Unleashing 5G’s potential – Policy conditions for success

In the midst of the COVID-19 pandemic, the importance of a digitally connected infrastructure to a healthy society and economy has never been clearer. The role that 5G will play in delivering new levels of performance and efficiency, empowering new user experiences and connecting new industries, is the foundation of this new highly connected future. However, the path to realising the full vision of 5G requires new thinking. Transformational ideas should focus on strengthening 5G’s value propositions to consumers and enterprises, optimising network architecture and setting policy conditions for infrastructure investments and digital innovation. Failure to act on 5G will prevent us from unlocking more than $2 trillion of economic value by 2035.

5G has been described as revolutionary – one could mark the beginning of the revolution as the launch of the first commercial 5G network in 2019. By the end of that year, more than 75 mobile operators had deployed 5G technology within their networks with the transition to 5G happening faster than in previous mobile technology generations. In South Korea, the number of 5G subscribers reached 4 million only six months after the commercial launch. The impact of COVID-19 on 5G plans is too early to know, as consumers and companies worry about their financial future, traffic volumes on mobile networks surge and a new urgency is placed on the robustness of digital infrastructure. But 5G is not a race; it is the fabric of next-generation connectivity. As such, we need to keep moving forward on this path of a 5G-powered, connected world.

The first 5G deployments are centred in cities and focus on delivering an enhanced broadband service to consumers. Higher throughputs, bundling of new devices, and new content services provide attractive consumer propositions. Early indications are positive – 10 million 5G connections, 200 plus smartphones with 5G capabilities, innovative content accessible with 5G plans and an uplift in 5G user revenues. However, additional investments to achieve lower latency, ultra- reliability, wider coverage and massive connectivity are required to unleash the full potential of 5G. These large additional investments will be phased in with the commercialisation opportunities they unlock. But the return on investment for these capabilities remains uncertain, further compounded by the economic effects of COVID-19 global health crisis

To quantify the investment required, the GSMA, supported by BCG’s network simulation platform, modelled a three-wave deployment strategy for a representative operator using real-world data. The expected investments associated with different infrastructure capabilities are outlined in Realising 5G’s full potential: Setting policies for success. The simulations show that realising the full power of 5G requires 2.4 times the capital expenditure of a base case 5G deployment.

New thinking and actions are required from policymakers and industry to meet this substantial increase in investment. Operators are innovating on their B2C propositions and B2B partnerships to leverage smart connectivity and content partnerships, and they are extending the connectivity offering into fixed wireless access and campus networks. They are optimising their networks via network sharing, virtualisation and automation to reduce costs while investing in new sites, extra capacity, higher backhaul, and edge computing centres.

While operators explore these possibilities, policymakers have a critical role in setting the conditions for 5G success. In Delivering the Digital Revolution, we outlined supportive policies — making additional, affordable spectrum available; facilitating the deployment of backhaul infrastructure; providing access to cell site locations; allowing network sharing agreements; enabling small-cell deployment; and setting harmonised power density limits — to accelerate network deployments. Governments around the world have taken concerted steps to reform these regulatory levers. Governments that have not reformed these policies should act now to pave the way for 5G. Our analysis of the incremental investments also signals additional policy actions – financial incentive models to extend 5G coverage and regulatory flexibility to explore innovative propositions and B2B partnerships.

It will take time to fully realise the potential of 5G, but with this revolution on its way, now is the time to act and create the path for 5G success.