(L’italiano è qui) 5G and foldable devices took center stage at MWC in Barcelona, the must-attend event for the leaders of what a century ago, or so it seems, was “the mobile industry”. Like in several other industries, artificial intelligence (AI) is now organic to networks . Like it or not, we have entered the era of “intelligent” hyper-connectivity in which networks are self-managing as to capacity, speed and criticality according to demand and type of demand.
The world of production was just beginning to capitalize on Big Data and to plan for the Internet of things (IoT), when it finds itself needing to rethink how it will produce over the next couple decades. The industry goes now “beyond connectivity”, says Mats Granryd, director of the GSMA. The facts support the statement. Traditional voice, SMS and similar services will soon account only for 5% of operators‘ revenues. Mobile data traffic, on the other hand, is forecasted to grow by 46% by 2022, prevalently due to business’ demand and only partly to consumer demand (streaming and the like).
Telcos reflect the tectonic shift: in the US they have been buying content producers; others are expanding towards industrial private networks (industrial areas, ports, mining areas); in Africa they follow several models—take 5G in Dubai in 2020 (I’ll write about shortly) or the nations where 2G or 3G “still” serve millions of unbanked, who gain access to financial services only through their mobile phones; in Japan, with an original combination of technologies an operator overturned the traditional telco business and tech model (coming soon too); and you name it.
MWC also reflects the different pace at which regions in the world move forward, and how governments and the progress of the private sector often have a hard time synchronizing. 5G networks are a good case in point. Several countries and MNOs (Mobile network operators) now claim the title of being first in lunching a 5G commercial network. The following list may appear wordy, but it just aims at mirroring reality: a number of 5G networks are already on because the standards (Release 15) are set, and it is only, so to speak, a question of upgrading and integrating infrastructures and gradually turning thee 5G networks on.
After South Korea, Finland and Qatar in 2018, several networks in the US, albeit limited, were switched on—Houston, Indianapolis, Los Angeles, Sacramento, with Atlanta, Chicago, Dallas, Kansas City, Houston, Los Angeles, New York, Phoenix and DC coming up. Whilst the FCC and other agencies have the last word on mergers between operators, in the US the market rules.
Pilot networks are being switched on in Beijing, Zhengzhou, Xiong’an, Shanghai, Suzhou, Shenzhen, Chengdu and in 25 other Chinese cities. In China, the government dictates the economic strategies.
Korean KT’s 5G networks covers Seoul, hotspots in other populated cities and the Dok Islands. I asked Sean Cho, head of the Network Technology Support Department of KT, about the challenges in rolling out their 5G networks, also from a regulatory point of view. “No! We don’t have that kind of problem!” Cho said smiling brightly, “we already bought the frequencies! “
In the UK, partial networks are coming up in 16 cities with others switching on in the second half of the year. What about the EU?
“I have a favorite webpage these days,” Jane Rygaard, head of Marketing Advanced Mobile Networks at Nokia, said showing me the website of the European Observatory for 5G. It shows the percentage of the spectrum assigned to 5G that will be available by the end of 2020 when, according to the EU 5G Action Plan, all Member States will have deployed next generation networks. The average percentage of the frequencies released in the three bands is 8.5%, with a maximum of 11.5% in the mid bands.
“Before we discuss technology or anything else, we need spectrum. Here you can see how far the Member States are in even releasing the frequencies, not even planning auctions. When people ask me what we need to do in Europe to speed up, I say we need to fix this. There are lucky countries. Finland is one: full spectrum available, networks up and running. In Germany we see auctions being planned.” Italy is another one where auctions were completed—besides the detail that Italian operators paid per megahertz of spectrum ten times more than the Finnish ones.
Connectivity has become a commodity, while the bulk of the growth of the internet business has gone to the big platforms, Google, Facebook, Amazon. On the one hand, in no other industry demand is growing in such a strong pace, on the other, telecom companies “have become a deflationary activity,” Telefonica CEO José Maria Alvarez Palette said. Stagnation of mobile revenue earnings growth is sliding towards 1%. “This is a major concern for operators”, Singapore Singtel CEO, Chua Sock Koong, said, now that they are investing billions in spectrum to enable the huge data growth.
According to data posted by Roberto Viola, Director for Digital Connectivity of the Commission, Europe will invest an average of $68-113 billion per annum over the next five years. Viola cites Deutsche Telekom, which plans to invest yearly $5.6 billion. In its annual report, Italian Tim set its CAPEX goal at $3.4 billion per year. Reckoning that the non-virtual operators in Europe are over 35, getting to an excess of $110 billion of investments for 5G appears easy.
US operators will invest around $33 billion per year; Japan $17 billion (GSMA data).
If the numbers don’t lie, then Europe is investing substantial money, even quite more than the other regions and countries. However, it is getting little in exchange. Not a commercial or industrial network is in sight in 2019.
The problem cannot lie in the quality of its research—together with Huawei, the two major global producers of research, hardware and software for 5G networks are European Ericsson and Nokia—nor in the willingness of operators, eager as they are for a return on their investment in spectrum.
Europe has done a lot for consumers by imposing four operators per country (even if “there is no magic number“, Vestager) to guarantee competition. With happy travelers and consumers, and despite a rich soup of operators, European nations risk now missing the first train towards a technology that leads naturally to the digitalization and modernization of businesses and verticals—that other regions are already achieving. Hands up whoever thinks Europe can afford it.