TELECOM | The current state of 5G
5G technology, with its promises of self-driving cars, remote surgery and igniting the Fourth Industrial Revolution, is heating up the competition among nations to be the first to fully roll-out a viable commercial version of the next generation in mobile connectivity.
Additional incentives include exceptional revenues to be generated by telcos and service providers. 5G market revenues worldwide is forecast to reach $277 billion by 2025. In the ASEAN market, 5G operator revenues could be anywhere between $4.3 billion to US$5.8 billion a year by 2025.
They’re enough to pump up interest on major telcos, enterprises and consumers alike on what’s in store for them in the coming golden age of 5G. But then reality bites and the question now is, where does everything 5G stand in the here and now?
There are 5G phones already available in the market but without the connectivity to derive the fullest advantages from an innovative technology, self-driving vehicles, for instance, remain in the realm of science fiction. Thus, the eventual champion is whoever puts up the first 5G infrastructure with the widest penetration.
The race is on
The frontrunner in the race is either the US or China, depending on the blurring parameters of the high stakes challenge. China has expressed its serious intentions by declaring it wants to be a 5G powerhouse in its development blueprint titled “Made in China 2025”. The country has actually focused on this mission and has put up more than 300,000 5G-compatible towers since 2015. Beijing also predicts that the roll-out of 5G will turbocharge its already expanding digital economy by monumental leaps and bounds.
In the same period, the US erected no more than 40,000 towers and Washington pooh-poohs the glaring disparity with China by arguing that the American infrastructure is made of sterner, better quality stuff. Red tape and the considerable investments required to put up each tower hamper America’s aggressive drive to the top.
There’s also the current administration’s decision to ban Huawei, the world’s dominant vendor of comparatively cheaper telecoms equipment, from the American market due to national security concerns. White House has even been appealing to its allies to do the same. The US come-on is that it will offer a faster, more secure connection designed to deliver 5G’s greatest promises seamlessly in the near future.
A few strides behind the main contenders are Korea, Japan and India. South Korea showcased its 5G capabilities at the 2018 Winter Olympics and Japan is expected to follow suit when it hosts the 2020 Summer Olympics. India hopes to work out the spectrum allocation late this year and has set its sights on a 5G roll-out by mid-2020.
Ericsson in partnership with Tel2, one of Russia’s leading telecom companies, launched in August the first 5G zone in the busiest sector of central Moscow. In a separate development, China’s Huawei and MTS, another major mobile operator in Russia, have teamed up to lay down a 5G network that will cover the entire Moscow in the coming months.
Europe isn’t keen on toeing the American line on security risks by taking a more rational approach and allowing foreign vendors like Huawei to compete in fast-tracking its 5G initiative.
The bottomline for Europe is that there’s not enough reason to ban telecom providers based on mere allegations that could otherwise result in delay in full 5G roll-out and higher-priced equipment and devices which businesses as well as the consumers won’t wholly support. Europe would rather focus on business fundamentals (e.g. reasonable costs, maximum profits) to achieve a projected windfall from 5G estimated at $500 billion by 2025.
Pole-vaulting ASEAN above the also-rans
The ASEAN region, with its tiger economies and newly industrialized countries, is not entirely watching the 5G global explosion from the sidelines. Recent international research studies such as consulting company AT Kearney’s report titled “5G in ASEAN: Reigniting Growth in Enterprise and Consumer Markets” foresees “tremendous value potential of 5G” in the region arising from superfast connectivity, 200 million subscriptions and opportunities from new business models such as B2B and B2C.
Singapore is leading the way in ASEAN, the report said, and slated its 5G launch by 2020. Keys to its success are the presence of capable operators, high value enterprises and customers willing to pay the price, and more than 50% penetration.
At Kearney’s report also sees the Philippines, Vietnam, and Thailand to be likely laggards. A basic argument is that most consumers in these countries may not be willing to pay the premium to benefit from 5G’s prized bonanzas.
On the ground, the so-called “laggards” may not actually fall that far behind highly touted Singapore in terms of 5G implementation.
As of the third quarter 2019, PLDT Smart remains confident that it would be able to roll out fixed and wireless 5G services for its residential and business customers by the fourth quarter of this year. Manny Pangilinan, PLDT president and chief executive, said they are still eyeing Huawei as one of the technology suppliers especially on the fixed network requirements.
In early June this year, Globe Telecom announced it launched its fixed wireless broadband services to make the Philippines the first country in Southeast Asia to experience a 5G-enabled environment. The launch came after a series of successful trial runs in areas outside of Metro Manila.
In Vietnam, the Viettel Military Industry and Telecoms Group intends to make its own base stations and deploy Ericsson AB’s equipment in Hanoi and Nokia Oyj’s technology in Ho Chi Minh City. A roll-out by 2020 is in the offing.
Thailand also wants to pioneer its own 5G deployment, hoping to start 5G services by next year. Like many ASEAN neighbors, the country has significant investments in 4G technology and plans to woo enterprises to go 5G with a package of financial incentives.
Malaysia has also began running tests on 5G services and the latest update is that it is eyeing a network roll-out by late 2020 at the earliest.
Indonesia in partnership with a Korean telecom company launched 5G trials during the 2018 Asian Games. While reports said Indonesia would remain focused on 4G, AT Kearney’s research study suggests that among ASEAN nations, Indonesia, with its widespread mobile penetration, stands to gain a lot should it transition to 5G as early as possible.
Brunei has reportedly the greatest mobile penetration in the region but it expects to go 5G by 2021. Myanmar which went 4G only in 2017 has announced plans to work with an international health care provider on 5G-enhanced telemedicine.
These disparate developments among nations have led to observations that varying states of 5G deployment could intensify the existing digital divide among economically developed, developing and underdeveloped countries. It could likely ripple into the domestic digital rift in each country.
It follows that the persisting digital divide could even get worse when 5G debuts in just selected urban areas. There is also the view that 5G won’t flex its true strengths unless rolled-out as a massive breakthrough rather than as a mere layer in the existing mobile communications infrastructure.
By this token, a local implementation such as the Smart’s 5G innovation in Clark may be just a drop in the proverbial bucket of 5G advantages. In contrast, more progressive 5G proponents are proclaiming that real progress is actually being achieved in specific 5G-enabled applications.
In Indonesia, 5G drones are being used to collect real-time information on soil condition, moisture content and climate impact in large agricultural plantations. The same principle could be applied to deliver enhanced ‘smart farming’ services such as animal tracking, plant disease control and fire detection alarm systems.
The final draft for 5G standards will be announced in early 2020. For now, it’s to go 5G or not? The deciding factor may all depend on the scale of investments to be made against the prospective revenue windfall down the road as well as certain unpredictable risks that come with new technologies.
5G Timeline: Philippines (2016 – October 2019)