Key takeaways

  • Amidst the hype, 5G technology provokes mixed responses from consumer and industry alike.
  • Businesses are slow to understand the opportunity and adopt the use cases to revolutionise experiences, services, products and whole ecosystems.
  • The current 4.9G mobile technology enables many of the hyped use cases, and this is already in our hands. Why not experiment and scale-up to benefit now?

Depending on which way you look at it, 5G will either be the key to a seamless internet experience that will let you download a movie in seconds, live in truly smart, connected cities, and safely drive autonomous vehicles… or it’s an over-hyped technology with not a lot of room to grow (yet).

What we know for certain is that 5G is the next level in connectivity, designed to make better use of the radio waves and expected to deliver up to 20 times faster mobile speeds than the current 4G network.1

What do consumers
think of 5G?

The present relationship with 5G is complicated.

The device ecosystem is evolving based on recently published standards – which means consumer uptake will be tempered. A PwC survey last year found that three out of five consumers are familiar with the name 5G, but only 30% of respondents said they would rush out to buy a new device in order to make use of the technology. We expect 5G penetration will reach its 50% sweet spot by 2025.

On top of this, 5G is expensive for mobile operators to implement. Over the last few years consumers have reaped the benefits of cheaper phone service and greater choice – creating an environment of price-based competition and greater focus on customer experience.  

This means a complicated market for telecommunications providers, who are required to build (and finance) the infrastructure. 5G promises to revolutionise the telco industry… but not yet. The early speculation about its possible future and hype is now giving way to a balanced and practical view of its potential applications over the next decade.

What will 5G
actually do?

5G is regarded as the next big leap in mobile, promising to revolutionise services, products and customer experience.

From a technology perspective, 5G will enable a larger exchange of information, longer battery life, low delay in two-way communication, and it will connect a massive number of devices. These features have created excitement for both telecommunications and non-telco players about the potential ways 5G could deliver futuristic digital use cases across different customer segments and industries.     

There are three families of use cases:

1) Enhanced mobile broadband. 5G will enable ultra-fast mobile broadband, potentially substituting for fixed broadband in some segments, as well as support augmented reality (AR) and virtual reality (VR) services. Customers should start to benefit from these use cases in mid to late 2019.

2) Ultra reliable, low latency communication. This will enable delay-sensitive communication. Transport is a great example of this application: think connected cars, mobility as a service, or the ability to track and deliver parcels remotely. For such transport logistics you would absolutely need 5G. The same goes for remote operation of equipment and robots. A large autonomous truck in a mine or a drone flying above a public space, for example, both require reliable connectivity and low latency to operate safely.

3) Massive machine-type communication. This final family of use cases focuses on fully automated, remote production control in factories, smart homes and cities where a large number of devices will be connected at the same time. These more exciting use cases are not likely to be available until 2021 or later, as the underlying standards, devices and business models develop.

PwC 5G report

The next frontier? 5G’s technology characteristics and categories of use case.

Industry perspectives on the use cases for 5G vary: some are sceptical in terms of the immediate business case, while others are more optimistic – the confusion around the expected return on investment is impacting the industry’s urgency to invest. What they share in common, however, is the view that 5G is an evolution, not a revolution. There simply isn’t a single perfect use case or ‘killer application’ just yet – but there are lots of really good, practical ideas emerging.

Do we really
need 5G?

When compared to 4G specifications – what the market currently experiences – 5G offers significant improvements. 4G technology, however, has evolved over the past decade, and a fairer comparison would be to 4.9G.

The majority of identified use cases to date, such as VR and AR, 3D video, and Industrial Internet of Things, can be achieved with 4.9G. A small number of use cases depend on a 5G network, but only a handful of these require a wider or nationwide rollout of a 5G network. That is still five to seven years away, and the business models are also yet to evolve.

Who’s going to
make money from 5G?

It’s fair to say, 5G presents a monetisation challenge.

From 2010, as the 4G network was rolled out and upgraded, mobile download speed in Australia increased 7-9 times. But average revenue per user did not, which suggests that consumers are only willing to pay for faster mobile broadband up to a point.   

This means that consumer revenue from 5G for telecoms operators needs to come from elsewhere. In the short term for the Australian market, this is likely to be from fixed wireless access and its potential substitution of NBN access in areas where the service levels and economics support its adoption. In the medium term, this could be monetising differentiated services and using tech features to provide a significant experience to customers with higher disposable income and willingness to pay. Experience chasers and gamers are one example: operators could charge for these services by developing add-on packs such as immersive media and gaming experiences, similar to international calling and roaming add-on packs today.

In terms of enterprise, 5G is showing the greatest long-term promise in enabling organisations to capitalise on Industry 4.0 and ‘connected life’ trends. The rate of productivity, in Australia at least, is declining across every sector. 5G has significant potential to help address that. When we looked at industries, there are five that stand the most to gain: construction, mining, healthcare, agriculture and manufacturing. Across these industries, which represent a quarter of Australia’s GDP, 5G is clearly one of the technologies that will drive the Internet of Things to the next level. What’s required of these industries is to experiment with different use cases and be more bullish about adopting the technology.

Experimenting also comes down to the telecommunications providers themselves, who are currently focused on their role as an ‘enabler’ – offering hardware and connectivity – but this only represents 10-15% of the total opportunity.

The real value lies in engaging and enhancing – that is, delivering services and becoming involved in sales, customer management and analytics. For example, delivering an API-enabled platform with analytics capability that allows health device manufacturers to provide value-added services to their customers.

Who will reap
the rewards of 5G?

To recognise 5G’s monetisation opportunities, organisations should think about its impact on experience, services, products and whole ecosystems. They should seize the opportunity to revolutionise experiences and open up new avenues for differentiation through ‘futuristic’ digital use cases.

Winners will be those that are proactive and develop a holistic approach to:

  • Product and pricing, backed up by use cases.
  • Identifying and prototyping end-user experiences.
  • Mapping out new business models and leveraging the 5G ecosystem to deliver it.
Digital 5G report

Give it a go: How to make the potential opportunities of 5G come to life.

Partnerships will be an important element of building a 5G ecosystem and deployment models will vary, depending on the use cases. For example, 80% of the cost of a network for autonomous cars will be in the sensors in the road, rather than the vehicles themselves. In this case, governments will need to consider who is best placed to own and manage such a network, and what regulatory framework will be required.

While the future of 5G technology is uncertain, it provides an immense opportunity. Success isn’t guaranteed, so be proactive, realistic and balanced in your approach. While 5G is clearly a leap forward in the possibilities it will bring for consumers and industry, there’s a lot that organisations can do now to test use cases on 4.9G. The future is exciting, there’s no doubt about it – but why wait for 5G to arrive before we see what it can do?


Read the full report on the future of 5G capability: download To build or not to build? Making a case for 5G: Challenges for Australian mobile network operators.

 

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Chris Bartlett

Chris Bartlett is a Partner with PwC Strategy& (formerly Booz & Company) and leads Strategy&’s Technology, Media and Telecommunications (TMT) practice in Australia and New Zealand.

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Zia Bhadiar

Zia Bhadiar is a manager with PwC Strategy&. He has over a decade’s experience in service delivery, management and consulting with telecommunications clients across Asia Pacific and the Middle East.

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