The 5G letdown

 I have often written about what I think are the necessary steps for network operators to grow and prosper in our digital world. Covid, the changes in work modes, the hiring gluttony of the GAFAs, the geopolitical situation, between the banning of untrusted vendors and the consequences of a European conflicts have created quite a different situation today. 

Twitter or X reorganization and mass layoffs signaled the tech industry that it was ok to look for productivity and profitability and that over-hiring without a clear mission or reorienting companies entire strategies on far fetched, unproven concepts (web3, metaverse, crypto...) had very costly consequences. Fast forward to this summer of 2023, most GAFAs have been refocusing their efforts into their core business, with less intent on changing the telecoms landscape. This lull has allowed many network operators to post healthy growth and profits, while simultaneously laying off / fast tracking early retirement for some of their least adequately skilled personnel.

I think that a lot of these positive telco results are conjunctural, rather than structural and one crucial issue remains for operators (and their suppliers). 5G is a bust. So far.

The consumer market is not really looking for more speed at this time. The main selling proposition of 5G seems to have a 5G logo on your phone. I have 4G and 5G phones and I can't really tell the difference from a network user experience standpoint. 

No real 5G use case has emerged to justify the hype, and all in all, consumers are more likely to fork out 1000s of $ for a new device, rather than an additional 10 per month for a "better" connectivity. Especially since, us, telco literati know that 5G Non Stand Alone, is not really 5G, more like a 4G +. Until 5G Stand Alone emerges dominantly, the promises of 5G wont be fulfilled.  

The promise and business case of 5G was supposed to revolve around new connectivity services. Until now, essentially, whether you have a smartphone, a tablet, a laptop, a connected car, an industrial robot and whether you are a working from home or road warrior professional, all connectivity products are really the same. The only variable are the price and coverage.

5G was supposed to offer connectivity products that could be adapted to different device types, verticals and industries, geographies, vehicles, drones,... The 5G business case hinges on enterprises, verticals and government adoption and willingness to pay for enhanced connectivity services. By and large, this hasn't happened yet. There are several reasons for this, the main one being that to enable these, a network overall is necessary.

First, a service-based architecture is necessary, comprising 5G Stand Alone, Telco cloud and Multi-Access Edge Computing (MEC), Service Management and Orchestration are necessary. Then, cloud-native RAN, either cloud RAN or Open RAN (but particularly the RAN Intelligent Controllers - RICs)  would be useful. All this "plumbing" to enable end to end slicing, which in turn will create the capabilities to serve distinct and configurable connectivity products.

But that's not all... A second issue is that although it is accepted wisdom that slicing will create connectivity products that enterprises and governments will be ready to pay for, there is little evidence of it today. One of the key differentiators of the "real" 5G and slicing will be deterministic speed and latency. While most actors of the market are ready to recognize that in principle a controllable latency would be valuable, no one really knows the incremental value of going from variable best effort to deterministic 100, 10 or 5 millisecond latency.

The last hurdle, is the realization by network operators that Mercedes, Wallmart, 3M, Airbus... have a better understanding of their connectivity needs than any carrier and that they have skilled people able to design networks and connectivity services in WAN, cloud, private and cellular networks. All they need is access and a platform with APIs. A means to discover, reserve, design connectivity services on the operator's network will be necessary and the successful operators will understand that their network skillset might be useful for consumers and small / medium enterprises, but less so for large verticals, government and companies.

My Telco Cloud + Edge Computing and Open RAN workshops examine the technologies, use cases, implementations, strategies, operators and vendors who underlie the key growth factors for telco operators' and vendors' success in the "real" 5G.