Rumbles from La Rambla
If you are even remotely associated with the telecom and tech industries, you will know that this is the week of Mobile World Congress (MWC). No time for gazing at Sagrada Familia or long strolls on La Rambla—all attention in Barcelona will be on the latest developments in telecom, with keynotes from some of the biggest names in the industry, plenty of new smartphone launches and perhaps even the opportunity to test the odd smart car or two.
What makes the 2015 event particularly notable is that this is the year that fifth generation (5G) wireless network technology will really gather momentum. Both the Next Generation Mobile Network alliance and the European Commission are revealing the details of their respective 5G white papers, and major equipment manufacturers such as Ericsson, Huawei, Alcatel-Lucent and ZTE will all be discussing and demonstrating the results of their early forays into 5G. While the first commercial 5G networks are only anticipated to launch shortly before the 2020 Olympic Games in Tokyo, the next five years will undoubtedly witness a growing frenzy of development and standardization, and that frenzy is kicking off now.
Why the New G?
For many of us, it feels like we only just switched over to 4G, so why the big rush for the next generation? To understand, we need to take a look back. Wireless networks have tended to evolve on a 10-year cycle (see table below), dating back to the earliest days of commercial cellular networks in the 1980s (first generation, or 1G) through to the 4G networks that started appearing at the start of this decade.
Each generation has represented a radical shift in cellular technology from the preceding generation, whether it was the move from analog to digital, or from voice to data. In general, the first five years of each generation are focused on the rollout of the existing technology, and the subsequent five years are spent preparing for the next generation. And the preparation is significant—not just for the R&D and advancement of the radio technology itself, but also for gaining consensus on standards from the hundreds of manufacturers, governments and industry bodies. Let’s not forget that it was only with the recent launch of 4G LTE that we gained a truly unified global standard. Ensuring that unification remains in place will be critical to the success of future network generations.
This all means that in 2015, we are right at that mid-point in our current generation, with 4G having rapidly become a mature standard, and the preparation for 5G now poised to really heat up.
So What Does 5G Mean to Me?
The move to 4G was all about speed and specifically achieving a 50-fold increase over 3G, enabling the rich user experiences that we currently enjoy from the apps and digital media on our smartphones. But the upgrade to 5G will be more expansive, encompassing the following core principles in its design:
IoT-optimized: 5G will need to go beyond the current wireless networks that are designed for telephony devices and cater for the Internet of Things (IoT)—the exploding number of sensors that are built into appliances, security systems, health monitors, door locks, cars and wearables will all need to access a secure, reliable wireless network to transmit data. The number of IoT devices is predicted to double to over 50 billion by 2020, so the need is immediate and great.
Self-Awareness: The IoT demand has subsequently created the need for service-aware networks. Indeed, 5G is quickly becoming known as the ‘Tactile Internet,’ creating networks that are smart enough to understand the situation and context around each and every connected device. For example, a 5G network will understand when a person is streaming video and provide a higher connection speed; or recognize that a device is running low on power and reduce the number of radio pings to conserve energy. In fact, 5G networks will have the ability to leave out the human altogether: Connected cars will be provided with a much lower latency, so a car will take less than a millisecond to tell another behind it that it has begun emergency braking.
As a result, you can expect your 5G network to deliver plenty of very tangible benefits:
- As notable as the 4G speeds currently are, you can still expect to see a further 100X increase from 100 Mbps to 10 Gbps.
- Reduced latency from the current 15-25 milliseconds to less than one millisecond, especially important for IoT sensors.
- Significantly improved coverage, with particular emphasis on deep in-building and more universal rural coverage.
- Optimizing spectrum usage, catering for a 30X increase in device density per node.
- A 1000X reduction in power consumption of devices (although how this will be achieved remains unclear).
What Does the Market Think?
The explosion of IoT devices and the consequent spike in data will ensure more than enough demand for 5G, guaranteeing its rapid development and roll-out a few years from now. Less certain is consumer demand. Some argue that the existing 4G experience is quite sufficient to meet the needs of all but a handful of heavy users, and that will likely stall consumer adoption and handset development, especially if 5G is offered at a premium. Others maintain that just as we couldn’t have predicted the advent and adoption of smartphones when 3G first arrived, so too is it impossible to imagine our wireless need state five to seven years from now, and that likely another wave of innovation at the device, software and/or experience level will spur on consumer adoption just like it always has before.
We thought it would be interesting to test the market, so we fielded a few 5G-related questions with a US consumer audience, which produced some interesting findings:
Anticipated Demand for 5G
We asked consumers how they felt about upgrading their existing service to 5G, and the results show a clear divide in perceptions. While nearly 20% of the sample expressed an immediate demand for 5G, indicating a strong group of early adopters, more than half expressed no interest in 5G at all. Clearly current demand is low amongst the majority, likely because 4G currently meets most, if not all of the existing consumer needs. Over the next few years, telecom operators and device manufacturers are going to have to ramp up their communication of 5G benefits to win over the reluctant majority, and that is going to require a well-crafted message regarding the incremental value of 5G.
5G Feature Wish List
If you’re wondering what that incremental value might be, we asked about that as well. Consumers only selected faster data speeds in second place, with more than a quarter instead choosing improved smartphone battery life as their top preferred feature. While much has been written about the demands that mobile broadband places on modern phone batteries, clearly the expectation of 5G is that the network itself will go some way to resolving these issues. Interestingly, over a third still feel that network coverage (nationwide and indoor reception) is an issue that remains unresolved.
We also asked consumers about their brand perceptions, specifically what brands they thought would lead the way with the 5G wireless experience. Choosing from a list at random, over half selected either Google or Apple as their anticipated leaders in this space. This is particularly interesting, as previous network generation changes have been lead with gusto by the wireless carriers (think back to all that Verizon and AT&T advertising with the launch of 3G and 4G/LTE), but with the next generation, there appears to be the expectation that the experience will be led by the manufacturers of the devices and software. This certainly aligns with our recent Brand Love research, which consistently shows that consumers look to tech providers over the telecom carriers for innovative solutions.
While it’s still early days for 5G, the global wireless industry can certainly expect innovation and disruption in equal measure before the Olympic flame is lit in Tokyo. And as much as we might think that we understand the wireless consumer and their motivations, we can be assured that this understanding is not static. So if, like us, you’re ramping up your forward-looking technology industry research and readying for the next generation of telecom, I invite you to contact Market Strategies. Email me or comment on this post, and let’s get prepared for 5G and beyond.