Telcos to make 30-35% of revenues from 5G only over a period of five to six years
Posted by Naushad K. Cherrayil on 14th August 2019
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This post was originally posted on TECHRADAR TECH NEWS

For telecom operators to make revenues from day one of 5G investment is not practically realistic despite numerous arguments within the industry pointing to the notion that benefits of 5G could outweigh the costs by nearly 3:1.

Bocar A. Ba, chief executive offer at Samena Telecommunications Council, told TechRadar Middle East, that deployment of 5G is an investment-intensive undertaking due to the new spectrum fees and needs and an altogether new infrastructure spend.

According to World Economic Forum, 5G will drive Industry 4.0 in the Middle East and Africa to merge operational, information and communication technologies with cyber-physical systems, enabled by advanced wireless communication and Industrial Internet of Things (IoT) services.

This digital and wireless transformation will be powered by 5G networks, which will have the potential to drive economic growth in the region like no previous generation of mobile technologies.

Moreover, he said the current spectrum availability, benchmarking, cross-border interference, device availability and spectrum roadmaps for future availability are areas that are still under consensus-building and harmonisation focus.

 “Absolute costs are substantial, especially with the valid assumption that 5G deployment is for a wide-area network with access to higher bands for capacity, and lower bands (such as 700MHz) for coverage.

“It would cost much less to deploy localised hotspots of 5G, but this might not deliver the social and economic objectives set forth by authorities in the GCC region. Given the current financial climate, every effort should be made to reduce uncertainty in the investment, wherever possible. Large payments or fees for spectrum could also impact on the business case,” he said.

Success dependents on operators and partners

According to an analysis by Samena, revenue increase by up to 30% from day one is not realistic and it would take a couple of years for 5G device numbers to grow to a significant number. “A more realistic model would perhaps have up to be between 30-35% over five to six years,” he said.

So, he said the success of 5G is, therefore, going to be dependent on operators and their wholesale partners developing new markets that look beyond traditional consumers of mobile services.

Mobile operators in the region are preparing for 5G primarily driven by national ICT visions.

In the larger interest of the digital economy, he said that investing in 5G will open opportunities to capture values from new use-cases and widespread adoption of the Internet of Things (IoT).

At the same time, he said they are keenly aware that they’ll have to increase their infrastructure investments in this technology.

In 2018, around 13 commercial 5G networks were launched, including both mobile and fixed wireless deployments worldwide.

As the race to 5G continues, these numbers are expected to triple by the end of 2019.

Multiple network parameters

At a broader level, Ba said the use cases of 5G can be grouped into three categories – enhanced mobile broadband, IoT and mission-critical applications. 

“The success of these use cases is dependent on the performance of multiple network parameters including spectrum, radio access network (RAN) infrastructure, transmission and core networks,” he said.

The deployment of 5G is expected in a time frame of three years from 2019 to 2022, as compared to 4G and 3G which took around six years and nine years, respectively.

He said that telecom operators in the UAE can earn billions from digitisation with 5G.

In the UAE, for example, he said that Etisalat has established Etisalat Digital, a unit dedicated to driving digital transformation “by enabling enterprises and governments to become smarter”.

According to Etisalat, he said the unit has become a major contributor to incremental revenue growth of its UAE operations and will be extended across the operator’s wider footprint.

New mobile bands

According to industry experts, 5G coverage is forecast to reach 45% of the world’s population by the end of 2024. This could surge to 65%, as spectrum sharing technology enables 5G deployments on LTE frequency bands.

Service providers in some markets are also setting more ambitious targets for population coverage of up to 90% within the first year.

He said the uptake of 5G subscriptions is expected to be fastest in North America, with 63% of anticipated mobile subscriptions in the region being for 5G in 2024. North-East Asia follows in second place (47%) and Europe in third (40%).

However, he said the key focus is on new mobile bands including spectrum in the 3.5 GHz range (i.e., 3.3-3.8 GHz) that has been assigned in numerous countries.

“Several countries plan to use spectrum in the 4.5-5GHz range for 5G, including China and Japan, and a growing number of countries are considering the 3.8-4.2GHz range. The fastest 5G speeds will also need millimetre wave bands (24–28GHz) and 39GHz in the US. A sufficient amount of harmonized 5G spectrum in these bands is vital to enable the fastest 5G speeds, low-cost devices, international roaming and to minimize cross border interference,” he said. 

Governments and regulators hold the key to realising the full potential of 5G when they agree new mobile bands above 24GHz at the upcoming WRC-19 Conference in Egypt in October, he said.