Key takeaways

  • The new 5G network will be the catalyst for enabling Industry 4.0, digitalisation, connected cities, IoT and the digital economy.
  • Telco operators have the opportunity to become smart-connectivity ecosystem service providers and rethink the way they monetise value on 5G.
  • The potential is great, given that 4.5% of the world’s GDP, as well as 29 million jobs, come directly from the mobile industry.

The technology on show at the annual Mobile World Congress keeps getting better. This year in Barcelona, besides the anticipated fanfare around new devices, we saw advances in hyperconnectivity through 5G and IoT, AI-powered virtual assistants and autonomous vehicles.

On the flashier side of things, there was a drone taxi that looked like a gadget from a Sean Connery-era Bond movie, an LTE mobile network for the moon, and, for the perennially busy, an IoT washing machine that programs itself.

Less visible, however, is the work being done behind the scenes to make networks faster and better.

5G the catalyst for the new economy:
not just a new Telco network

The almost unbelievable data speeds being promised with the 5G network were driven home by Formula 1 driver Fernando Alonso and his McLaren F1 team, who spoke about the technology used by teams in motorsport. Connectivity and data are critical to an F1 race, for not only managing race performance but enriching the viewing experience.

But while impressive, speed isn’t the main story. It’s the whole 5G network and the new business model that will sit on top of it that is the game changer.

The network will be the catalyst for enabling Industry 4.0 (aka the fourth industrial revolution), digitalisation, connected cities, IoT, the digital economy and other future buzzwords.

Network slicing (providing a ‘highway’ of network for dedicated use such as for emergency services), dynamic resource management, network optimisation and virtualisation are the technical catalysts which will enable the co-existence of mission-critical services, consumer services, IoT devices and other technology connected to the network. All have very different needs in terms of speed, bandwidth and network guarantee.

A new digital economy:
time for a new Telco?

The way in which these services can co-exist, be managed real time and be optimised for the best customer experience is truly remarkable. This is the opportunity for telco operators to really step up from the ‘dumb pipe’ paradigm to the smart-connectivity ecosystem service provider and rethink the way they monetise the value on the 5G network. And at significantly lower operating costs. But are telcos ready to seize the opportunity? Are they ready to be seen as critical to the digital economy? Will they just connect services or will they provide them?

While there is an ecosystem being built, the economics of the industry still resemble old-world telco: large capex requirements and revenues limited to connectivity. This will ultimately prove unsustainable: an estimated half a trillion US dollars of network capital investment is required globally over the next two years. The payback will need to come from new revenue streams coming from these new IoT connected services.

The social and economic value being created by the mobile industry is unquestionable, with 4.5% of the world’s GDP coming directly from the mobile industry, as well as 29 million jobs.

So the fundamentals are strong from a GDP perspective and there are many examples of mobile connectivity changing people’s lives: giving otherwise disadvantaged people access to health services, banking and education. There’s lots to win, but also plenty to lose. As ever, balance is key.

Our sense is that practicalities, standards and priorities will influence the pace at which 5G rolls out as well as the desires by which the telcos will chose to adopt some of this new functionality.

We also hope that those practicalities don’t create a reason not to push the boundaries on new business opportunities. Which path will the telco take? We’ve thought about two paths – the tale of Two Telcos.


Matthew Benwell

Matt is a consulting partner who leads the Enterprise Agility practice and co-leads the Technology Advisory practice at PwC Australia.

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Mohammad Chowdhury

Mohammad is a partner at PwC and the lead for the telecommunications, media and technology industries across ASEANZ.

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