5G Evolutionary or Revolutionary? Yes.

Every important new technology gets hyped, for good reasons. Suppliers see big markets, and have every reason to promote the upside, to boost sales and grab leadership of the expected big new markets.

Futurists and journalists have nothing to talk about if they cannot speculate on the transforming potential of general purpose (GPTs) and other technologies. But GPTs exist. They transform work, life and economies.

Also, no matter how hard we try, humans are notably poor at making accurate forecasts accurate forecasts about the future. We rarely do much better making more mundane estimates of future prices, who your competitors will be or what products you will be selling in a decade.    

Beyond that, important new technology follows a pattern described by the S curve, which virtually guarantees that any systemically important new technology will take some time to develop. That very process also ensures, however, that impact is virtually always less than expected at first, and far more important, later.

The point is that it is almost pointless to debate whether some new technology actually will become a general purpose technology that transforms life and work: we often cannot know that, at first.

And even if a GPT is coming, its impact will not happen in the first years, but only over decades.

For that reason, even debates about whether the impact is evolutionary or revolutionary are nearly pointless. Even if a GPT is coming, its initial impact will seem quite evolutionary, and often quite limited. Only decades later will the larger impact be so obvious.

With regard to 5G, all these caveats are relevant. There has been significant uncertainty about changes in revenue models and lead apps for every next generation mobile network. The immediate shifts were always evolutionary.

Expected innovations in consumer behavior and apps always took some time to develop, and perhaps the most-important shifts occurred over several different network generations. Some potentially-important “new data apps” we might have conceived of in the 3G era might actually emerge only in the 5G era.

And, to be sure, most of the actually realized initial revenue from 5G will be 4G usage that shifts to 5G. So yes, 5G will appear to be quite evolutionary. In some sense, that always is the case for next generation mobile networks.

But there are some potential new twists. If, as many expect, the global telecom business radically consolidates, if 4G improves enough to provide 5G type features (bandwidth and latency), if the new internet of things revenue upside accrues mostly to a smallish number of big tier-one operators, then it would be rational for executives to set lower expectations about 5G.

Also, if much more new competition is expected, or if significant portions of the addressable market were to shrink, the investment case might be more challenging than some propose.

It might be rational to “go slow” on 5G investments, if in fact one believes market consolidation is about to happen, and capital will have to be expended to buy assets. Conversely, if one expects to be a seller, then delaying an expensive investment also would make sense.

All of that makes even more sense if the near-term 5G revenue upside is expected to be muted.