A funny thing happened on the way to 5G: feared unaffordable levels of investment never happened. Instead, 5G investment now tends to fall within the limits of current spending. That is a huge development for a technology whose detractors often said would cost twice as much as 4G, or even many times the cost of 4G.
As recently as 2028, many also said in public that there was no compelling business case for 5G. And, to be sure, we cannot yet claim to be certain about the upside from 5G.
We tend to forget that each next-generation mobile network tends to represent uncertain new use cases and values, the big immediate value being “more capacity (or speed)” and lower cost per supplied bit. Eventually, each mobile platform develops some new use cases, revenue possibilities and value. But that never is so clear at the beginning.
The latest Gartner estimates for mobile network spending and 5G capital investment show the picture. Global mobile infrastructure spending, despite a nearly 100-percent ramp up in 5G capex in 2020, compared to high 2029 spending, still occurs within a context of 4.4 percent less capex overall.
In part, the dip might be explained by impact of the Covid-19 pandemic, which is slowing construction timetables. But sharply-declining spending to support 2G, 3G and 4G are bigger drivers. At the same time, we are likely seeing a restraining impact on costs caused by use of open source technology.
Open source creates lower-cost product substitutes, which also increases competition for legacy suppliers, arguably leading to lower costs for legacy products. Also, 5G was designed to leverage 4G, unlicensed spectrum and spectrum sharing, allowing a more-graceful and lower-cost adoption pattern.
Whatever the reasons, a feared explosion in capital costs to build 5G has not happened.
No comments:
Post a Comment