What is 5G and what will it mean for UK business owners?
The auction has closed for the latest chunk of the UK's radio spectrum. The networks are now hoping that their bids will enable them to roll-out next generation 5G services. This has raised £1.4m for the Chancellor of the Exchequer but apart from this what other benefits will we see?
5G has the potential to transform our daily lives - but only if the UK is at the forefront of this move to the next generation.
What is 5G?
Firstly, it will be fast; about 10 times faster than 4G. Meaning a high definition film should only take about a second to download. It would also enable much touted virtual reality games.
Secondly, there will be less latency than 4G. Whilst this is not always noticeable, there are brief lags between data being sent and received. This is important in relation to future technology; imagine that delay when applied to a driverless car communicating with traffic lights, or the gap between a surgeon remotely controlling a laser during surgery.
Finally, 5G offers greater capacity, which means more devices can connect and communicate at the same time. This is obviously important for the Internet of Things (IoT) as we connect our heating, front door cameras and even BBQs to the web.
Deliver of 5G – the issues
That all sounds great but remember the fuss made around 4G? Did it deliver all it promised? How can it, when the UK is still ranked 54th in the world for 4G coverage? There is no point in having great technology if you can only access it part of the time - especially if it relates to driver less cars.
The Government has consistently failed to get the operators to improve coverage and yet these same networks, Vodafone, EE, O2 and Three, all won part of the bandwidth needed for the 5G networks. So why will this auction result in a better outcome than with 4G?
At least Ofcom recognises some of its past failures. It has said, ahead of its next auction in 2019, that "To ensure widespread improvements in mobile coverage across the UK, we are proposing to attach coverage obligations to some of the licences we will award for the 700 MHz band... These obligations will require winning bidders to roll out improved mobile coverage in rural areas and the nations."
But these obligations are not attached to the 5G auctions.
Forcing networks to offer free roaming across the networks would dramatically improve the situation. You can roam free across Europe – but not in the UK. The Government is talking about 5G services being launched in 2020 at the earliest – while the USA and many countries in Asia are already way ahead of us.
South Korea had a trial 5G network operational for the recent Winter Olympics and Japan is planning to deploy it as a key part of the 2020 Summer Olympics - including drone-based security.
As expected, China is at the forefront – a recent report by The GSMA (the body that represents the worldwide mobile communications industry) estimates that by 2025 China will have 40% of the worldwide 5G connections – and this will have a hugely positive impact on jobs and China’s GDP.
The USA has opened up a lot of high-frequency spectrum for the benefit of 5G in the future. It was very proactive in the rollout of 4G and has excellent coverage. The USA looks set to repeat this approach with 5G. 5G is expected to be available in some cities as early as Q4 of 2018.
Whilst Europe hosts the biggest event in the mobile industry calendar – the mobile world congress in Barcelona – the continent is lagging behind. The EU has set a target for each member state to have one major city running a commercial 5G solution by 2020. The UK might actually benefit from Brexit in this area; it has the potential to move faster to make the necessary radio spectrum available sooner. We’re already auctioning spectrum; the EU has only just agreed which spectrums to make available.
The UK Government regularly talks about the strength of the country’s digital economy. For that to succeed, grow and attract inward investment, we need the right infrastructure, and to be at the forefront, not lagging behind the rest of the world.
All this investment in 5G technology will need to be paid for. Yet the network operators are facing revenue pressures from applications such as WhatsApp. The heritage mobile networks have seen text messages volumes fall by 40% over the last 4-5 years. This is a big drop in revenues.
Therefore, there is the potential that 5G will cost more. You will also certainly need to buy a new phone – so when you are signing your next mobile phone contract consider how long you’ll keep it and whether you really want the phone as well, or would you be better going SIM free?
The UK now has the opportunity to make up for the mistakes it made with 4G and the current problematic limited broadband availability. Now is the time to become genuine leaders in Europe. However, operators need to be held accountable for failures to deliver and the UK needs to be radical about releasing the capacity within the spectrum. In the same way it used tax breaks to encourage the oil industry perhaps the UK Government and Ofcom should be planning to do something similar with the companies which are capable of exploiting 5G’s capabilities.
Dave Millett, Director, Equinox