Will 5G remake the world, or just make it a little faster? That may depend on Technology, Media & telecommunications companies. Telecommunications Contents
Introduction 04 Blockchain to blockchains 30
How 5G could enable remote Communications infrastructure healthcare through the use of upgrade: The need for deep fiber 14 AR/VR and robotic surgery 32
Spectrum portfolios in a 5G world: Predictions 34 Rethinking the value of spectrum 18
A network of networks: How will But will consumers pay for faster carriers handle the evolution to 5G? 20 connections? 37
To be or not to be: The future of Conclusion 40 the telco business model 23
Blockchain @ Telco 27 Will 5G remake the world or just make it a little faster? Will 5G remake the world or just make it a little faster?
Introduction
The availability of ubiquitous high-speed mobile Internet connectivity has substantively changed the world in a short amount of time. Beginning with third-generation (3G) wireless technology, then 4G and Long-Term Evolution (LTE), consumers and business users could connect to the Internet virtually anywhere. Ever- increasing coverage, data speeds, and advancements in mobile devices helped spur the smartphone era. Today, nearly 2.5 billion people use smartphones, and 1.2 billion use tablets.1 Over 175 billion apps were downloaded in 2017 alone. These apps, some of which have over 1 billion users,2 have helped transform how we communicate, make and maintain relationships,
1 eMarketer, 2/17, http://mobilemarketingmagazine.com/24bn-smartphone-users-in-2017-says-emarketer. 2 App Annie 2017 Retrospective Report, https://www.appannie.com/en/insights/market-data/app-annie-2017-retrospective/. Will 5G remake the world or just make it a little faster?
watch TV and movies, shop, and devices, and the figure is forecast to get from point A to point B. And reach over 20.4 billion by 2020.3 while the Internet of Things (IoT) is still a developing story, devices In short, the combination of wireless ranging from in-home assistants connectivity and smartphones to vehicles are connecting to the has sparked a global revolution Internet through mobile networks. that can affect nearly every aspect IoT will likely rely heavily upon of a consumer’s life. Companies the next generation of wireless face a world in which competitors technologies, 5G, which is poised can quickly scale their offerings to potentially become the most to millions of consumers instantly revolutionary advancement in and simultaneously, at relatively mobile communications yet. In 2017, little or no cost. These include there were 8.4 billion connected communications services (such as instant messaging), mobile financial Will the evolution of services (such as foreign fund wireless create another transfers and in-store payments), revolution in customer over-the-top media services (such behavior and industry as subscriptions to premium movies and content), location-based disruption, or simply continue what 3 Gartner, https://www.cnet.com/news/at-ces-security-risks- 4G started? still-a-core-internet-of-things-fear/. Will 5G remake the world or just make it a little faster?
services, and an almost endless list remake the competitive landscape carriers to operate mobile voice and of other possibilities. yet again? data connectivity. In fact, commercial applications enabled by 5G could In fact, 4G (and Wi-Fi4) was Recent Deloitte Global member change how multiple industries responsible for so much change that firm research from around the operate, while also providing one might wonder whether it’s even world is answering these questions much-needed revenue streams for possible to create another wireless by taking a close look at 5G. While telecommunications organizations technology revolution in customer the technical standards are still that are struggling to recoup their behavior and industry disruption, developing, 5G has the potential investments in 4G networks,5 and or if changes will simply build to drive numerous advancements, whose relationships with consumers incrementally upon what 4G started. including digital transformation may be at risk of being supplanted In other words, will the future of across industries, providing the by technology platforms. connectivity make tomorrow mostly platform for end-to-end connectivity like today, only a bit faster? Or will in IoT, enabling faster connections What’s so great about 5G, and why is it usher in a new era of capabilities, for consumers, and even providing the future of connectivity so closely enable new business models, and a more cost-effective platform for tied to it? Three things, really:
A single autonomous vehicle will generate an estimated 4,000 gigabytes each day—about as much as 3,000 people.
4 See: Sean Kinney, “Analyst: Wi-Fi Carries 80% of Mobile Data Traffic,” RCR Wireless, July 7, 2016, www.rcrwireless.com. 5 https://www.morganstanley.com/ideas/5G-wireless-outlook. Will 5G remake the world or just make it a little faster?
speeds, low latency, and more more than entertainment, however, of IoT has long been touted, but the “lanes” in the network to organize including handling data pertaining difficulty of setting up low-latency and allocate bandwidth. to vehicle speeds. A single wireless networks capable of linking autonomous vehicle could generate sensors and connected devices has Why do we need faster mobile an estimated 4,000 gigabytes each typically been a serious barrier to data speeds? One big reason is day—about as much as 3,000 widespread adoption. 5G can help video. By 2021, 78 percent of mobile people. 5G network speeds will data traffic will be video, up from likely be critical for moving that 5G can help 6 60 percent in 2016. A 5G network much data around. telecommunications can allow a subscriber to download an HD movie in 5 to 10 seconds, What is latency, and why is companies develop compared with 10 minutes for 5G’s low latency such a big critical new revenue 4G. In fact, 5G technology could advantage? Latency is the amount streams while helping deliver speeds of up to 10 gigabits of time it takes a data packet to get drive the digitization of per second. Such speeds can also from one point to another on a data make even more data-intensive network. Much of the excitement nearly every industry. entertainment like virtual reality around 5G networks has to do viable on mobile networks, instead with their low latency—about one of relying on a Wi-Fi connection. millisecond. Low latency can be High data speeds can be used for critical for enabling IoT. The promise
6 Cisco Visual Network Index, 2017, https://www.cisco.com/c/ en/us/solutions/collateral/service-provider/visual-networking- index-vni/mobile-white-paper-c11-520862.html. Will 5G remake the world or just make it a little faster?
telecommunications companies Both precision and haptic feedback edge computing (MEC) can solve develop critical new revenue require very low latency, which 5G this problem by providing data streams, while helping drive the mobile networks can deliver. processing power at the edge of the digitization of nearly every industry. mobile network. 5G networks can How will 5G enable “multi- make MEC better by combining high Many of the most promising IoT access edge computing,” speeds and low latency. The edge use cases, such as industrial and why does this matter? computing concept has long been automation, asset tracking, “smart Smartphones and connected used in Content Delivery Networks city” applications, autonomous devices of all kinds are consuming (CDNs) to handle the increased vehicles, and remote surgery, and generating large quantities use of streaming media and over- require ultra-low latency. For of data at the “edge” of wireless the-top (OTT) services. With the example, robotic surgery networks. The more data that is capabilities of 5G and IoT, however, requires precision and “feel.” sent to and from these mobile the number of use cases will likely Recent advances in haptic devices, the more strain is put grow far beyond just consumer and feedback provide the surgeon an on centralized cloud-based social content— increasing the need instantaneous sense of touch when architectures, where data is for advanced MEC. using medical implements that may processed and stored in a be located thousands of miles away. central location. Multi-access
“Network slicing” enables a single, common network infrastructure to contain multiple virtual networks. Will 5G remake the world or just make it a little faster?
Wireless service providers (WSPs) wireless networks. Edge networks a WSP can use a common network can integrate small data centers can also sort through data, sending infrastructure to create multiple into their 5G network nodes instead valuable information to centralized virtual networks. It can then deliver of sending data all the way back to data centers and discarding the “network-as-a-service” to customers a centrally located data center. At rest. Industry 4.0 applications and with varied use cases. For example, the edge, companies can use data augmented reality/virtual reality an IoT application might require analytics and artificial intelligence (AR/VR) on mobile devices are other very low latency, but also low data to generate more value from data, use cases that can benefit from throughput. A VR application, on the and to help enable data-intensive 5G-enabled MEC. other hand, could have less-critical applications. Again, consider roads latency requirements, but high full of autonomous vehicles, each Will 5G enable more lanes data throughput. generating huge amounts of data per network? 5G networks can that require real-time processing. accommodate several dedicated With so much potential, what can Cloud-based networking and data “lanes” on the same network stop 5G from having a huge impact, processing are simply unworkable; infrastructure. This is called and soon? And what are some of large-scale adoption will likely “network slicing.” Instead of having the most promising sources of require data processing at the to build several dedicated networks revenue for WSPs? Deloitte member edge, in addition to low-latency for different technical requirements, firms from across the globe are
5G makes it critical for wireless service providers to value accurately their most important resource: wireless spectrum. Will 5G remake the world or just make it a little faster?
tackling these questions. enough deep fiber is in place to dollars to spread the cost of deep First, 5G will require significant support the number of anticipated fiber deployment, particularly investment in network cell sites needed for 5G and beyond. in rural and underserved areas. infrastructure, especially in the Significant investment will likely Communications Infrastructure deployment of deep fiber (i.e., fiber be required if WSPs are to take Upgrade: The Need for Deep optic cable closer to end users). advantage of the revenue streams Fiber from Deloitte explores why Deep fiber is critical for 5G networks, 5G can provide. The need for which operate at higher frequencies investment comes at a challenging While 5G offers many 7 than 3G and 4G networks. These time for many telecommunications revenue opportunities for frequencies do not travel as far, and organizations: maintaining their are more susceptible to interference, legacy networks can be costly, wireless service providers, requiring a substantial increase in and wireless substitution and it also contains inherent the number of cell sites. Although competition from cable companies threats to their current these sites utilize small cells as for home broadband have reduced business model. opposed to large/macro cells, these their customer base. Finally, they small cells can still require high- will likely need regulatory reform speed backhaul to the cell site. In from the US government to the United States, however, not improve competition and hard
7 “Deep deployment of fiber optics is a national imperative,” https://www2.deloitte.com/us/en/pages/consulting/ articles/communications-infrastructure-upgrade-deep- fiber-imperative.html. Will 5G remake the world or just make it a little faster?
more deep fiber is needed for that utilizes high spectrum bands, contain inherent threats to their 5G to flourish, and how the US carrier aggregation methods, and current business model. 5G can government and telecommunications spectrum sharing models, combined allow devices to connect to multiple organizations can work together to with new regulations, can open types of networks, potentially from fund and deploy it. the potential for a wide range of different service providers. Thus, increasingly complex and demanding it can separate a critical linkage for Beyond the fiber/core network, the use cases. Deloitte’s Spectrum telecommunications organizations: advent of 5G can also make it critical Portfolios in a 5G World can help the network and the consumer’s for WSPs to value accurately one WSPs see their spectrum as a end device. A Network of of their most important resources: portfolio, add to it strategically, and Networks explores how 5G creates wireless spectrum. Spectrum that assess its value. Investors also can challenging “separations,” and what was formerly considered “subprime,” benefit by understanding what telecommunications organizations including high-frequency and a WSP’s portfolio is worth, and can do to reconnect them. The paper fragmented spectrum, are now how it can hasten—or hinder— also explores the disruptive potential commonly more valuable given revenue growth. that WSPs can bring to landline-only technology advancements that residential broadband providers, enable WSPs to leverage these While 5G offers many revenue given that the dramatic speed spectrum allocations. 5G technology opportunities for WSPs, it also can increase expected with 5G could
Blockchain has the potential to simplify the provisioning of services and determining of usage rates through automated contracts. Will 5G remake the world or just make it a little faster?
overtake landline performance for across various networks by a Blockchain@Telco report. Although many applications. wide range of devices, including smart contracts can be useful for The piece focuses on the possible smartphones, IoT endpoints, 5G and beyond, Deloitte highlights separation of network and device and connected vehicles. To offer some of their risks in Blockchain to led by Deloitte Germany, and seamless connectivity—and get Blockchains. examines a scenario in which paid for it—telecommunications The ability to provide network- carriers acknowledge that OTT companies should consider driven services to enterprises, players have won the battle for determining the fastest connection the public sector, and healthcare the consumer. That can then lead for each device that accesses institutions can offer possible them to focus on providing network its network, and then charge revenue streams for telcos. In services. Telco 2030 ponders this accordingly for that access. How 5G Could Enable Remote and other existential questions Blockchain technology has the Healthcare Through the Use about what the future will hold. potential to solve these technical of AR/VR and Robotic Surgery, challenges by simplifying Deloitte Australia explains how 5G’s The separation of network and the provision of service and faster speeds, lower latency, device can also pose technical determining usage rates through and increased reliability can challenges. One of the biggest automated smart contracts, as benefit patients in rural and benefits of 5G is ubiquitous access Deloitte South Africa shows in its underserved areas. Will 5G remake the world or just make it a little faster?
And, it’s too early to count out the only” future could become a reality ability of telcos to compete for a for a wider range of people. But for bigger share of consumer spending. 5G to win consumers over, it will In fact, 5G could allow telcos to likely have to make economic sense. compete with cable companies 4G is already faster than many for home broadband—and the consumers’ Wi-Fi connections, as we entertainment bundle that home discovered from our Global Mobile broadband anchors. Global Consumer Survey. Predictions shows how a “mobile excerpt 01 Communications infrastructure upgrade The need for deep fiber
Unlocking the full potential of 5G in the United States rests on a key assumption: the extension of fiber deep into the network. Despite the demand and potential economic benefits of fiber deployment, the United States lacks the fiber density in access networks to make the bandwidth advancements necessary to improve the pace of innovation and economic growth. Increased speed and capacity from 5G will rely on higher frequencies and network densification. Carriers will deploy many more small cells, homespots, and hotspots in higher bands, with a coverage radius measured in meters versus kilometers.
Download the publication Excerpt: Communications infrastructure upgrade: The need for deep fiber
A Deloitte Consulting LLP analysis increased capacity. Increased speed points with small coverage areas estimates that the United States and capacity from 5G will rely implies that fewer users share the requires between $130 billion and more heavily on the use of higher network capacity produced by 5G $150 billion over the next five to frequencies and densification. small cells, generating enormous seven years to adequately support Deploying fiber closer to customers performance gains. broadband competition, rural can enable efficient transport of coverage, and wireless densification. increased wireless traffic from that Transmission at higher frequencies Fiber density is critical to support densification. exhibits more limited propagation the next round of innovation and characteristics than transmission Internet access for America. Deep Carriers are already purchasing and at lower frequencies. The signals fiber can facilitate high-speed access testing high-frequency spectrum cannot reach as far and have to more homes, more businesses, (both licensed and unlicensed) to more difficulty penetrating walls and support hundreds of thousands solve capacity constraints. Rather or other barriers. Therefore, of new cell sites and hotspots for 5G. than building macro towers with network densification becomes mid- or low-band spectrum, carriers an even greater imperative. Such Previous generations of wireless will deploy lower-powered small densification is challenging, given technology (i.e., 3G and 4G) relied cells and rely on homespots and current fiber deployment limitations on broader blocks of spectrum hotspots, each with a coverage and the upgrade costs and and improved spectral efficiency radius measured in meters versus deployment cycle times associated to generate higher speeds and kilometers. Densification of access with traditional network architecture. Excerpt: Communications infrastructure upgrade: The need for deep fiber
Small cells need connections to fiber/ Wireless substitution and cable cable backhaul to realize capacity competition have taken a toll on and speed potential. most wireline carriers’ customer bases, leading to challenging Homespots and hotspots require economics and limited funds for high-speed broadband connections fiber deployment. to homes and businesses. Without Return to table of contents deeper fiber deployment, carriers will be unable to support the projected fourfold increase in mobile data traffic between 2016 and 2021. Exhibit 1 below shows how fiber is a critical component to realizing opportunities for the economy as it expands into communities to promote competition, increases connectivity for rural customers and the underserved, and supports densification for wireless. Excerpt: Communications infrastructure upgrade: The need for deep fiber
Supports wireless densification, Current lack of deep fiber Deep fiber broadband competition, and