Is 5G as Big as the Internet?

Is 5G going to be as big an innovation as was the internet? It is too early to tell. But here’s an exercise, taking a range of claimed Internet benefits and simply substituting the word “5G.”

“Unlike its predecessors though, Internet is a technological paradigm shift, akin to the shift from typewriter to computer. And it isn’t just a network. Internet will become the underlying fabric of an entire ecosystem of fully connected intelligent sensors and devices, capable of overhauling economic and business policies, and further blurring geographical and cultural borders. It will be capable of delivering at every rung of the ecosystem’s ladder, and will provide seamless, continuous connectivity for business applications.”

source: OECD

• “5G will be a fundamental shift in the way communications networks are managed and operate; a marked distinction from previous mobile generations
• 5G is no longer just about communications, but connectivity solutions. Data rate and capacity have traditionally been key metrics, but Internet significantly improves other metrics such as latency and coverage. This allows enhanced connectivity for a much wider range of applications across all sectors and industries.
• Major mobile operators will have to focus on an expanded value chain to sustain high growth, while key players from other sectors will find themselves integrated into the wider telco industry.
• 5G will become a universal connectivity platform, and will have a profound impact on the way devices and people communicate and interact.”

1. “5G will turn connectivity into a platform. With Internet, wireless access networks will go beyond pipe, providing seamless, ubiquitous, and limitless connectivity for all people and all things.
2. Everything will go 5G. Right now, most things are offline by default, and most electronic devices are not connected. With 5G, being online and connected will become the default for everything.
3. The world will go all cloud. Supercharged with 5G, the cloud will provide massive computing power with instant transfer speeds and near-zero lag. This will make intelligence on demand available for everyone, everywhere. New business models like Cloud X – where devices are boosted by inexhaustible cloud-based resources – will begin to emerge.
4. Devices will be redefined. With AI support across devices, network, and the cloud, devices will go from plug and play to plug and think. They will understand users better – able to actively predict our needs, not just passively respond to commands – and interact with us in more natural ways.
5. Experience will flow seamlessly. With existing networks, our online experience is fragmented from one scenario to another. When all things are 5G and cloud-based, experience and content will flow seamlessly through time, space, and devices for a truly holistic experience across all scenarios.”

The point is that many potentially huge innovations, such as internet of things, artificial intelligence, virtual reality and autonomous vehicles are enabled by a complex of technologies and platforms. Internet is part of that complex, but ultimately just a part.

That is not to say 5G will fail to play a role in creation of a big new platform for apps, services, use cases and revenue models and sources. But separating the impact of 5G specifically, from all the other important changes, is a perilous exercise.

The internet itself, AI, VR, semiconductor advances, use of millimeter wave spectrum, device advances or other technologies might play key roles. Or not.

The big point is that all the incoming innovations likely are not solely driven by 5G. If successful innovations happen, they might not even require 5G. It just is impossible to say, right now.

Are Telecom Prices Too High?

One argument we always hear about any communications service is that it is “too expensive.” That clearly is true in developing or lesser-developed nations, where mobile internet access can cost 14 percent of gross national income per person. In developing markets, mobile internet access can cost about six percent of GNI, per person.

Consider mobile internet access. In developing countries, mobile internet access costs about 0.7 percent of gross national income, per person, according to International Telecommunications Union data.

source: ITU

Much the same story holds for fixed network internet access as well. Fixed network internet access in developed nations costs less than one percent of GNI per person, perhaps 11 percent of GNI per person in developing nations and as much as 30 percent of GNI per person in lesser-developed nations.

source: ITU

One rather impressionistic bit of evidence that prices are not excessive might be gleaned from industry profits. On a global basis, revenues dropped by about four percent between 2014 and 2015, for example.

Developed market revenues have been dropping since about 2012, according to ITU statistics.

 

source: ITU

Half of Global Fixed Lines Support Internet Access

In 2017, about half of all fixed network lines globally supported voice. The other half (the growing half) consisted of internet access lines, according to International Telecommunications Union data.

Fixed Network Lines, Voice and Broadband, Lines in Millions
	2014	2015	2016	2017*
Fixed-telephone subscriptions
Developed	503	490	479	471
Developing	592	556	524	500
World	1,095	1,046	1,004	972
LDCs	9	8	9	9
Fixed broadband subscriptions
Developed	354	370	382	392
Developing	377	472	535	588
World	731	842	917	979
LDCs	5	7	8	10
Total Lines
Developed	857	860	861	863
Developing	969	1028	1059	1088
World	1,826	1,888	1,921	1951
LDCs	14	15	17	19
Percentage Broadband Lines
Developed	41%	43%	44%	45%
Developing	39%	46%	51%	54%
World	40%	45%	48%	50%
LDCs	36%	47%	47%	53%

source: ITU

That illustrates one key facet of fixed network business models: increasingly, the fixed network is a platform for internet access, less so voice. The other trend is that more of the value of the fixed network is being generated by a range of data services including wholesale and retail lines, as well as services for enterprises.

source: TRAI

source: TRAI

source: TRAI

NFV, SDN, Cloud Native

Most of the time we talk about networks functions virtualization and software defined networks as ways to lower the cost of operating a modern network (the former) or enable new services (the latter). Some call this overall process a transition to "cloud native" communications. 

Open source also is among the many ways network operators are wringing cost out of their platforms. 

All those trends illustrate the ways that modern telecom networks have become computing networks. One big business model implication is that applications and services are logically separated on a modern computing network. That is why we hear so much about "dumb pipe" and "OTT." 

Will 5G Cause Economic Growth?

Correlation is not causation, it is helpful to remember. There is a correlation between higher per capita gross domestic product (GDP) and more time spent on Wi-Fi, say researchers at OpenSignal.

There also is a correlation between higher GDP and overall average mobile upload and download speeds; overall Wi-Fi download speeds; and LTE availability, OpenSignal researchers note.

Others will note that there is a correlation between GDP and fixed network internet access availability; between gross domestic product and internet access speed;  or between GDP and affordability; between 5G and economic activity.

source: IHS

To reiterate, correlation exists. Causation is another matter.

Does internet access cause growth, or does growth lead to better, faster, more affordable internet access? It is impossible to know.  

The same sorts of issues can be noted where it comes to Wi-Fi speed. There is a correlation between faster Wi-Fi (faster fixed network access) and GDP.

source: OpenSignal

But it remains impossible to determine the extent to which better connectivity causes growth, or the extent to which growth leads to better connectivity. Put another way, does wealth lead to spending, or does spending lead to wealth? Nobody doubts the correlation. But to the extent public policy is based on perceived causation, the causal chain does matter.

“Necessary but not sufficient” often is the best formulation. Quality internet access might be necessary for economic growth, but is not sufficient to cause it. Good communications might be necessary to attract firm foundings, relocations or expansions. Rarely, if ever,  is it sufficient.

Good internet access is an aid to quality education or prevent population loss. It is not sufficient to cause educational quality or prevent population loss.

Wi-Fi Offload Will be Replaced by Wi-Fi Bonding

Wi-Fi offload has been a central part of mobile connectivity strategy on the part of users and service providers since 3G. That has changed in the 4G era, and might flip in the 5G era, when it might make sense to stay on the mobile network all the time, tariffs permitting.

Already, in  33 countries smartphone users now experience faster average download speeds using a mobile network than using Wi-Fi, according to OpenSignal mobile analytics.

In 50 countries, 63 percent of those studied, 4G networks offer a faster smartphone download experience than Wi-Fi.

Equivalent download experience means there is no “speed reason” for smartphone users to switch network type. But there still might be tariff reasons for doing so (mobile data is expensive, compared to Wi-Fi, either public or private).

In a number of markets with well-developed fixed network access, Wi-Fi offload might still be faster than 4G, though. But it is no longer automatically the case that Wi-Fi offload provides a better experience.

source: OpenSignal

So mobile operators and smartphone makers must re-evaluate their Wi-Fi strategies, especially around mobile offload, automatic network selection and indoor coverage, to ensure they do not accidentally push consumers’ smartphones onto a Wi-Fi network with a worse experience than the mobile network, researchers at OpenSignal say.

source: OpenSignal