What’s the market for 5G?…follow the money

What’s the market for 5G?…follow the money

(Note: This was published in 2014. It is retained for historic interest as, at the conference at which it was presented, it was considered to have been the least visionary of the 5G forecasts presented but turned out to have been the most accurate)

People may have forgotten the film “All the President’s Men” starring Dustin Hoffman and Robert Redgrave but everyone knows the expression coined in that film…that if you want to find the answer “follow the money”. The answer we want to know today, as we set our research objectives for 5G, is what the market drivers are going to be for 5G. We need to finish with a globally harmonised technology that mobile network operators (who comprise “the market” for 5G networks) will want to buy.

Had we “followed the money” 10 years ago we would have seen two main trails of money leaving the wallets of consumers and going directly to the mobile network operators. The first paid for access to the networks. The second much larger flow paid for the services consumed. These were the telephone calls made and text messages sent. All the money received then paid for the spectrum, networks and handset subsidies. It was a very profitable eco system. Then along came the smartphone revolution. Its impact on the flows of money in the mobile value chain has been huge and far reaching.  The mobile network operators still receive a flow of money from consumers to pay for access to their networks. The revenues from old services is declining in the case of SMS and (at best) flat for telephone calls as intense competition forces mobile operators to give more and more minutes away. The game changer is what is happening to the revenues from all the new services consumers are discovering on the Internet through their smartphones. All of this money is flowing directly onto the Internet and none of it flowing back to the mobile operators to contribute to the cost of increasing network capacity.

What “following the money” has allowed us to discover is that none of the new services on the Internet that a 5G network may enable is likely to finish up with the mobile network operators. In fact new services on the Internet are appearing every day and will continue to do so irrespective of what generation of technology a mobile operator is using. The “new” mobile services market (now the Internet) and mobile network markets have become totally decoupled. It would therefore be a mistake to focus on “new services” in setting the vision and objectives of 5G research.

If it is not “new services” then where should we be looking for our inspiration? Solving the main problem facing the customers for 5G networks is a good place to start. Today the biggest head ache for the mobile network operators (at least in Europe) is that their revenues are broadly flat (at best) yet the demand for new investment in capacity is inexorably rising. This can only be squared by one thing…a revolutionary leap forward in efficiency. The incremental cost per data byte shipped has got to be made to fall at the same rate the volume of bytes shipped is increasing.

Fortunately there are a lot of places we can be looking for efficiency gains. The last 40 years of deregulation have created a large number of silos with huge inefficiencies accumulating across the interfaces of fixed-mobile networks, networks-handsets, content distribution-networks, networks-spectrum usage and networks-regulatory framework (still of the telephone age). The way our networks allocate capacity and speeds are totally divorced from any knowledge of what users are trying to do. This offers huge scope for networks that are far more attentive to the demands of users (and applications) and to provide “always sufficient” resources rather than the current spectrum that ranges over the extremes of glut and famine. It is the core argument the IET is making in its DAN initiative and “always sufficient” is defining the Surrey University 5G IC approach to 5G.



Business Enabler


                  Cellular Reusing bandwidth from same spectrum

           2G (GSM)

                  Digital Scale economies for a mass consumer market


                  Multi-media Video etc

         4G (LTE)

                  Channel-width Broadband mobile access


                  Efficiency “Always sufficient” QoS for less investment

This allows us to arrive at a vision of our 5G networks as very high efficiency massive data translocation engines  that will be powering our digital economy and digital social space.

Note: This post is retained for historic reasons. It is based on Prof Stephen Temple’s input in the Panel discussion on 5G business enablers at the  5G@Europe Summit on 10 February 2014 in Munich. Nice to have got this one right. The 5G eMBB rolled out has primarily delivered an efficiency benefit from the use of wider radio channels.

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