5G — Here’s where the fuss should be

5G is going to make a huge impact on the world as we know it. From enabling new technologies and infrastructure changes to new Value Propositions. Here’s the first of a 5-part series on the broad business aspects of 5G.

Synopsis

There is more to 5G than meets the eye. Companies will soon need to make decisions on how to approach this impending market reality and find areas where they can seek new value propositions. Data communication speeds will move up to 20–50 Gbps versus today's 1 Gbps and 1-millisecond delay compared to the current 70-millisecond delay. 5G transcends physical boundaries and gives millions access to data speeds that were previously inaccessible. The move from wired to wireless outdoors will enable anyone to communicate at speeds which are available only to large corporations.

When data becomes a commodity, how does the economic model around it change? Which new business models are enabled and which one must be abandoned?

In this blog, we start the conversation and focus on infrastructure changes and impacts on hardware companies. This 5G series will further develop and cover multiple verticals starting with self-driving cars (which will no longer be needed), followed by AI and ML, and finally privacy and security challenges in this new world.

Reinventing Infrastructure

For 5G to become a reality, new costly infrastructure is necessary as today’s connections cannot handle the bandwidth of 5G. The Strategy Analytics Advanced Semiconductor Applications service report estimates the number of new base station sectors will double between 2018 and 2024 with 5G operators targeting 2020–2021 to begin rolling out their services. They are forecasting sector segments will experience a compound annual growth rate greater than 100%.

The sheer number of 5G base stations and their unprecedented impact on backhaul infrastructure is one aspect when considering 5G. Fiber or faster transmission technology is essential to meet the capacity and latency requirements of 5G and means replacing the existing infrastructure: cables, radio interfaces, antennas, switches, routers, gateways, relays… you name it, it needs upgrading.

Once created and operating, the theoretical range for 5G base stations is about 250–300 meters, while a 2/3/4G base station has a theoretical range between 50,000–150,000 meters. This means the number of base stations required to cover the same area is a factor of 200x to 600x for 5G base stations to cover the same area. By estimating the performance per 5G base station there needs to be a multiplier of at least 20x faster. This number is very large, yet telecom theory allows the assumption that only a small percentage of the backhaul is active at any given time. Using this model we can estimate a multiplier of a 1000x capacity increase in the transition from 4G to 5G. To support a 5G system with the same number of subscribers, the backhaul bandwidth must increase by a factor of 1000x. Furthermore, some applications will require diverse Quality of Service (QoS) that will drive for higher network and backhaul demands in certain areas. Some topological and physical issues related to the radio spectrum used in 5G will further exacerbate this issue. With the debut of 5G on the horizon, architects, engineers, cable providers, telecommunicators, and app developers need to think beyond their current value propositions and fast.

Further, new traffic models will dictate conceptual changes and force migrations of existing systems to a new paradigm. Some or all of the large network switching manufacturing giants will experience huge pressure to reduce costs and increase network efficiencies and capabilities. Network automation can no longer be nice to have, it becomes essential. The existing network management system will not be able to scale and new technologies and applications are required. Additionally, the high availability of 5G will be another point of contention between the existing switching manufacturer and cellular network operators.

In the end, 5G creates an opportunity for fiber players such as Nokia, Huawei, Ciena, ECI Telecom, Coriant, Infinera, Fujitsu, Cisco, Aspire Technology, ExterNetworks, Accedian, ADVA Optical to change the game by introducing new and compelling value proposition(s) to make it simpler for 5G operators to install, deliver, and maintain value to clients. The challenge in the coming years will be in reassessing and identifying new value proposition(s) to be proactive with 5G, as well as maintaining their place in the market against competitors.

The Flight Towards the Last Mile

When WiFi first debuted in 1997, its purpose was to replace existing residential ethernet cables by surpassing its speeds. Homes no longer needed to install cables between rooms. Cables, switches, and routers were replaced by a single unit — the WiFi router. 5G speeds can replace Interhome cabling in the same way that WiFi replaces Intrahome cabling. Existing cable providers like Comcast and AT&T need to reconsider their strategy in this regards. Each home would have the equivalent of a fiber connection for a small fraction of today’s costs delivered by the 5G cellular operator. Cable service providers already face disruptions in other areas of their market, but 5G will present them with additional challenges that could greatly influence their future.

In Conclusion

While the future of 5G doesn’t have one set path, companies can be proactive in their approach to its possibilities. 5G presents an opportunity for companies to adjust their focus towards new value propositions that will change the way consumers live, work, and play. This is a very exciting and fruitful future for companies and users. The possibilities and the variable impacts provide an excuse for creatives and strategist to envision and devise in new ways. It will be the companies who effectively create and protect those innovative value propositions that will become the next unicorns and benefit the most from what 5G has to offer.

In all, 5G is just a vehicle that empowers new opportunities for those who can see it…and the clock is ticking. A brave new world is in the making… will today’s top companies maintain top status in the marketplace or bottom out?

Note to readers: Stay tuned for my next 5G piece, the democratization of the self-driving car.


Originally published at multi-innovation.com on September 9, 2019.

Shmuel Silverman

Written by

Shmuel is an inventor with over 145 patents & provisional disclosures. CEO of Multi-Innovation™ — helps companies tap into the full potential of their business.

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