What are we getting wrong about 5G? Are we unclear about the value of other advanced technologies in the connectivity business and internet ecosystem? An experienced panel of industry analysts will tackle those subjects head on at the PTC'21 conference closing session on Jan. 20, 2021. You can register here.
Among the big topics certain to be discussed: is the global industry investing too much on 5G, without hope of return? How much capital can service providers really afford to invest in a mature business?
How big is the threat of service provider displacement from private 4G or 5G networks? What is the value proposition that might drive substantial numbers of enterprises to do so?
Is there really serious hope of 5G revenue growth, or must we look at 5G capital investment as maintenance spending?
As Matt Bramson, Cloud Strategy Solutions founder puts it: “what are the implications of these new technologies? What do you need to know when a board member asks you about them?”
When do you need to move; start investing; and why? What chasm has to be crossed?
Panelist Benoit Felten, Diffraction Analysis founder asks: “What 5G dangers lie ahead for regulators? What are they not seeing?” What are the possible impacts on market structures, need for consolidation or even ownership? And is there really significant revenue upside from new services?
In a mature business, how much capital can service providers actually afford to invest, asks Dan Hays, Strategy& principal. “What are the business and financial implications of huge amounts of capital invested in some 5G auctions?”
“Can you afford to invest so much if there is no top-line growth?” Hays will discuss.
Do big mobile service providers such as Verizon actually have a choice to invest heavily in mid-band mobile spectrum? Mark Lutkowitz, FibeReality principal, is not so sure. It fundamentally is an existential question. “Do you want to stay in business or not?”
What are the longer term implications of an inability to wring more revenue from such capital investments? Can the industry actually support multiple facilities-based competitors?
Some of us remember roughly similar questions and answers asked about fiber to the home investments as well, back before the turn of the 21st century.
One CEO, asked about the magnitude of FTTH investments, said the upside was “we get to keep our business.” Note: the argument was not “we will make more top-line revenue.” The justification was existential: “we get to stay in business.”
Is that why service providers are looking at as they invest huge sums for mid-band spectrum?
The large U.S. telcos invest about $10 billion in capex every year, Hays notes. The U.S. C-band auctions already exceed $80 billion in commitments. How big a burden might that be, even if the spectrum is essentially existential? After 82 rounds, about $81 billion has been committed by bidders in the C-band auction.
In addition to those sums, roughly 16 percent to 22 percent more has to be added as the cost of clearing existing licensed users from the bands. In other words, existing bidders already are pledging between $94 billion and $99 billion for C-band spectrum, and the auction is not yet over.
Many would argue that acquiring a trove of mid-band spectrum is existential for Verizon and AT&T, in the same way that fiber to the home was existential for some telcos. But that is quite a different rationale from arguing that the investments will drive top-line revenue, substantially reduce operating costs, significantly reduce churn or elevate marketing effectiveness.
Those are among the weighty issues the panel will discuss.
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