Who’s going to pay for 5G? How to optimize the cost among different players

5G Techritory

While many are excited about 5G’s potential for the future of communications, manufacturing, logistics, and other vertical sectors, it’s not clear who will be covering the less fun part of its deployment, integration and development - the expenses. 

Already, billions have been spent on 5G infrastructure, development costs, and spectrum auctions across the globe. But the truth is harsh - a widespread 5G launch is not evidently commercially viable in the short-term. 

With benefits not being clear, no single stakeholder is ready to bear the financial burden. Instead, we are seeing parties putting the responsibility on each other, assuming that others will lead the way. 

Let’s look at who are the main players in the 5G game who could pitch in to help accelerate 5G deployment.

Who are the players?

5G is set to play a significant role in the coming decades, with communications, transport, and defense being among the main sectors to feel its transformative power. Arguably the stakeholders who will invest in the right aspects of 5G will come out as winners. However, there are still very few proven use cases for 5G technology, and this holds many players back from accelerating in the 5G race. 

Mobile Network Operators (MNOs)

Mobile providers might seem like the first who should take the reins of 5G deployment. However, the potential returns of 5G (especially for vertical sectors) are so shrouded in uncertainty that MNOs aren’t willing to cover all the costs alone. Furthermore, with promises of 5G’s positive impact on society, they shouldn’t be the only ones interested. 

In some cases, we see aggressive deployments, for example in South Korea and China, but those are driven mainly by Government support and direct (or indirect) financing.

That being said, we might see more and more investments from MNO’s in the very near future. For example, Verizon Communications are planning to increase the number of 5G cell sites by 500% and deploy their 5G network in 30 new US cities by the end of the year.  

MNOs are initially looking to find early revenues from low-hanging fruits focusing on the consumer segments. For example, an innovative use case of 5G comes from Europe - Latvian mobile operator LMT. Its 5G-powered PayTV service has received several international awards for being one of the first Internet Protocol television (IPTV) platforms launched over the mobile network.

Large industrial businesses

If 5G is so touted for its benefits, where are the eager investments from big industry companies? The truth is that businesses hesitate to make significant investments because there are very few tested use cases for 5G benefits. Therefore, the industry is stuck in a vicious circle - there are almost no proven use cases because companies don't invest. And companies don't invest, because they're too cautious to trust a mere promise. 

However, some industry giants (especially high-value manufacturers) do believe that 5G is the future - for example, Bosch is investing around a billion euros in the first 5G-capable semiconductor plant worldwide. 

Governments 

Governments are a strong candidate for leading the 5G funding parade. Not only governments are the party with the highest social responsibility, but they would also be a chief beneficiary of 5G implementation for healthcare, education, and other sectors. 

However, so far most governments haven’t actively participated or supported other parties by investing directly in the fast deployment of 5G. Meanwhile, most governments have been gathering huge amounts of money from spectrum auctions, instead of supporting businesses in their efforts. 

One thing governments could do is support more use cases for the value of 5G which means testing beyond the simple technical aspects. Such use cases could help explore and prove the commercial value of 5G technology and urge vertical sectors to invest in 5G. 

Plans like this are easier to implement in the homogenous US than in fragmented Europe. Presently the Old Continent is falling behind Asia and North America in terms of the speed of 5G deployment and development.

Device builders

While many players are still on the fence regarding large scale investments in 5G, hardware builders are the ones already living in a 5G world. Companies like Ericsson, Nokia, and Qualcomm are at the forefront of 5G hardware development and are also participating in research programs and field trials with mobile operators around the world. But they shouldn’t be the only ones with a hands-on approach to 5G deployment. 

The users - us

Eventually, society at large will benefit from the widespread launch of 5G. However, at this point it’s unrealistic to expect citizens or even non-governmental organizations to finance some part of expenses related to the 5G rollout. 

A segment of consumers are excited about using 5G in their phones, however, the exact 5G benefits for the end-users are still shrouded in mystery. On top of that, many 5G initiatives have to face outbursts of technophobia, some cases even going as far as setting 5G cellphone towers on fire

In hopes of a productive discussion

There are many 5G-associated costs and many parties to benefit, but the bottom line is this - everyone will have to split the bill. 

No individual player has the means to cover all the expenses - only coordinated effort can help to get over this jam. But to get there, all the stakeholders need to gather around a table and start a discussion on the responsibility of driving the 5G funding project forward. 

A strong attempt for such a discussion will be made at this year’s 5G Techritory conference that will take place digitally on November 11 and 12. Hopefully, the gathered 5G industry leaders, policymakers, and tech innovators will finally come to the conclusion that the 5G movement cannot go on without more initiative and courage from all those involved.

Author Bio:

Neils Kalnins is the Director of 5G Techritory - the annual 5G ecosystem forum. He's also the Director of Development and Custom Management at the Electronic Communications Office of Latvia – an organization that regulates the telecommunications sector in the country.

Share this