U.S. Professionals Do Not Yet Understand 5G, Survey Finds

Consumer or business surveys can be hard to interpret. Consider this bit of research on 5G benefits. 

Only 19 percent of US business professionals claim to understand the benefits of 5G, according to a survey commissioned by Ciena and conducted by research firm Dynata. 

41 percent of working professionals saying they only know a little bit about the benefits of 5G. Some 32 percent of working professionals stating they have heard of 5G, but don’t understand what it is, while eight  percent of working professionals say they never have heard of 5G

Today, the main benefit that US professionals associate with 5G is “faster access speeds,”  cited by 61 percent of respondents. By contrast, only six percent of respondents considered “reduced latency (lag)” to be a major benefit. 

Only 18 percent of respondents said that they consider “more reliable connectivity” to be a major benefit; and only 16 percent recognized “better wireless coverage” as a major benefit, the study suggests. 

One conclusion is that mobile operators need to educate the market on 5G benefits and back that up by consistent performance. 

But one might also reach other conclusions. The value of new technologies is hard to grasp when most consumers or workers have yet to experience them. The value of new technologies is likely to be misunderstood early in the deployment phase, when all features are not available, coverage or availability is spotty and when ecosystems are not yet established. 

All of that applies to U.S. 5G at the moment. 

The darker explanation for the survey results is that, in addition to having no experience with 5G, potential customers also are not seeing the promised benefits; or the benefits are seen, but are not yet clearly transformative. 

Some skeptics might argue those results are found because 5G "has no obvious benefit" and might not offer benefits.

One would expect quite different results in five years, when most users will have had experience with 5G; when the more-advanced features are readily available and when ecosystems have developed around 5G. 

In the near term, faster speed might not be so pronounced; latency advantages not perceptible and new use cases only early in development. That would be true for any major technology product.

5G Will Lead to Consolidation in Asia-Pacific Markets

The transition to 5G in many Asia-Pacific markets will include consolidation, says Fitch Ratings. “The 5G technology will favour operators with scale and strong balance sheets, which may contribute to diverging credit quality over time across the peer group,” says Fitch. 

“It will be difficult for smaller telcos to absorb 5G investment without an immediate return on investment,” Fitch adds. 

To be sure, the  connectivity business has always been an undertaking that benefits from scale and density. That was true in the monopoly era and remains true in the competitive era. So with or without 5G, the trend towards consolidation would continue. 

Free cash flow will be weak for most firms through 2022 because of high capital investment profiles and slow operating cash flow growth, Fitch says. “We expect most of the companies in the peer group to have negative free cash flow (FCF) in 2021-2022 due to high capex and slow growth in operating cash flow.”

Capital preservation will be necessary for up to half of firms analyzed by Fitch, with staggered 5G investment, dividend reduction and asset sales.

PT Telekomunikasi Indonesia Tbk (Telkom, BBB/Stable) “is the only company with high rating headroom, while Singapore Telecommunications Limited (Singtel, A/Stable) has the least,” Fitch says.

Fitch expects tight competition and significance of scale to raise the prospects of merger and acquisition activity in India, Indonesia, Malaysia and Singapore.

How Soon Will O-RAN be Common?

By definition, 5G core networks are virtualized, and therefore separate network functions in software from the hardware and appliances they run on. That, in turn, opens the door to “open” approaches to infrastructure, a necessary but insufficient condition for open approaches to radio access, for example.

source: STL Partners 

Suppliers can offer network elements and systems that are compliant with open radio access network protocols and standards, but operating in a single-vendor deployment, for example. As often is the case, mobile operators might spot deploy O-RAN, using it to support small cells or in front hauled radio heads only, at first. As comfort levels grow, O-RAN would then be used in all parts of the network. 

There is room for skepticism about how soon O-RAN sales volumes will become significant. By the time comfort levels are high, some major buyers will have installed the great bulk of their 5G networks. So O-RAN will be driven, by volume, by later adopters. 

source: STL Partners 

On the other hand, this tends to be true of all big technology transitions: later adopters can make choices earlier adopters cannot. 

source: Rethink Technology 

Still, analysts now believe O-RAN will succeed in the marketplace. 

source: Omdia

Later 5G Adopters Will See "Insignificant Revenue?" Yes and No

The tendency to see 5G mobile services as a “race” with winners and losers is hard to shake, even if it is largely meaningless. Whether any particular country adopted 4G earlier or later did not ultimately matter. Virtually all countries have most of their users on 4G networks, whether they started earlier or later. The same will happen with 5G. 

To the extent there is a “race,” it is among winners and losers supplying  infrastructure products. But mobile service markets are not zero sum games, with winners and losers. Some might argue that countries with higher early adoption of 5G have economic, social or other advantages. 

But such “advantages” are hard to separate from all the other sources of advantage: stable legal systems, clear property rights, well-developed infrastructure, educational attainment, good credit markets, high gross domestic product or critical mass in key knowledge industries. 

Countries in the Asia-Pacific region that are late in adopting 5G technology will get insignificant revenue from the services, Moody's Investors Service said. That statement likely must be qualified, though. 

"For the late adopters Bangladesh, India and Indonesia, we do not expect material 5G mobile service revenues over the next 12 to 18 months," the report said. In and of itself, that is a simple enough observation. 

Countries with high 5G take rates necessarily will have far-higher revenues than countries that have not yet launched, or are in early stages of adoption. That does not mean long-term take rates will be materially different, given enough time. 

Profit margins or gross revenue are dictated by any number of underlying conditions: costs of doing business in any country; consumer ability to pay; the competitive structure of mobile service provider markets; size of gross domestic product and other general economic health metrics. 

Such underlying conditions often lead to “later adoption.” But the later adoption is a reflection of the underlying market conditions, not its cause. 

Among the four early adopter markets, Hong Kong SAR, China was the first to roll out 5G services, and its 5G adoption rate will be the highest, the report said. 

That is almost a tautology. By definition, high rates of adoption by mass market customers means high revenues. Low adoption means lower revenue, at first. 

To be sure, India has had a history of high spectrum license fees and taxes that will reduce mobile service provider profits. But India also was relatively late to mass deploy 4G. Having only recently done so, there is reduced appetite to undertake yet another major wave of capital investment. So yes, 5G deployment will be more measured. 

That has nothing to do with deployment timing. It has everything to do with fundamental costs of creating widespread 5G availability at reasonable prices and sufficient profits to sustain operations. It has everything to do with the recent major investments to bring 4G to market. There is no “race” to adopt 5G that pits nations against each other in terms of user adoption. 

Every market will adopt 5G at levels at least commensurate with overall mobile adoption in each country. Eventually, 5G adoption will be near ubiquitous in every country, just as mobility itself becomes ubiquitous over time in every market and country. 

The four pioneer markets, which include (South) Korea and China, will maintain their lead in the adoption of 5G services,” the report said. That would normally be the case for any nation early in the 5G launch period, when take rates are low. "

There is nothing terribly surprising about that conclusion. Early adopters, with strong mass market adoption, generate more revenue than later adopters that are only beginning to commercialize 5G. 

There is no “race” between countries in terms of mass adoption of 5G. Earlier adopters of 5G also tend to have other economic advantages that make early adoption possible. Later adopters likewise are shaped by underlying market conditions. But later adoption still leads to full adoption.

5G Carrier Aggregation is Different from 4G

5G is different from 4G and 3G in several ways, but among the notable differences is the wide range of frequencies supporting 5G: low band, mid band and high band millimeter wave. No other mobile generation has had that wide spread of frequencies supporting the networks.

Also notable for 5G networks is aggregation of licensed and unlicensed spectrum. 

To be sure, 4G used carrier aggregation to allow mobile operators to combine blocks of spectrum, including contiguous frequencies within a band, non-contiguous frequencies within the same band, or non-contiguous spectrum in different bands.

source: 3GPP 

Carrier aggregation remains important in 5G as a method of increasing end user bandwidth. 

source: 5G News Hubb 

source: Ericsson

Carrier Aggregation Explained In 101 Seconds

Carrier aggregation, pioneered for 4G, remains an important method for increasing end user bandwidth on 5G networks. 

Expect Big Changes in 5G Experience as Spectrum Comes Online

5G is different from 4G and 3G in several ways, but among the notable differences is the wide range of frequencies supporting 5G: low band, mid band and high band millimeter wave. No other mobile generation has had that wide spread of frequencies supporting the networks.

Performance and coverage varies wildly based on the spectrum assets available to support 5G in any particular area. Some comparisons of low band and high band 5G performance illustrate the differences. 

source: Opensignal 

5G performance will show much-higher speeds as mid band networks are rolled out. 

PCCW Global Gained 800 New Accounts Entirely Without Sales Personnel Involvement: How?

According to Marc Halbfinger, CEO of PCCW Global, the firm gained 800 business accounts within the last year completely without the involvement of any sales personnel at all. It was no accident. PCCW Global has been working to become more agile, and that includes the way it generates leads and sales.

But changes have been building for a decade. According to Elmar Rode, Oracle Global Industry Solution Lead, up to 60 percent of Oracle leads come before the involvement of any sales personnel. In other words, potential customers are doing their research online, before contacting potential suppliers. 

Top-performing sales professionals in the mobile, wireless or software industries had to learn to work without face-to-face interactions during the recent global pandemic. Which changes are likely to be permanent? What new tools, platforms and practices will emerge, and what do top sales professionals need to know about the new selling environment?

All that suggests something fundamental has happened in business-to-business sales operations. At the very least, we will see more automation, more use of artificial intelligence, more remote interactions. 

But what else will change?

Rode and Halbfinger are among the subject matter experts who will speak about such issues on a PTC webinar July 21, 2021, at 14:00 HST. The series is restricted to PTC members on that date, but the event will be viewable by everyone about 30 days after initial screening. You can view episodes here. 

Sales professionals will still be needed. But it is possible--indeed likely--they will need new skills, and adopt new roles. The panelists will discuss what they believe is coming. 

Enterprises See Value in Network Slicing, Edge Computing

Fully 75 percent of industrial executives polled by Capgemini  believe that 5G is going to be a key enabler for their digital transformation efforts in the next five years. In fact, 5G is ranked higher than artificial intelligence or advanced data analytics as a driver of digital transformation, behind only cloud computing. 

source: Capgemini 

On the other hand, the specific features enterprise users and customers might want might not be available for a few years. Network slicing is a feature in that category, as it promises guaranteed quality of service, to the device level. 

Multi-access edge computing is the other obvious capability, which would allow local processing that matches the ultra-low latency of the core and access networks. 

About 66 percent of respondents want to implement 5G within two years, but it might take three years for 5G suppliers to have all the network features in place. 

Also, perhaps 33 percent of respondents would consider private 5G networks of their own, and up to half of the largest enterprises, Capgemini notes. 

source: Capgemini 

Fixed Wireless Matters "At the Margin"

Fixed wireless is a subject that has importance “at the margin” for service providers. The service is provided by perhaps 70 percent of connectivity service providers, according to Ericsson, yet does not generate huge account numbers globally. 

The highest growth during 2021 has been in regions with the lowest fixed broadband penetration: Middle East and Africa, Central and Eastern Europe, Asia-Pacific and Central and Latin America, says Ericsson.

source: Ericsson 

Those regions grew between four and 13 percentage points. Central and Eastern Europe had growth of almost 25 percentage points since the start of the pandemic in February 2020.

Service provider adoption of fixed wireless  offerings has increased by 12 percentage points in the first half of 2021 and more than doubled since the first measurements in December 2018.

source: Ericsson 

Still, total accounts in service are not so high by global standards. There were perhaps 1.7 billion fixed network broadband accounts in service in 2020. Only about 60 million to 65 million of those connections were supplied using fixed wireless, by Ericsson reckoning. 

So fixed wireless accounted for less than four percent of total fixed network broadband accounts. Ericsson does expect fixed wireless share of fixed network connections to reach about 10 percent by 2026. 

Still, that is a relatively small portion of total connections. The real importance might well come in some highly-competitive, large and saturated markets where home broadband is nearly a zero-sum game. In such markets, one supplier’s gain is balanced by another supplier’s loss. 

And in such markets, a small shift of market share represents significant incremental revenue. In the U.S. market, market share shifts as small as two percent represent $4 billion in annual revenue. 

New lines of business worth $1 billion annually are a reasonable test of feasibility for many larger tier-one service providers. Any new proposed line of business generating less than $1 billion in annual revenue is too small to bother with. So fixed wireless easily passes the test of value. 

“At the margin” is where fixed wireless will be hugely important. That will often be the case in large, saturated markets where shifting just a few points of market share represents significant revenue upside.

5G Adoption Will Follow the Typical Enterprise Pattern

New entrants into existing markets often face a “trust” issue. Buyers cannot be sure the new provider will deliver value at least as much value as the existing providers without disrupting existing processes. 

New technologies or services often face a similar problem: as attractive the benefits are touted to be, enterprises do not fully trust the promises and want protection from unexpected problems. 

There are established value propositions that enterprises will accept--and which suppliers can offer--to gain trust. 

A time-tested value proposition is “keep your existing suppliers, but add us as a backup.” The incremental value then is resiliency without disruption of current processes. That is the strategy pursued by non-dominant connectivity providers in local access or business bandwidth markets, for example. 

The same approach--”use us as a backup”--also works for alternate networking platforms. MCI used point-to-point microwave in that manner. Cable companies used the approach when pitching cable modem service to business customers. 

Metro fiber specialists offered a diverse building entrance and route. 

That is likely to play out in some 5G areas as well. Whether firms are relative slow adopters or fast adopters, the drivers for 5G are likely to center on support for remote work and higher bandwidth, IDC reports, after surveying some 600 information technology executives about 5G. 

The expected adoption cases follow the augmentation pattern. Improved latency performance, a prime 5G attribute, is not expected by information technology executives to drive early deployment. Instead, current issues such as support for remote work are listed as the key drivers. 

source: IDC 

Longer term, that should change, as executives expect 5G to be more important for sensor operations and mission-critical surveillance and control. 

source: IDC 

The point is, all hype aside, 5G is likely to be deployed as have other new technologies and tools: incrementally at first, to support use cases that do not disrupt present operations. Buyers will not rip out what they have to replace with 5G; instead they will augment. 

Over time, as comfort levels grow, replacement becomes a viable choice.

Migration to 5G Core Network Likely Will be Phased, Involve More New Vendors

Many mobile operators plan to migrate their core networks over time to a full stand-alone 5G core network, relying on 4G evolved packet core for a time, says Rethink Research. That approach allows for a more-graceful capital investment strategy that supports early requirements at lower cost. 

The transition to a full stand-alone 5G core then happens later, allowing more time for use cases to develop that require a stand-alone 5G core and its features. 

The other big change is a migration to cloud-native and virtualized 5G core networks. Mobile operators have a few choices to make, in that regard. Service providers can build their own cloud-based network or source it from a hyperscaler. Essentially outsourcing the core network command and control function might have been anathema in the past, but seems increasingly a reasonable choice. 

Beyond the “build versus buy” decision, mobile operators also have to decide whether the 5G cloud core network is designed to support network operations only, or whether the telco cloud also should include support for customer applications as well. 

Perhaps one reason more operators are choosing a hyperscaler-supplied core is that doing so also allows support of enterprise customer applications. 

source: Rethink Research 

As always is the case, upgrade strategies tend to favor infrastructure provided by existing suppliers. The switch to a brand-new stand-alone core network opens the door to different vendor choices. That arguably is easier than ever in the case of the 5G virtualized core, which, by definition, allows easier support for multiple vendors. 

Network functions then can be sourced at the application layer rather than necessarily being bundled with physical infrastructure. 

Continuing Education for Telecom Professionals

The next edition of the PTC Academy  online training courses--providing accredited continuing education recognition--will be held 7-29 September 2021, 09:00-10:30 SGT (UTC+08:00). 

You can register here. 

The course is delivered in 10 distinct modules over a three-week period by a team of leading industry executives. 

These modules will prepare you and your team for advancement with key insights into business challenges and opportunities in the ICT industry.

Students earn continuing education credit issued by the International Accreditors for Continuing Education and Training organization that are internationally accepted and can be used to satisfy a variety of professional requirements across a range of industries.

Course content is presented in 90-minute segments, featuring:

Introduction to Telecom: Key Trends and Changes in Business Models

Provides an overview of the global telecom industry business drivers with special emphasis on key business challenges faced by C-level executives.

5G and Beyond

A closer look at mobile and wireless segments of the industry as they relate to fixed networks and overall business models.

Pipes to Platforms: Cloud and Data Centers

Examines the role and importance of cloud computing and data centers in relationship to the connectivity business.

Your Career, Your Ladder

Explains how your skills, tasks, and knowledge will change as you move up the ladder to the C-Suite.

Doing Well While Doing Good

Examines C-level challenges of balancing the interests of many stakeholders: owners, managers, employees, customers, partners, and society.

How Would You Do It?

A workshop allowing participants to grapple with C-level issues of revenue, competition, customer demand changes, cost, innovation challenges, and social responsibilities.

OTTs: Opportunities and Threats to Telcos – Taking Advantage of Both

Over-the-top apps and services sometimes compete with, but can complement, connectivity provider strategies. What are the key challenges and opportunities?

What Really Impacts Your Mobile Gameplay or Streaming Video Experience?

A closer look at the critical elements affecting network latency and a discussion of how to reduce latency to deliver a better user experience.

Convergence

Provides a broader view of how digital natives are operating, the convergence of sectors and data models, and how this may impact telecom operators over the coming years.

Digital Transformation: How Data Centers, Networks, and Clouds Are Changing IT

A closer look at how data centers, networks, and clouds are changing the IT landscape, and how these companies come together to form the backbone of today’s digital economy.

PTC Academy is designed especially for:

• Professionals with five to 10 years’ experience in one or more functional areas at communications service provider firms, data center or collocation firms, infrastructure supplier firms, application providers, device suppliers, construction or maintenance firms, regulatory bodies, industry-related consulting firms, or other firms allied to the field

• Anyone who has not yet had general responsibilities for profit and loss at their firms

• Experts in their own fields interested in learning about key business factors in related industry segments

• Anyone who wants to learn more about the industry’s history and how business strategies have changed

Course prerequisites include:

• Basic computer skills

• English language fluency suggested

• High-speed Internet-connected computer

• Desire to learn about key C-level management challenges and perspectives

U.S. 5G Mid-Band Spectrum Required Both Sharing and Reallocation

All engineering and communications network design involves trade offs. That can be seen clearly in the properties and value of 5G spectrum of various types. Low-band is best for coverage, indoors and outside, but does not supply capacity so sell. 

Mid-band provides a balance of coverage and capacity. High-band (millimeter wave) is best for capacity, but at the expense of coverage. To the extent that T-Mobile expects to increase capacity of its U.S. network by as much as 14 times over the next few years, primarily by deploying new mid-band spectrum. 

source: Ericsson

Low-band 5G spectrum comes from a mix of refarmed spectrum from early mobile generations (1G, 2G) and previously unused bands. 

Mid-band spectrum covers the 1-GHz to 6-GHz bands. Millimeter runs between 30 GHz and 300 GHz, though capacity in the 24-GHz range is classified as “millimeter” capacity for purposes of mobile communications. 

The mid-band is of primary importance for 5G globally because it offers a balance of capacity increases and coverage not so different from low-band spectrum. That helps the business case as use of mid-band spectrum obviates the need for many small cells. 

U.S. mobile operators and regulators have had to work around the fact that much of the 5G mid-band spectrum already was allocated to other users. So spectrum sharing and reallocation of the C-band formerly used by satellite service providers have been key mechanisms for making mid-band spectrum available. 

Though the 3.55-GHz to 3.7-GHz Citizens Broadband Radio Service (CBRS) added 80 MHz of shared and 70 MHz of licensed spectrum for mobile use, th

Ericsson: 1 Million New 5G Subscriptions Every Day

Ericsson predicts that 5G mobile subscriptions will exceed 580 million by the end of 2021, driven by an estimated one million new 5G subscriptions every day. Europe is off to a slower start and has continued to fall far behind China, the U.S., Korea, Japan and the Gulf Cooperation Council (GCC) markets in the pace of 5G deployments, Ericsson says. 

source: Ericsson

A question some have had about 5G take rates is whether 5G would be adopted slower than 4G, at about the same rate, or faster than 4G. Ericsson has argued for faster adoption. 

Assuming 8.8 billion human device mobile subscriptions by 2026, it will take about 3.3 years for global adoption to hit 10 percent take rates, were 5G to launch everywhere, simultaneously. That has not happened, so it is hard to predict when the 10-percent point actually will be reached.

That is a key metric, as popular consumer electronics products hit a growth inflection point at 10-percent take rates. At this point, the clock has not yet started in most countries, so we could well see a 10-percent global adoption rate in perhaps five years. 

 

source: Ericsson

Ericsson predicts varying take 5G rates in different regions by 2026:

• Latin America, 34 percent

• India, 26 percent

• Southeast Asia and Oceania, 36 percent

• Central and Eastern Europe, 38 percent

• Northeast Asia, 65 percent

• Western Europe, 69 percent

• North America, 84 percent