5G starts to find traction

Here’s a question for you: what’s the most complex object ever built by humankind?

Hints: think of subassemblies, each one complex in and of itself that require fuel to operate. The subassemblies are diverse, and require significant human resources, which must be housed/fed/cared for, to maintain and operate them. All these are joined in a single structure that functions with the help of mechanical and electronic subsystems, and also maintains an extensive communications system.

The answer: an aircraft carrier.

5G will be the most complex communications system ever built by humankind. It’s accurately described as an ecosystem, but there are multiple subsystems that are an integral part of the 5G ecosystem. Telecommunications will be a major component, but it’ll be faster and will incorporate new means of transmission, like massive MIMO antennas and small-cell technology. Networks will adopt more efficient methods like SD-WAN and network slicing. And the IoT will continue to expand and encompass everything from M2M transmission to connected vehicles and public utilities.

Standards take shape

I’ve been writing about 5G for years now, and in early 2018, the ecosystem is gaining traction. The 3GPP issues regular releases that help define standards, and while we can expect some “border skirmishes” over standards, vendors realize that interconnection is essential to form the 5G ecosystem.

In February, the Winter Olympics will be held in PyeongChang, South Korea. Something will be displayed at that event which some people in officialdom will call 5G, or a precursor of 5G-we’ll find out soon enough what it is. In any case it will provide photo opportunities and will be hyped as much as possible.

The Tokyo Olympics in the summer of 2020 will also feature something officials will call “5G” but whatever it is will more closely resemble what we can expect from 5G as we close out the second decade of the twenty-first century.

The GSMA weighs in

A September report from the GSMA Intelligence Unit titled “Global Mobile Trends 2017” gives the organization’s perspective on 5G trends. “There are two broad deployment scenarios for 5G networks: standalone and non-standalone,” says the report. “Standalone would be a new-build network, including new base stations, backhaul links and core. This provides higher scale economies and avoids legacy LTE integration.”

However, some operators have significant investments in LTE and aren’t keen on scrapping them. The report highlights an alternative which will appeal to some LTE-rich environments. “A non-standalone network would piggy-back on existing infrastructure, supplemented by targeted small cell deployment in areas of high density,” it said. “This offers a quicker route to market but is difficult to do beyond cities.”

“We expect the majority to choose the non-standalone route (at least at first), but China could be a notable exception. Regardless, early 5G deployments will focus on dense city centers using small cells. National rollouts will happen at a slower pace than 4G; by 2025, about 40% of the global population will be covered by 5G.”

Asian trends

“High-income Asian markets are likely to be among the first 5G markets,” says the GSMA Intelligence Unit report. “For Korea and Japan, their Olympics in 2018 and 2020 [respectively] provide global showcases. China has a national ICT agenda with 5G an integral part.”

But the industry body cautioned against expecting too much too soon. “We anticipate 5G adoption will take longer than 4G because of slower network rollouts and uncertainties around the value proposition relative to LTE,” says the report. “Europe is a possible exception. The EU sees 5G as an opportunity to retake a leadership position in technology, and even now 4G is still relatively immature.”

5G enthusiasm

Lukasz Nowicki, a principal at research firm Delta Partners waxed bullish on APAC’s 5G prospects in an October research note. “From the moment Ericsson showcased the potential of 5G networks in a Swedish lab in 2014, operators, equipment vendors, and device manufacturers joined the chorus of 5G enthusiasts,” says Nowicki. “They praise the near-zero-latency and above 1Gbps speeds enabling the emergence of futuristic and aspirational use-cases like augmented reality, virtual reality, and low latency ultra-reliable IoT.”

“Asia is an attractive market for 5G, with the estimated number of users reaching 670 million by 2025, accounting for 60% of the global 5G market,” says Nowicki.

APAC ahead of the pack

According to Nowicki, 23 operators around the world have already conducted 5G tests, including several APAC players:

“In 2016, Singtel, along with Ericsson, successfully completed a live trial of pre-standard License Assisted Access (LAA) using 1800-MHz spectrum augmented with unlicensed 5GHz,” he says. “The test not only showed [a] throughput speed of 275Mbps, but also proved that LAA can co-exist with-or even enhance-Wi-Fi signals.”

One of the more interesting players in the 5G space is Japan’s Softbank (see sidebar: Forget Elon Musk, here comes Mayashi Son, page 6). “In 2016, SoftBank successfully completed trials using 4.5GHz and 15GHz in Tokyo,” says Nowicki. “The Japanese operator recently announced more advanced tests using 27GHz in urban areas of Japan. The first end-to-end pilot will include two 5G New Radios, virtual RAN, virtual EPC, beamforming, massive multiple input multiple output (MIMO) functionalities, and test support services.”

“South Korea plans to launch 5G technology in early 2018, during the Olympic Winter Games,” says the Delta Partners analyst. “KT, the country’s second largest mobile operator, claims it will complete the construction of a trial 5G network in certain areas of the country by September 2017, and that they achieved data transmission speeds of up to 2.3Gbps during previous tests in Seoul. Although some commentators doubt the 2018 5G introduction, Heo Won-seok, director at South Korea’s Ministry of Science, ICT and Future Planning, has already announced the government’s aim of offering autonomous buses, high resolution services and virtual reality experience during the Olympic Winter Games.”

“5G will see the evolution of technical solutions already used in 4G and 4G advanced networks-for example, further developing massive MIMO as well as the ability to combine licensed and unlicensed spectrum in heterogenous networks and Self-Organizing Networks (SON),” according to Nowicki.

“To achieve these projected improvements in network performance, operators will need to devote significant capex and opex budgets to acquire new spectrum, and deploy small cells along with fiber backhaul,” he says. “Telecom executives must specify 5G’s uses outside of what cannot be addressed using LTE or LTE-Advanced.”

In Delta Partners’ view, these cases fall into three categories:

Fixed wireless broadband: Leveraging vast amounts of available high-frequency spectrum (counted in hundreds or thousands of MHz), will not only enable higher speeds, but also significantly decrease bandwidth cost.
Enhanced mobility: extreme low latency and improved spectral efficiency will enable new types of mobile devices and experiences enabling Augmented Reality or Virtual Reality to enter the mass market.
Massive IoT connectivity: Above-mentioned low latency and low power consumption-along with ultra-high speed and mobility-open a new chapter for IoT devices. Development of 5G technology and devices such as wearables, commercial beacons, and autonomous vehicles (AVs) will disrupt whole industries such as defense, medical technology, and smart cities.

Singapore in the mix

“As Google and Uber test autonomous vehicles and Amazon introduces its IoT-enhanced Amazon Go physical store, Singapore has taken one critical step forward,” says Nowicki.

“A research consortium called the Singapore-MIT Alliance for Research and Technology (SMART) has applied for permission to run a pilot on driverless taxis on public roads. [Automated vehicles] are just a part of Singapore’s “Smart Nation” government project, which includes over two thousand IoT initiatives, including smart electricity and water usage, and city waste management.”

“The revenue upside opportunity drives operators to participate in the 5G development race, but cost efficiency is also a significant contributing factor. In countries where fiber deployment is challenging due to distances or terrain (e.g. Australia and Indonesia), introducing Fiber Wireless Broadband Access (FWBA) can significantly decrease deployment costs without sacrificing service quality. Offloading mobile traffic to small cells and replacement of FTTH with FWBA will create additional value for players using 5G technology.”

Is Hong Kong keeping pace?

“5G will be a key enabler of smart city services such as video-centric apps, sensor-networks, and autonomous driving,” says Charles Mok, Hong Kong’s Legislative Councillor for Information Technology. “But as the world moves towards 5G, is Hong Kong keeping pace?”

Hong Kong’s Innovation and Technology Bureau recently published its Smart City Blueprint Consultancy Report, which highlights the importance of making available radio spectrum for 5G services. “The report recommends that the government allows specified venues to serve as testbeds for 5G technology, and anticipates a meteoric rise in small cell penetration, but Hong Kong remains behind most of the world in 5G development,” he says.

“While other regions develop their 5G policies, we need to keep pace with developments in mobile apps that leverage smart transport systems, VR/AR/AI, and the IoT,” says Mok. “In 2017 Hong Kong’s OFCA began offering licenses for the provision of public IoT services with use of license-exempted bands, and providing temporary permits for technical trials of 5G and IoT technologies.”

“Hong Kong is one of the most successful mobile communications markets in the world. The government should publish a clear 5G spectrum supply roadmap, review the allocation approach, and enhance efficiency in assigning spectrum bands-this will encourage MNOs to invest in infrastructure and create better consumer services,” says Mok. “A holistic approach is needed to keep Hong Kong’s digital economy competitive.”

Sidebar: Forget Elon Musk, here comes Mayashi Son

An M&A expert highlights a known disruptor whose 2017 buys indicate a pattern that may outline the future octopus-like profile of massive telcos.

Japanese tech giant SoftBank was in acquisition-frenzy mode in 2017, says Elizabeth Lim, senior analyst and research editor at Mergermarket. “SoftBank’s buys have been fairly representative of a market share grab taking place throughout the industry, and have ranged from medical testing start-ups to autonomous vehicle companies to AI and robotics firms,” she says.

As of Q3 2017, wrote Lim in a report, “[SoftBank] engaged in a record 27 transactions, more than 3x the number for the whole of [2016].” Deals closed in Q317 included “a $114m bid with Qualcomm Ventures for autonomous robot company Brain Corporation, and the full-on acquisition of US cyberdefense company Cybereason, among many others...most of SoftBank’s bids have been as part of various consortia-altogether, they have taken stakes in companies worth a combined $22b.”

This article first appeared on Telecom Asia December 2017 / January 2018