I will be frank – I’m not a gambler, and as a result much of the appeal of Las Vegas is lost on me. However, there are some gambles, some bets on the future, that will be on show at CES this week that frankly intrigue me.
Probably the biggest bet out there today is 5G. 5G is the catchy name for the fifth generation of wireless technology based on the 802.11ac standard. It promises far greater speed and coverage than 4G and the ability to enable pretty much any of the much hyped IoT, driverless car and smart city applications you’ve read about are predicated on it working – and working well.
For consumers, it means much faster access to the kinds of services we are becoming addicted to – 5G will let you download a full HD movie in a matter of seconds, by increasing download speeds up to 10 gigabits per second and significantly reducing latency. If you’ve ever travelled on Singapore’s MRT you’ll have no doubt about the all-encompassing demand for fast access to video content on the move.
5G also made a lot of noise at last year’s CES, but at that point we were further from real world implementation. Today we have multiple tests underway, such as those at the PyeongChang 2018 Winter Olympics and the final AT&T trial now underway in Texas. In fact, it has been suggested that rollouts will begin in earnest in 2020.
However, it isn’t quite as simple as it sounds. 5G requires a hefty investment from carriers. In 2017 Barclays estimated that covering the USA with a 5G network would cost roughly $300 billion – a view based on the idea of a revamp and installation of multiple extra mobile sites, something carriers are unlikely to want to invest in. The costs of implementing 5G are astronomical, and potentially prohibitive. Bloomberg estimated a spend of approximately $200 billion per operator in terms of the R&D investment and implementation costs.
The challenge is how carriers recoup that investment in terms of growth. The GSMA estimates that wireless carriers will only grow about 2.5% a year through 2025, just a half percentage point more than their growth in the previous five years. 5G maybe transformative in terms of the experience it delivers but looks like being less transformative in terms of the revenue opportunity. And make no mistake, we will continue to be entirely reliant on our carriers and providers to enable a world of constant and ubiquitous digital communications.
Against this backdrop we’ll see a lot more 5G chat at this year’s CES. 5G is being hailed as the secret sauce that will revamp industries and enable everything from self-managing laundry solutions to autonomous driving. Last month the Consumer Technology Association (CTA) announced a 5G Mobile Innovation keynote at this years CES, which will focus on the innovations enabled by a successful rollout of 5G including breakthroughs in healthcare, AR/VR applications for commercial and consumer use and IoT data applications. Companies from Intel to Huawei and Microsoft will all be talking about the potential to be realised in a 5G connected world. Feels to me like a lot of people are putting all their chips on 5G this year.
Sara is the Global Technology Practice Director at Hill+Knowlton Strategies.