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Recent months have seen conflicting messages around 5G. On the one hand, the UK auction of frequencies in the so-called “5G pioneer band” raised £1.35bn. On the other, the chairman of Huawei publicly said that consumers would not notice any difference between 4G and 5G and the only reason Huawei was developing 5G equipment was in case a lack of a 5G offering affected its 4G sales. What’s going on?
5G has been the subject of unrelenting hype for many years. Go back to 2016 and most believed that 5G was transformative, would change the way we lived our lives, would open a host of new revenue streams for operators and was an opportunity for countries to gain important global leadership. It was against this backdrop that I published my book The 5G Myth, a lone voice suggesting that the business cases presented just didn’t make sense.
But in November last year, things started to change. The CEO of BT said he couldn’t see a business case for 5G and neither could other operators he talked to. Others, such as Vodafone, followed suit. Even Korea Telecom – for a long time the poster-child for industrial strategy investments – said the business case was challenging and that the learnings from initial deployments at the 2018 Winter Olympics were that deployment was harder than expected.
So if operators can’t see a business case, why did they spend so much on spectrum? The answer is capacity. Mobile operators often suffer network congestion in dense urban areas and traffic demands continue to grow, albeit at a slowing rate. The lowest-cost way to deliver more capacity is to utilise more spectrum on existing cells – this is much cheaper than building lots of small cells. The frequency bands auctioned, at 2.3GHz and 3.5GHz, can be used immediately for 4G.
Hence they have value to operators as a cheaper way to meet existing demand. They also give operators an option to build 5G should a business case emerge for it – most operators would not want the risk of not having 5G spectrum and then discovering that there is a strong need for it. It is also worth noting that this is not a lot of money for spectrum – much less than the £22bn spent on 3G spectrum, for example.
So, should we be happy with the way things have played out? On the plus side, the spectrum will allow operators to provide more capacity, probably without raising prices. And sanity is starting to prevail about 5G, reducing the risk of large wasted investments. But on the minus side, mobile connectivity is far from perfect, with not-spots and connectivity issues still happening far too often. These frequencies will not help improve connectivity – the range is too low to be useful.
A more achievable and, arguably, better future is what I call consistent connectivity – the ability to be connected at a reasonable speed everywhere. Rather than aiming for the ever-faster connections promised by 5G proponents, it suggests that delivering enhanced coverage in a number of known problematic locations, such as trains and rural areas, would generate greater value for the economy and be preferred by most consumers.
In most of these locations – trains, planes, indoors – Wi-Fi is a better solution than cellular, with the exception of coverage in rural areas. This reflects a trend that has been under way for years towards increasing use and reliance on Wi-Fi to the extent that it is now the preferred method of communication for most people. Developing policies for a “Wi-Fi first” world is becoming increasingly important for governments and regulators.
The end result – connectivity everywhere – would be well worth striving for. A great road system is no longer one with unlimited maximum speed, but one with minimal congestion and excellent safety. A great communications system is one that is available everywhere, at all times, with minimal congestion and at low cost. The recent 5G auction is likely to prove a sticking plaster rather than a cure for the current connectivity issues. It is time for a different approach.