The 5G Wave: What it Means for CEOs

 

The pace at which large tech companies are investing in 5G puts to rest the speculation that this new generation of wireless technology is only an overrated hype. While Verizon is spending a major portion of its capital expenditure of about $18 billion this year on 5G, AT&T plans to bring 5G to 21 cities worldwide by the end of 2019. Ericsson predicts nearly 40% of the world's population will have access to 5G over the next five years.

So the point to ponder for business leaders is not whether 5G is real, but how to best harness its true potential. While network strategy development and implementation has typically been a CTO’s mandate, it’s time for CEOs to get involved in the 5G wave. CEOs are best positioned to decide the scale and time of rollouts and the target audience, and can help offset implications of any risks or miscalculations. 

Here are five areas that CEOs need to focus on to tap into this new technological surge as it sets out to transform the way people and businesses communicate. 

Strategy

Be it voice or data, the previous generations of wireless technologies offered business leaders enough scope to strategize and scale up their networks. In the case of fifth-generation networks, businesses are still operating in uncharted territory. While 5G promises lightning-fast speeds, low latency, and ability to operate multiple connections simultaneously— businesses still lack a complete understanding of its potential. What’s more, as per McKinsey, 93% of businesses it surveyed say network sharing will intensify with 5G. The impact of such sharing between competitors remains unclear. It’s therefore best to devise a fluid and flexible strategy by factoring in what’s known while making room for the unknown.  

Investment

With 5G, the stakes are high, requiring businesses to make significant commitments towards building infrastructure. McKinsey predicts most of the business outcomes will accrue from new technologies like the Internet of Things (IoT) and fixed wireless access (FWA). With a high possibility of network-sharing and collaboration,  investment in the 5G era will also depend on the preparedness of the ecosystem in which a business operates. For instance:

Existing investments in networks that are connected via Radio access network (RAN), and McKinsey’s predictions about telco businesses upgrading their RAN by 2025, indicate most of the investment will be parked here. 

The core network investment will depend on the 5G roadmap of an original equipment manufacturer (OEMs). Many, according to McKinsey, are still developing the technology for core 5G networks. 

With transport networks still under-prepared for 5G, fiber-connections will assume center-stage as the most suitable bet to support 5G capacity.

Investing in enabling layers like operational support systems (OSS) and business support systems (BSS) will be the key as these systems are needed to market, sell, price, and provision critical solutions. 

Cost-savings

5G will undoubtedly require heavy investments to support network upgrades.  But there are ways to offset these expenses. Here’s how.

Look at bite-sized coverage of geography and clients to begin with, instead of targeting large scale coverage. 

Make use of local utility assets like traffic lights to install new small cells instead of macro sites to densify networks. 

Use big data and analytics to create compelling user experiences through visibility into data usage by each user. 

Tap into the infrastructure of public bodies eager to launch their own 5G initiatives  like smart cities. A network shared by multiple players can reduce costs by up to 50%, according to McKinsey. 

Collaboration

With network-sharing being the centrifugal force of 5G, no strategy can work in isolation. Here are some ways businesses can factor in the interests of other stakeholders.

Work with multiple vendors, and also arrive at mutual agreements on using technologies compatible with industry standards, given the bevy of technology choices and diverse bandwidths available.

Build relationships with “anchor” B2B customers who will be willing to partner with the 5G ecosystem to experiment with use cases. 

Forge relationships with competitors to reduce costs as well as make 5G implementation efficient.

Collaborate with government agencies and regulatory bodies as they play a crucial role in policy making, deciding releases, and defining and implementing infrastructure access. 

Operational challenges

As with any new technology, 5G will require operational changes to address the challenges that arise in its wake. Here are some ways to manage it.

Balance 3G, 4G, and 5G while working with diverse technologies and vendors.

Reconfigure networks to be more agile and leverage intelligence and automation to deliver tailor made customer experiences. 

Deploy relevant tools, hire new talent and upskill/reskill employees via training to better manage network resources and optimize ROI. 

Clearly, while transitioning to 5G isn’t going to be easy, a well thought out approach can open up an enormous quantum of possibilities. It can enable telecom and chip companies to bring in as much as $619 billion in additional annual revenue by 2026 by enabling businesses to communicate in a whole new way. All that organizations will need, to effectively transition to 5G, is the mettle to reinvent and reimagine.

 

Reference:

https://www.mckinsey.com/industries/telecommunications/our-insights/a-5g-manifesto-for-the-ceo 

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https://www.fool.com/investing/2019/03/11/4-reasons-why-investors-should-believe-the-5g-hype.aspx