Wednesday, June 27, 2018

Big Assumptions Underlie Big Forecasts for 5G

How big 5G revenue streams could be depends largely on how big an impact 5G can have in enabling all sorts of other businesses requiring 5G connectivity and features (low latency, ultra-high bandwidth, retail user costs as low as provided by fixed networks).

In the area of what 5G might provide, in terms of connectivity revenues, hinges largely on incremental new activity, above and beyond what retail customers are willing to spend on 4G.

If most customers wind up substituting 5G for mobile internet access, there will be some incremental revenue potential, but not so much incremental revenue growth. If 5G winds up supporting many new use cases (sensors, for example), then brand new revenue will be created.

Just how much revenue depends on connection volume more than per-connection prices, which might be quite low.

On the other hand, perhaps 60 percent to 90 percent of total 5G-enabled revenue might come from applications, platforms, devices and other services to implement 5G-using applications for business or consumer markets.

Truly-significant revenue generation might well depend on whether 5G enables brand new internet of things, virtualization use cases, automated vehicles and processes or solutions based on artificial intelligence and machine learning.

Those are very big assumptions.

Some researchers predict that 5G will become a “general purpose technology,” and that matters because GPTs are the foundation for huge waves of economic growth. Some past GPTs are said to include:
  • Interchangeable parts and mass production
  • Military and commercial aircraft
  • Nuclear energy
  • Computers and semi-conductors
  • The Internet
  • The space industries

Others might be more selective and cite electricity and information technology as general purpose technologies that have mattered. The steam engine and electricity are seen by others as GPTs. Some cite the internal combustion engine as being a GPT.

Spoken language, the wheel, written language, printing, railways, automobiles and mass production are other often-mentioned GPTs.

Few observers seem to count “communications” as a GPT, though some have considered the telegraph or telephone a GPT.

So it is not clear whether 5G will produce as much economic activity as some predict.

source: Graeme Chamberlin, Linda Yueh  

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