As the world deals with the Covid-19 pandemic, technology, or more specifically, connectivity, is increasingly supporting many aspects of our lives at both individual and business levels. The pandemic has made us realise the importance of faster, reliable connectivity to enjoy uninterrupted life and work. And thus the discussion around the 5G rollout is gaining momentum.
5G is a platform for innovation and because of its socio-economic multiplier effect, it will serve as the critical infrastructure to usher in new possibilities for consumers and industries alike. While 5G services today mainly address consumer use cases such as enhanced mobile broadband, its network capabilities go far beyond previous generations of mobile communications given its higher capacity, reliability, security and lower latency.
The Ericsson Mobility Report, published last November, predicts that 5G networks will carry more than half of the world’s mobile data traffic in 2026. Enhanced mobile broadband will be a way for service providers to manage cost and quality in line with consumers’ desires. More than 70 per cent of consumers expect 5G to provide better performance such as faster speeds, better reliability and lower latency, according to a study by the Ericsson Consumer Lab. That will enable consumer offerings around gaming, video, augmented reality (AR) and virtual reality (VR).
There are more than 160 active 5G networks globally, with more than 800 commercially available 5G devices. The subscriber uptake is gaining a healthy momentum and we foresee that 5G will cover a quarter of the world’s population by the end of this year.
India too is well poised to launch 5G, once the spectrum is available, to cater to the mushrooming data demand and spur digitalisation. In fact, 5G is already transforming consumer experiences across the world and kickstarting the Fourth Industrial Revolution for early adopters.
So, what is 5G really, and how will it revolutionise the consumer experience and the enterprise landscape?
Game changer for consumers
India had the second-highest average monthly usage per smartphone, at around 15 gigabytes (GB), at the end of 2020. This is expected to surge to 40 GB by 2026. In the initial stages, 5G will help telecom service providers manage this ballooning consumption more efficiently. South Korea launched its first 5G network in April 2019 and today, 53 per cent of its traffic is routed through 5G networks. Their monthly average data consumption is 26.3 GB per 5G subscriber, nearly three times more than a 4G subscriber’s 9 GB average. An Ericsson study shows the cost per GB for 5G is 10 times lower than for 4G.
Indian consumers are extremely interested in 5G and, more importantly, are willing to pay more for the technology’s new capabilities, according to an Ericsson Consumer Study earlier this year. The study also revealed some specific insights on Indian customers, as follows.
At least 40 million smartphone users could upgrade to 5G within a year of the service becoming available. In fact, India has the biggest increase in consumers intending to upgrade, with 67 per cent saying they would take up 5G once it is available, a 14 percentage point jump over 2019.
They are also willing to pay 50 per cent more for 5G plans bundled with digital services, but a mere 10 per cent premium for a standalone 5G connection. But 6 in 10 potential early adopters expect pricing innovations such as data sharing between family members or across devices.
Indians with 5G-ready smartphones already spend more time on enhanced video and multiplayer mobile games. Consumers are predicted to spend 7.5-8 hours per week on XR (extended reality) apps — an umbrella term for immersive technologies such as AR and VR — by 2025.
Ericsson’s “Harnessing the 5G Consumer Potential” report shows service providers globally could generate up to $131 billion by 2030 in digital service revenue by proactively bundling and marketing 5G use cases such as enhanced video, AR, VR and cloud gaming.
Over time, there will be new and exciting innovations in the spheres of 5G for business and IoT (Internet of Things). We will likely find the most transformative use cases in critical IoT, where the technology’s speed, latency and security will be key. This will highlight 5G’s potential to transform industries and society at large, with use cases such as smart manufacturing, smart cities, self-driving cars and advanced healthcare applications, just to name a few.
Digitisation is happening across all industries and private as well as enterprise networks are examples of areas already leveraging cellular and 5G technologies. This will open up new material revenue opportunities for telecom service providers. The more progressive ones are already starting to experiment and address these opportunities using 4G, keeping in mind the opportunities that 5G will offer.
For some service providers, fixed wireless access will be a key growth opportunity to address a new market or underserved customers. Our economic study shows that the payback time for investments is less than two years when connecting underserved suburban households using existing mobile wireless networks. Fixed wireless access has begun in North America, but we see it gaining momentum in other parts of the world as well.
We foresee 5G continuing to gain strong momentum over the next few years, led by North America, where 84 per cent will have a 5G subscription by 2026. More than half of north-east Asia, the Gulf countries and western Europe and 26 per cent of India will have subscriptions by 2026.
Smart enterprises
The enterprise opportunity for 5G is a bigger potential revenue stream for telecom service providers than the consumer opportunity. This market could be worth up to $700 billion by 2030, according to Ericsson’s “5G for business: a 2030 market compass” report. For India specifically, there is a $17 billion opportunity for those in manufacturing, healthcare and public safety, energy and utilities, media and entertainment, and automotive sectors, among others.
Zooming in on the India opportunity shows 5G will help service providers achieve incremental revenue growth of 48 per cent. Many 5G applications can transform an industry. The top five most relevant ones are enhanced video services, real-time automation, monitoring and tracking, connected vehicles, as well as hazard and maintenance sensing.
In fact, there are many implementations already today around the world, in various industries. As an example from the mining sector, Sweden’s Telia will build and manage a dedicated 5G-ready mobile network for Boliden at Aitik, the world’s most efficient open-pit copper mine. Over in the UK, BT is providing wireless connectivity for Belfast Harbor, a major maritime hub in Northern Ireland.
In the manufacturing segment, Telefónica, Ericsson and Mercedes-Benz are building the world’s first 5G mobile network for automobile production at “Factory 56” in Sindelfingen, Germany. Mercedes-Benz wanted flexible, high performance, connected infrastructure to replace its traditional assembly line with automated driverless transport systems. So, it picked Ericsson’s Private Network solution, with 5G radio dots for high performance indoors.
The expected results include optimised existing production processes through data linking or product tracking on the assembly line as well as keeping sensitive production data on-premise. Another aim is to improve the end-to-end networking across the entire value-add chain, from development and design to suppliers, production and customers. “Factory 56” will be the blueprint for all future vehicle assembly facilities around the world.
The World Economic Forum (WEF) has recognised Ericsson’s 5G Smart Factory in Lewisville, Texas, as a global front-runner in the Fourth Industrial Revolution. The WEF awarded the factory with its prestigious “Global Lighthouse” designation in recognition of Ericsson’s deployment of next-generation technology, including connected robots, at the factory as well as the subsequent impact.
These included an impressive 120 per cent improvement in the output per employee and a 65 per cent drop in manual material handling at the factory when compared to a similar site without automation and 4IR enhancements. In fact, nearly all the initial training at the factory, which opened in 2019, was done with almost no face-to-face interaction and, instead, we used VR to connect with colleagues in our other smart factory 8,000 km away in Tallinn.
These and numerous existing and futuristic 5G use-cases can usher a paradigm shift across enterprises, helping them become more efficient, future-ready and sustainable. The possibilities that IoT, 4G and 5G create for enterprises will not only fast-track enterprises meeting the demands of the new world but, more importantly, contribute to the socio-economic development of India.
Given the Indian government’s focus on ‘Digital India’, I see a huge opportunity for 5G in India. 5G must be considered a critical part of national infrastructure, every bit as vital as trains and roads. With the availability of spectrum for 5G trials and Indian operators preparing to introduce the technology, I believe Ericsson has a role to play in helping Indian operators move seamlessly from 4G to 5G.
(The author is Managing Director, India Head-networks, Market Area South East Asia, Oceania and India, Ericsson)
