.
At the moment, 5G and IoT are a Rorschach test. Different people see different things.