5G is one of the most eagerly anticipated technologies of the modern world. Consumers and businesses alike are awaiting its heretofore unseen connection speeds and the technologies that it will empower, such as autonomous vehicles and smart cities. Yet for many, progress towards that 5G-empowered future has been slower than they would have hoped. Coverage in many places - such as the UK - is too narrow and signal is often significantly weaker than 5G’s greatest champions promised it would be.
There are good reasons for this. 5G is far more complex than previous iterations of mobile technology and as such, requires a great deal more attention, focus and investment. Moreover, operators are struggling to monetize their 5G offerings, thus starving them of necessary CapEx to develop further and deliver new products, services and open up new revenue streams. On top of all of this, many operators are wracked with manual processes which slow down operations and waste crucial funds with inefficient practices.
5G is a fundamentally different proposition than previous generations of mobile technology. Its use of virtualised networks and network slicing; the use cases it will empower; the new vendors and supply chain actors as well as the new considerations that impinge upon it such as cybersecurity make it incredibly complex. It requires levels of maintenance, investment and attention that telecom operators have never had to deal with before. 5G networks also require new purpose-built infrastructure - as much as 3x as many base stations as 4G - which drives new building requirements and CapEx requirements. On top of all of this, many organisations have to maintain their Wi-Fi, 2G, 3G and 4G offerings to maintain operations while developing newer technologies like 5G Standalone and OpenRan.
Huge amounts have already been invested in 5G - PwC predicts that there will be a total of $275 billion invested by the end of 2026 - however, operators are still struggling to see a return on that investment. Operators have developed their 5G capabilities up to a certain point, but often have a hard time taking it further. Further developments might help bring out new products, services and the necessary revenue to fund improvement, but they first have to get that at those potential streams of revenue.
Admittedly, 5G has been publicly available for only around five years and they’ve been a tumultuous few years for the global economy: Inflation has risen dramatically, bolstered by a global pandemic while seismic geopolitical events such as the war in Ukraine have delivered shocks to energy prices and the global economy. This has mitigated consumers ability to purchase premium services.
However, the problems in monetizing lie deeper still. Operators are now struggling to monetize. Premium 5G mobile services and fixed wireless access services are not going to be as lucrative as some might have hoped. As a result, consumers won’t pay for a premium service that doesn’t offer a real improvement on their current mobile broadband purchase. This is largely for two reasons. Firstly, operators cannot truly substitute 4G in terms of geographical coverage and capacity versus 5G and secondly, the macroeconomic climate
means that soaring energy costs and inflation are driving delayed adoption of 5G to the consumer.
In fact, data from PwC shows that fixed wireless access and mobile internet offers low revenue potential in comparison to other 5G applications. In reality, it's the IoT use cases which will be the real revenue driver for 5G: PwC says that these offer 30 to 40 times more revenue potential than mobile connectivity plans.
And yet here lies another stubborn obstacle - these use cases often need better 5G in order to become realisable and yet operators cannot monetise current 5G offerings to pay for those improvements. Take autonomous vehicles - one of 5G’s flagship use cases. In many parts of the world, 5G coverage is not wide nor strong enough - to power the mobile connectivity demands that autonomous vehicles will require. That catch-22 is currently denying operators of the necessary revenue to develop further, and those use cases of the crucial technology to help them realise their potential.
5G private networks - in which individual businesses have their own dedicated 5G network - will also likely be a real revenue driver. In fact, a 2023 report from telecoms.com found that 59% of telecoms professionals believe that 5G private networks are the best path to monetization with huge potential across verticals like healthcare, manufacturing and transportation.
The ability to monetize 5G is The PwC’s 26th annual global CEO survey shows that nearly half - 46% - of telco CEOs believe that their current path won’t be economically viable in ten years. From that point of view, making 5G monetizable is an existential issue for many operators. As such it is absolutely crucial to maximise efficiency within the sector in order to pursue 5G effectively.
Waste and manual processes
Unlocking that CapEx is a crucial step and although operators are still waiting to unlock new use cases to effectively monetize 5G, that CapEx can be unlocked much closer to home.
Telecom operators still deal with a large amount of waste in their operations, largely driven by overreliance on manual processes which drain capital, manpower and time.
Testing labs serve as a key example of this. Telecommunications labs often manually manage a wide variety of equipment that is crucial to testing. Not only is this equipment power hungry and expensive, it’s also left running and unused for the large majority of the time. In 2022, Spirent collated customer data to understand the true scope of this waste. We discovered that 93% of equipment in the lab gets used less than half of the time. Furthermore, over three quarters - 77% - of lab equipment is used less than 90% of the time. This is a major source of waste in the industry and it's not just Spirent data that shows it. A study by Mckinsey shows that 85% of energy waste in the telecoms industry comes from needless energy expenditure such as idling equipment.
Automating those labs would go a long way to reducing that waste and this alone can reduce lab expenditure by 40% and speed lab resource management by as much as 30%. Spirent recently modeled a large telecoms lab that had streamlined equipment used by automation.
In this modeled lab, the ability to schedule equipment use saved this lab 1 million every year. It could save nearly €4 million in labor savings because of the increased efficiency in testing.
This goes further than testing in labs too. The incredible complexity of 5G also demands that automation start to be implemented within the network, streamlining the tangled web of technologies and stakeholders that 5G represents. This will not only free up necessary money and manpower but speed time to market for the products and services which will make 5G a hugely monetizable opportunity.