At next week's Mobile World Congress, I expect to be clobbered by hundreds of companies that claim to have the answer to 5G. Massive MIMO and MU-MIMO. Millimeter waves. New modulation and duplexing formats. Cloud RAN and various kinds of SDN/NFV. Carrier Aggregation between multiple air interfaces. MTC for the IoT.
Of course, all of these are pieces in the 5G puzzle. But when hundreds of companies are telling me that each new invention is the key to 5G, I have to take a step back and ask, what is the essence of 5G, really?
Purists are waiting for the ITU-R definition for 5G, known as IMT-2020, to be finalized later this year. We've seen this before: ITU-R had standards for 3G (IMT-2000) and 4G (IMT-Advanced). Under these definitions, LTE is not "4G", and we need LTE-Advanced to meet the specs for IMT-Advanced (100 Mbps to 1 Gbps). Back in the real world, most people refer to LTE as "4G", because mobile operators made major billion-dollar investments in new LTE equipment, and everybody had to buy a new phone.
In fact, nobody cares about the IMT definitions, because actual investment in new stuff is far more important than the ITU standards. It's the money that matters, not the ITU spec.
You can count on the same dynamics with 5G. ITU will create a definition, but it's not likely to match up exactly with the network that gets deployed. There's only one question that matters: What will drive another round of billion-dollar investments?
Mobile Experts launched its 5G research service this week to answer that key question. We believe that the most important defining feature of 5G is that new business models will emerge. Previous generations have all relied on an end user paying their monthly bill for wireless services to an individual user. We've already squeezed the juice out of that lemon. Nobody should think that we can increase global ARPU from $25/month to $40/month by simply offering faster data.
Instead, 5G will rely on new business models. So far, we've found two examples which hold significant promise:
1. Enterprises will pay for access to Machine-Type Communications (MTC) data. The beauty of this concept is that small bursts of data can be worth significant revenue.
2. Mobile operators can compete with cable and fixed operators for broadband access to the home. That's a commonly understood market with an established revenue stream and very little competition in many locations.
In other words, instead of a broad deployment on every tower, 5G deployment will be targeted at specific businesses, specific homes or neighborhoods, and new applications. In this way, mobile operators can keep their ARPU for mobile access and add significant new revenue for totally new wireless services.
Believe me, when bankers look at 5G, they don't care about Massive MIMO, or millimeter waves, or spectral efficiency. Bankers will only care about finding a new source of sustainable revenue. That's where the next $500B investment is going to come from. Keep that in mind when you see hundreds of brilliant inventions at MWC...some of them will help to create new revenue, and some won't.
Comments
Post a Comment