By Request – 5G Operator and Consumer Roles

I have on my website a link for people to submit writing topics for me.

Articles my Readers asked me to write
Articles my Readers asked me to write

Responding to readers requests helps me stay focused on things which interest my readers and also encourages me to write about things I might otherwise never get round to. For these reasons, I’m always grateful to my reader when they submit a question.

The Question

Reader Sean W. recently asked this question:

Will Mobile Operators make the investments in 5G required to meet consumer price points?

I’m sure the answer is “yes”.  

But it’s a much more complicated question than it seems.  Let’s take it apart and deal with it in all its glorious complexity.

What New Generations Bring

Most of you have been around long enough to remember when 4G was new, still on the horizon.  Setting aside the outrageous hype and marketing promises, 4G was set to give to the ecosystem pretty much what every new technology generation gives:  more speed for users, more capacity for operators, and an expanded ecosystem which typically would not be fully realized until the generation after that.

Think about it. With each new generation, each new “G”, end users are required to upgrade their device to take advantage of many of the new capabilities.  Faster download and upload speeds are the capabilities holding the most interest for the most people.  This exchange can be expensive for early adopters.  But getting that faster speed is what’s important.

Capacity

For Mobile Operators, there is the promise of more capacity.  Faster download speeds are bound to lure subscribers.  There is also the hope of improved spectral efficiency, allowing more users to be served these faster speeds in the same radio spectrum. 

Yes, some regulators still allocate new spectrum and dedicate it to the new G.  But many regulators are fresh out of new spectrum.  So it’s up to the Operators to implement the new G in the most sensible way for their business and their market.

Lastly, there is the promise of something new; a new ecosystem for mobile technology. When 3G was the new kid, it was the Mobile Internet.  Remember WAP?  With 4G, everyone would be watching and creating video all the time.  To some extent, these dreams came true. 

But the vision sold is always bigger than the reality delivered.  Cleaning up the mess and finally realizing that vision will always be the job of the G after. 

In 5G, the vision is IoT.  Am I allowed to just write “IoT” and let you all infer the reams of promises you’ve heard about IoT?  Let IoT include autonomous vehicles and M2M and millimeter wave communications and MIMO and then we’re all set to get half a loaf and wait for 6G to fully deliver on all that.

Usually, the vision is an expanded infrastructure that promises 2 things: more features and functionality for end users, and an expanded market for mobile operators to sell to.  For 5G, IoT is the catch-all phrase for those new capabilities and that expanded marketplace.

Will Operators Invest in 5G

But Sean really asked 2 questions: will mobile operators make the investment, and will 5G be available at consumer price points.

For the investment, the answer again is of courses.  Because as soon as one operator in a market launches 5G, or even something only vaguely resembling 5G, all the other operators had better launch it soon or be at a competitive disadvantage for the high-value users.

So for this part of the question, the answer is unequivocal: Mobile Operators must invest.

Will 5G Be Available at Consumer Price Points?

Here is where the situation gets rather tricky.  There is a huge spread of potential consumer price points around the world.  In the US and EU, ARPU (Average Revenue per Unit) is around $45-$50/month.  4G is ubiquitous, and people seem anxious for 5G to arrive.

But I live in Thailand.  ARPU here is about $6/month.  We also have 4G.  Yes, 4G came a couple years later to Thailand than it did to the US and the EU.  4G works fine here.  And there might not be as many iPhones and high-end Samsung phones.  But they are here and available.  People talk about 5G just like everywhere.

That’s a lot of ARPU

Nonetheless, the spread of ARPU is an order of magnitude.  It is unlikely that $6 ARPU will deliver the same service and experience as $50 ARPU.  Compromises up and down the food chain will be made.   One way or another, everything will get discounted. 

In the lower ARPU markets:

  • Intellectual property licensing cheaper
  • Network equipment will get lower-cost support and longer response times
  • Devices, on average, will be less capable and lower quality
  • Average download/upload speeds probably won’t be as fast; coverage not as good

To expect more or less the same thing a 10% of the price is naive.  But that’s how you meet a wildly diverse range of consumer expectations.

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