If the most popular metaphor for 5G is a race, then the industry is “just off the starting block,” according to analysis from PwC. There’s a marathon ahead, with some particularly tricky hurdles to navigate both in terms of deploying the technology and making it profitable — even if the hype cycle is “ramped up to near full speed.”
How long might it take before 5G makes a daily impact on people’s lives, has a true nationwide footprint and dominates equipment and device shipments? Eight to 10 years, according to Mark McCaffrey, PwC’s US Technology, Media and Telecommunications lead.
PwC recently released its 5G Index, which assesses the state of 5G deployment. It found that as of July 1, 2019, less than 1% of the U.S. population had 5G coverage, and less than 0.5% of mobile devices in use can actually use 5G networks — although those figures are changing rapidly, with new cities being turned up and new devices being added. PwC expects that by January 1 of 2020, 5G coverage will 10% of the U.S. population and 2% of devices in use will have 5G capabilities.
Still, 5G is “just off the starting block,” PwC said, adding that “the road ahead is a very long one and in many ways more complex than it was for prior mobile generations.”
While McCaffrey agrees that 5G is a gamechanger, particularly when it comes to Industry 4.0 and massive IoT, he thinks that making it all real (and profitable) is “further out than a lot of people would suggest, these days.” PwC’s 5G Index cited numbers from SNS Telecom and IT that 5G small cell shipments, for instance, won’t exceed LTE shipments until around 2030, despite the fact that 5G is expected to be more small-cell-intensive than LTE.
Right now, he said, carriers are concerned with immediate issues of assembling 5G spectrum assets and figuring out how to deploy the technology, and which vendors’ equipment to use — especially in light of the ongoing controversies surrounding Chinese equipment vendors and security concerns.
As carriers begin to put down billions of dollars buying 5G spectrum and building it out, how they will recover those costs “is still something people are trying to evaluate, because the real value will be in a longer term play,” McCaffrey said. Autonomous cars and robotics are certainly part of the long-term vision for the role and the value of 5G, he pointed out, but companies who invest in them are probably not going to see immediate return on investment.
Faster gaming, faster video streaming or downloads are value propositions that may pay off in the short-term. But at some point, those are also very price-sensitive, he added. Consumers aren’t going to pay unlimited amounts for faster video downloads or gaming — they may pay more, but right now it’s unclear exactly how much.
PwC’s 5G Index concluded that “the use cases are far from real and wireless operators have work to do to make 5G pay. Industry collaboration among value chain players is uncomfortable for many and presents yet another impediment to innovation.”
“I think you’re talking eight years, even 10 years before you see the full impact of 5G across the entire U.S.,” McCaffrey said.
McCaffrey also noted that with previous technology generations, mainstream adoption started among consumers and as people saw what the networks and devices were capable of, they spread within enterprise — the use of tablets, for instance. Companies will be trying to figure out if the same model will play out in 5G, McCaffrey said, and carriers may push forward with investments in emerging spaces in order to gain early market share before the market itself is fully realized. Drones, which can be used by either consumers or by enterprise or government users, are one such space, he said.
But despite the excitement around 5G’s potential, it will take years for the networks, their capabilities and their economics to be fully realized.
“When you start to see the economic impact of it, that probably will be a much longer road, until you get to thinks like virtual reality and autonomous cars,” McCaffrey said. That might not be until 2030, he added, because it will take that long for a consistently available and reliable network to be built out on a nationwide basis which can impact people’s daily lives.
“Those really are going to take a lot of time to build out with all the technology that needs to be in place,” he said.
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