12 February 2020

Robert Machin

5G - who needs it?

In terms of anticipating demand, the potential benefits of 5G for developing countries are not hard to discern. There’s a clear and present need for reliable broadband both to fixed locations and for data-hungry mobile users, for example. The kinds of IoT initiatives that will be boosted by 5G – helping to optimise resource usage and to make industry and agriculture more efficient and more commercially and ecologically sustainable - are even more relevant in developing countries. Machine-to-machine technology and smart city initiatives could greatly improve quality of life in over-crowded but under-resourced cities, and could reach remote areas with medical, educational, and social resources – and with revenue-earning streamed content and entertainment. The question is not really whether developing markets need 5G, so much as ‘how soon can they have it?’.

Is 4G not enough for now?

Many will say that before they embrace 5G, countries need to let the previous generation – 4G - bed in, technically and commercially, and many operators have barely started down that road.

While it’s true that people in the developing world are embracing the reliable internet connections that 4G is bringing, 5G is something different – it’s not just an incremental improvement over 4G.

4G is primarily aimed at better personal connectivity, to the internet in particular. Important as this is, 5G will make a huge difference to how industry, commerce and whole economies will work – and this could be of huge benefit in the developing world. 5G also has the potential to level the global playing field and help developing countries catch up with the world’s leading economies at a faster pace. 5G could help to bridge the technological and social divide that exists between the world’s richer and poorer countries and it’s important that that happens sooner rather than later, rather than leaving the developing world forever playing catch-up.

India, to take just one example, is already a vibrant hub for manufacturing, light industry, computing and much more, while still operating in large part on 2G technology. What a powerhouse it could be with pervasive connectivity that hooked up industry, logistics and transportation, and resolved some of the traffic and communication issues in major Indian cities. 5G could provide fixed wireless broadband to large swathes of the population and many small businesses that have hitherto managed with the cellular equivalent of dial-up. People could have better access to healthcare and education, driving up quality of life and social mobility. Resource use – the allocation of scarce water and power in particular - could be more sustainable. The country could be transformed.

But should India and other emerging economies have to go through a ten year 4G lifecycle before they can have these benefits? Or should they think about rolling 5G out alongside 4G, and leapfrogging into much closer parity with the west?

Time for transformation

If they are to take full advantage of 5G, operators will have to extensively upgrade their legacy business and operational capabilities. The good news is that much of this change can be absorbed as part of the upgrades that will be essential for 4G.

The tipping point for transformation of IT and business processes actually comes with the rollout of 4G because whether we’re talking 4G or 5G, or the opportunities that will ride on the back of these technologies (such as streamed content, IoT or smart cities) we’re really talking about ‘digital commerce’ and monetising what the internet and digital technology has to offer. So change needs to come early, to give operators confidence that not only can they support an interactive consumer environment based on 4G and smartphones, but they’re resilient enough to support the new opportunities that 5G and the IoT are beginning to open up.

Equipping for 5G

A key requirement is flexible and scalable performance, to give the business ‘headroom’ for what is likely to be exponential growth in traffic and transaction volumes in the digital commerce era. But just as important is the need for a platform that’s ‘digital-first’ in what it does, and ready for tomorrow’s challenges. So that means low-latency performance – not just to deal with millions of prepaid balances, but to provide immediate responsiveness to online customers who want to engage through digital channels and will be expecting the same frictionless experience that they get from other leading companies in the digital economy.

Flexible configurability is essential too, because tomorrow’s business models may look different to today’s, in unpredictable ways. It seems likely, however, that future business will require increased support and charging for small businesses and enterprise customers, and a greater need for settlement with content producers other external commercial entities. The business platform of tomorrow needs to be operationally powerful, for sure, but it also has to be commercially agile.

Low operational costs will continue to be critical of course. ARPUs will grow as we move towards 5G but will continue to be constrained by incomes in many developing markets and although volumes in many new services – such as IoT service enablement – could be very high, margins are likely to be low. This drives the need for more cost-efficient ways of running the BSS – either from the cloud or on small footprint non-proprietary hardware.

It’s also important that operators don’t overlook their current business and that they look for solutions whose capability is sufficiently broad to deal with the legacy of circuit-switched services as well as new digital services, or to integrate transparently with systems that do, so that the BSS can provide a ‘single point of truth’ about customers, their accounts and their services. Business platforms need to be network-agnostic to accommodate not just 5G but also legacy networks and other network technologies – in particular those that may form part of the future IoT landscape

The journey towards 5G

Emerging markets are catching up fast on the world’s leading economies and, given that mobile internet penetration is still very low in many developing countries, it’s a journey that’s really just beginning. As with the rollout of 4G that is currently in progress, operators in emerging markets will have the advantage of learning from the experience – and mistakes - of their counterparts in today’s high-income countries, particularly about which services will fly with consumers and enterprises, and how those services can best be monetised. These are exciting times.

By Robert Machin, global solutions marketing manager, MATRIXX Software