New research from Barclays Corporate Banking shows that 5G could supercharge the UK economy alone by up to £15.7bn per year by 2025 – but the opportunity could be missed because industry leaders still do not know enough about the benefits of investing in the technology. Paul Skeldon takes a look at what 5G offers the UK and the world
5G is coming – and you really should believe the hype: it is going to transform telecoms as we know it. According to 5G Americas, the industry trade association and voice of 5G and LTE for the Americas, global mobile connections will total 10 billion by 2023 based on forecasts provided by Ovum. Also, by the end of 2023, global 5G connections are expected to reach 1.3 billion.
What does that mean in terms of money? Well, a study of the impact of 5G on the UK by Barclays Corporate Banking adds some flesh to these connectivity bones.
Its report, 5G: A Transformative Technology, analyses a series of potential scenarios that UK businesses could face when implementing 5G. Under an ‘optimistic scenario’, which anticipates an accelerated rollout of 5G and an enhanced uptake amongst UK businesses and consumers, the UK will see a £15.7bn increase in business revenue by 2025. A slower-than-anticipated rollout and limited use would deliver around £8.3bn of added revenue to the UK, while the current pace of development added revenue would reach £13bn.
The optimistic scenario could be a reality for British businesses, as mobile providers are already beginning to introduce 5G capabilities on a large scale this year, including pilots underway in London, the Midlands, Edinburgh and Belfast.
The Government is also supporting 5G by incorporating it into its Industrial Strategy, having pledged £1bn towards digital infrastructure. The bidding process for 5G licences, meanwhile, opened to the telecoms industry last year.
Top performers in the optimistic scenario
Accelerated rollout spells a positive picture for regional growth, which would provide opportunities outside the usual technology hubs of London (£4.1bn increased business revenue) and the South East (£2.5bn). The North West (£1.4bn), East of England (£1.3bn) and the South West (£1.1bn) make up the rest of the top five. Scotland comes close to, but just behind, the South West, also at £1.1bn – showing that 5G development is not an initiative that will just benefit a small pocket of the country.
Under the optimistic scenario, the business areas set to see the largest revenue increases are distribution (£3.6bn), manufacturing (£2bn), professional services (£1.1bn) and business services (£1bn). The diverse range of sectors set to see a boost to revenue is a testament to the wide applications of 5G technology.
The current state of 5G technology play
The new Barclays research revealed that a majority of businesses (58%) are already benefitting from fast communications technology like 4G and ultrafast broadband. This is because it allows companies to operate across disparate locations (59%), communicate with customers and potential customers (49%) and connect multiple machines and devices (48%).
5G can further enhance these operations through benefits including peak data rates 20 times faster than 4G and simultaneous connections for one million devices per square kilometre. The extreme speed paves the way for innovations in artificial intelligence, robotics and large-scale Internet of Things (IoT) usage. For businesses, this means more extensive machine-to-machine communications, using self-driving vehicles and better overall infrastructure – amongst other new applications.
Despite the demand for current communications technologies and the potential applications for 5G, the Barclays survey of 526 British businesses found just four in ten (39%) business decision makers know how their business can make the most of 5G. When it comes to preparing for 5G, only 15% of businesses are thinking about how to harness the new technology. The sectors most likely to have plans for 5G are TMT (23%), logistics (18%) and hospitality and leisure (17%) – but it is clear a majority of businesses are not ready to successfully join the 5G revolution.
Sean Duffy, Head of TMT at Barclays, explains: “The rollout of 5G offers a huge opportunity for the UK. We’re seeing massive potential for business growth, which ultimately delivers a positive knock-on effect for the whole economy. While the Government and network providers are already working hard to introduce 5G in the UK, we found that businesses do not yet have enough clarity about how they will benefit in the long-run. What’s more, nearly four in ten business leaders still aren’t entirely sure what 5G is.”
He continues: “To ensure the UK can realise the full potential of an accelerated rollout, the Government, mobile operators and other corporate partners – including financial institutions – have a job to do in order to raise awareness amongst businesses so they can harness 5G. This support is crucial for businesses to make smart investments which will unlock the power of 5G.”
Investing for success
While awareness is low for some sectors, the good news is that those industries with an understanding of 5G are already investing, or planning to invest, in the technology. The sectors planning significant investments into 5G technologies within their business are TMT (35%), logistics (34%), business services (28%) and manufacturing (24%).
Even if businesses may not be immediately planning to invest in 5G technology in the short-term, across sectors, 40% of business decision makers said they expect 5G to increase their revenue over the next five years – a clear indication of the value placed on the technology and the commercial benefits that leaders expect it will provide.
Global 3G growth – where are the hot spots?
While the Barclays Corporate Banking research gives a detailed view of how the UK economy can be lifted by 5G – and by extrapolation, gives an indication of what it also means across Europe – 5G is a fast-moving global phenomenon. So what does it mean for other regions?
North America will take an early lead in 5G deployments with all four national service providers anticipating commercial launches in 2018 or 2019. Ovum forecasts 336 thousand 5G connections in North America by the end of 2019 representing 47% of total global 5G connections.
“5G is in the initial stages of commercial deployment in the U.S. with big plans by all four national service providers,” says Chris Pearson, President of 5G Americas. “5G technology deployments represent a transformational time for innovation as our industry enables new applications and services.”
North America’s 5G networks will be built upon the strong LTE foundation in the region. LTE achieved a penetration rate of 107% with 390 million LTE connections as of third quarter 2018, compared to the population of 365 million in North America. This penetration rate compares to the next two highest regions, Oceania, Eastern and Southeastern Asia at 87% and Western Europe at 71%.
Latin America and the Caribbean
LTE continues to exhibit high growth rates in Latin America and will be a key component of 5G deployment and uptake in the region in the coming years. Total LTE subscriptions in the region reached over a quarter billion by the end of third quarter 2018.
“The first 5G trial in the region took place in 2016 and we are expecting the first 5G commercial network to start offering services during 2019. However, it will take at least 4 to 5 years before this new technology has a comprehensive footprint in the region, making LTE the most relevant mobile broadband technology during the short term,” noted Jose Otero, Director of Latin America and the Caribbean, 5G Americas.
LTE continued its healthy growth with market share increasing from 26% to 37% year-over-year at the end of September 2018.
Rest of the World
Forecasts for LTE continue to show very positive growth with milestones of nearly 4 billion at end of 2018; more than 5 billion by 2020; and about 6 billion in 2022 at which time LTE growth will decline due to the mass market growth of 5G. In 2023, LTE connections will decline to 5.7 billion when nearly 1 billion GSM connections and 2 billion HSPA connections will remain.
5G will trend upwards beginning in 2019 with less than 1 million global connections; by 2020, this will grow to 37 million and then more than quadruple to 156 million in 2021; by 2022, 5G connections will exceed 500 million and the 2023 forecast puts 5G global connections at 1.3 billion.