5G Whiz: Why the next network upgrade isn't about your phone speed

The 5G network is rolling out now, and this upgrade is all about business. Here’s what you need to know to secure a slice of the action. 

If you’re trying to understand how 5G will change the world, you could do worse than to stop obsessing about “killer apps” and download speeds and start by contemplating a glass of wine. Specifically, how that magical chardonnay or pinot noir ended up in your hand.

Imagine, for a moment, the vineyard that produced the wine. Beneath the neatly trellised vines and gnarled rootstock of your favourite varietal lie thousands of sensors, picking up the vineyard’s vital signs: water content, pH, soil nutrition. The trellises themselves are armed with devices that monitor canopy cover and can detect early mildew incursion. Among the rows are more devices that act as virtual pathways directing the mechanised pickers. Then imagine these devices hooked into an AI analytics system connected to the weather forecast, allowing for smart irrigation decisions and real-time operator control.

Now think about how each of these control systems has slightly different needs. The picking system, for example, needs low-latency (or fast response times) so its path can be tweaked instantly for maximum picking efficiency. It needs high reliability so the vines aren’t destroyed if it goes off piste. And it needs medium bandwidth so it can run a video feed from the picker’s eyes to the controller. On the other hand, the myriad soil sensors require a control system with no obvious latency or network mobility needs, but high reliability and mass-connectivity.

Until now, business solutions such as these that rely on 3G and 4G mobile technology, have had to work mostly within the constraints of a single network’s capacity. The looming step-up to 5G technology changes all that. Soon organisations – from emergency services to artisan winemakers – will have the ability to use bespoke solutions through a characteristic of 5G called “network slicing”. Much like carving up a cake, slicing gives operators the capacity to carve thin slices for people who want specific characteristics of the technology for small geographic areas, and thick slices for those who might want all the capabilities over a national network.

The CTO and Head of Technology for Nokia Oceania, Adam Bryant, says that while 5G may be the fifth upgrade to a technology that started with people lugging around suitcase-sized mobiles and is now all about watching sports and drama on the move, the “killer app” is not consumer-focused. This generational shift is all about business.

“The biggest thing with 5G is giving businesses an end-to-end view solution,” he says. “Network slicing in particular is a way of giving different virtual private networks to different users for different purposes, which means that we’re moving towards a point where an operator can actually contract their own service level agreement [SLA] depending on their specific needs. And that’s a big change for industry.”

For organisations looking to optimise their enterprise solutions, however, the promise of “network slicing” as well as other 5G characteristics such as edge computing, generally throws up two critical but interrelated questions: How will the physical network be rolled out so that it can deliver all the touted benefits? How will governments and successful bidders allocate and monetise the bandwidth?

While the initial 5G networks (using the 3.5GHz spectrum) are starting to be rolled out already by the large telcos in Australia, the next iteration of 5G (using 26GHz and 28GHz spectrum), may require a five-to-10-fold increase in cells, with implications for local government, planning and infrastructure as well as the spend by telcos themselves.

And while there are potential growth opportunities for utilities leasing their poles to telcos, past experience has not been a smooth ride, suggesting that a collaborative approach is a pivotal prerequisite. It is also expected that the telcos will ‘re-farm’ their existing spectrum currently used for 3G and LTE, to 5G – in many cases through a software upgrade.

Slicing also provides a way to deal with capacity restraints within a network and allows for the opening up of channels for emergency responders or other priority groups. “If you had multiple farms or vineyards covered by the same carrier, you might get a network slice for the local fire service, for example,” Bryant says. “You start to see quite a bit of complexity and it’s all around prioritising the scarce resource that a network is.”

Meeting the legal and regulatory challenge

EY Global Telecommunications Sector Leader Tom Loozen has had extensive experience with global telecommunications companies that are dealing with this rollout. “We need to understand that there are a number of different set-ups the companies can choose to realise the network – there’s network sharing, leasing towers, passive/active investing, network build-out, investing in all of the network or having external money co-invest,” he says. “But even though we have quite a bit of experience in helping deal with these topics, it’s also clear that it’s not obvious which way telcos and associated businesses should jump.”

And it’s not just the physical infrastructure that needs grappling with. “There are extensive legal issues involved: licences, permissions to roll out fibre to connect with towers and poles, putting antennas up in the city, leveraging existing poles, staying within radiation exposure limits,” Loozen says. “The regulatory environment is crucial to navigate. In one of the countries in Europe where 5G is being introduced, the majority of the 5G towers are not activated today because of municipality concerns.”

Bryant also offers a note of caution in the timing for slicing. “Slicing becomes a reality with a 5G core network which is something that is introduced in the second release of 5G standards – the ability to set up network slices is part of that capability,” he says. “The first release of 5G standards uses the 4G network for control, whereas it won’t be until you’ve got to the second release of 5G you start seeing the 5G core network coming in with a network slice function.”

The question of bandwidth allocation is just as knotty. Especially when the question of network slicing is lobbed into the mix. What was once essentially a straightforward bidding process by the government involving a handful of large telcos which then monetised their national networks, the spectre of slicing introduces a whole new dynamic.

This chimes with the latest EY 2019 Global Telecommunications c-suite study, Accelerating the intelligent enterprise that shows spectrum is the number one regulatory concern among operators, ahead of other issues such as data protection, net neutrality and wholesale pricing. More than 70 per cent of respondents chose “spectrum release and licencing frameworks” as one of their top three regulatory impacts over the next three years.

The large telcos may need to restructure their teams to maintain their enterprise advantage more nimbly. Smaller telcos that could broker 5G cell infrastructure and bespoke network solutions for specific areas or industries might emerge. As could the prospect of industries such as banking, large supermarkets or logistics companies, all wanting, literally, a slice of the action. Peak bodies may need to lobby government for their own specific slices. In Germany, for example, some of the 5G spectrum was set aside specifically for industry bidding.

Bidding on 5G bandwidth

In Australia, the Australian Communications and Media Authority (ACMA), which will run the 5G bandwidth bidding in the first quarter of 2021, as set out in the Five-year spectrum outlook 2019-23, is open to new models of network use. A spokesperson notes that the Minister for Communications, Cyber Safety and the Arts, Paul Fletcher, has recently made the Radiocommunications (Spectrum Re-allocation—26 GHz Band) Declaration 2019 and ACMA is proceeding with arrangements to auction spectrum licences in the frequency range 25.1-27.5 GHz (“the 26 GHz band”) in 29 cities and regional centres.

However, ACMA says it is “yet to finalise the technical framework that will underpin licences in the 26 GHz band. This will only be finalised following stakeholder consultation. However, we expect that the technical framework will be optimised for 3GPP New Radio (NR) technologies – also referred to as 5G. We note, however, that spectrum licences are technology flexible and therefore, while they may be optimised for those technologies, licensees are not required to use those technologies. Whether or not licensees choose to explore ‘network slicing’ under their licences would be a commercial decision for individual licensees.”

For telcos, and new players that may enter the space, Loozen zeroes in on the key challenge: how to create the right commercial model. “Will you just charge the companies for the data used?” he asks. “Or when you introduce really tuned, advanced private networks, will you have certain ‘semi-customised’ packages for SMEs, for example, or will you allow customisation for every client at no cost?” Adopting a more tailored approach is borne out by an upcoming EY Enterprise 5G/IoT survey, says Loozen. “Our forthcoming survey shows that customisation will become a more important attribute that businesses seek from their telco and tech providers in the future,” he says.

There’s also the question of how 5G interacts with new enterprise solutions from cloud technologies and AI (artificial intelligence) to robotic process automation. “Our EY 2019 Global Telecommunications c-suite study found that telcos see 5G (69 per cent), automation (62 per cent) and AI (58 per cent) as the top three drivers of digital transformation. And that for each to deliver maximum upside, they must work effectively alongside, and reinforce, each other.”

Bryant agrees that each licensee will obviously have different priorities, stakeholders and desires. “Our view is the more spectrum for the more people the better,” he says. “The real challenge of network slicing is not only that it’s still new technology that will take time to lock in standards, operating scenarios and general architecture, but it will require a paradigm change in how the network operators sell to businesses. It’s no longer selling a bundled plan where they set up VPNs to branch offices for this and that and away you go. It’s a completely different way of selling to enterprises, especially the smaller enterprises. How do the carriers go through that mind shift? I think it is going to be one of the challenges for the industry.”

What now?

Amid all this noise and haste around 5G, what should businesses do to take advantage of the inevitable shift to 5G? At its most simple, businesses need to go back to basics and look at their processes, asking where the most efficiency gains are. Telecommunications and technology providers also need to act as genuine partners to businesses in a 5G/IoT world. This means truly understanding the industries their enterprise customers operate in, and providing end-to-end solutions that help their enterprise customers achieve far-reaching transformation of business processes.

Telcos and technology businesses also have a lot to gain from considering bold choices regarding their own ecosystem partnerships, selecting which customer types they are targeting and shifting to take advantage of emerging industry opportunities.

Combined with real world pilots currently operating at the Port of Hamburg and elsewhere, the forthcoming EY Enterprise 5G/IoT survey underlines that transformation of operating models will be essential if businesses are to make the most of 5G. “It’s about ensuring that companies are ‘being’ digital and not just ‘doing’ digital applications,” says EY Managing Partner, Oceania Consumer Markets, Jenny Young.

But as Young points out, this is more than a tech play. “Organisations should also consider how they will access the skills they need to take full advantage of 5G capabilities,” she says, “Who will they collaborate with, and who will their partners be? How do they update their workforce? “It’s asking how to bring digital capabilities and behaviours together to fully leverage the benefits of technology. Organisations will fall short if they just buy the technology to improve current processes.”