All that glitters is not MWC, to paraphrase a popular saying, but MWC probably glitters more than most technology shows. The question that you have to ask after an MWC event, or any other trade show for that matter, is whether there’s anything behind the bling. I thought it might be interesting to look at Wall Street’s take on the event and add in my own assessment where I think the Street has it wrong.
Remember that Wall Street and the media have one thing in common; they love a revolutionary story. Static markets don’t produce stock appreciation. Thus, it would be surprising if the Street dissed 5G overall, and it doesn’t. The lead of most research on the show is that “5G is happening” or “happening faster than expected”. The Street cites the AT&T, T-Mobile, and Verizon commitments to services available in “late 2018 or early 2019” as the proof point.
As I’ve noted in earlier blogs, it’s certainly true that there will be 5G service offered by multiple US providers in that period. However, these services will be little beyond radio-network advances added to legacy mobile infrastructure. Don’t expect to see all the fancy features of 5G, including network slicing and even controlled latency. Some of the services will promote attachment of IoT devices via special service models, but the people I talk with say that there won’t be an explosion of IoT adoption.
Even with 5G New Radio (NR), the problem operators face with 5G is that to exploit it fully, you need new spectrum, new phones and devices, and new infrastructure. Any of those things presents a challenge in investment and ROI, a demand for credibility among both buyers and sellers, and a risk. How many people would change phones to get 5G? How many when they didn’t even have the new 5G spectrum available in their area? How many operators would commit to wide deployment if there were few mobile devices that could support the services and pay back on their commitment?
Another view of the show is that it’s really not so much about “near term” “happening-now” stuff, but about what the technology signals about the future, likely meaning beyond 2019. This view can be summarized by citing those signals: 5G NR, IoT, SDN/NFV, mobile-edge computing, and 5G digital services like AI, robotics, etc. You can see a sort-of-technological progression here, one that does reflect at least the order of issues that the 5G market faces.
The first step in the progression is the 5G NR stuff, which is first because there’s zero chance anyone would either do a full-bore 5G NR/Core rollout at one time, and less chance they’d do 5G core without NR in place. Operators can use some current spectrum with 5G NR until the new stuff is available, but compatible phones will be an issue. That suggests that early 5G NR might be easier to pull through using something like IoT, which isn’t typically used with 4G and so represents a new revenue opportunity for the mobile operators.
The problem with IoT, of course, is that it’s at least as speculative as 5G is. Yeah, I know you’ve heard about the ten or twenty or fifty billion IoT devices already out there. The fact is that they aren’t using mobile cellular services to connect. Most of them don’t even use IP directly, they are based on a home/local facility protocol like Insteon, X10 or Zigbee. For sure, a huge uptick in 5G-connected IoT devices would make a great start to a 5G business case for operators, but who makes the business case for the IoT part? We’re still waiting.
SDN and NFV, the next issue on the Street list, won’t help with jump-starting 5G either. In fact, there is little in the early 5G deployment opportunity set that really empowers either technology. What’s happening with 5G and SDN or (in particular) NFV is that vendors who had banked on these new network technologies boosting their fortunes and exit strategies are now realizing that proactive adoption of SDN or NFV on a large scale isn’t going to happen for years, if ever. Unless 5G pulls it through. If you’re dying of thirst, every mirage is a waterhole in disguise.
SDN and NFV in 5G deployments depend on serious commitment to the 5G Core; NR won’t cut it. Serious 5G Core depends on significant new services, services that won’t fit the model of current 4G/IMS/EPC networking. Can we identify the services? Plenty of folks at MWC told the Street they could, then named off things like augmented reality, robotics, universal AI, self-driving cars, flying cars, and so forth. Earth to MWC: enumerating things isn’t creating them. I can name a bunch of stars, but I can’t get you to any of them (not even the closest).
Some Street reports on MWC also mentioned a vendor not particularly linked with 5G, Juniper. The company is said to be undergoing a “sales overhaul”, because of significant market headwinds arising in part from a slowdown in cloud switching. Why is this tidbit relevant to my 5G theme? Because Juniper had been benefitting from a “positioning deployment”, meaning the process of taking a technology (cloud, in this case) from nothing to something. Every new service technology has a positioning deployment, and when it’s over the service providers sit and monitor their cash registers to see if things are paying off as expected. That’s the problem with those new SDN-and-NFV-facilitating services. We may see early interest in exceptionally good business cases, but will we see it on a scale needed to create a massive infrastructure shift for mobile services? I doubt it, at least not in the next three or four years.
If you read the details of the Street research from the show, you get a better if less optimistic picture. The technical advances, particularly in phone and camera technology, needed for those new 5G services can be expected to be available in about 2020. When they are, there will be an opportunity to test them with the proto-5G NR applications that have already deployed. That testing could result in significant service deployments by 2022. Not “near term” but respectable.
Could we do better? Operators tell me that the most decisive steps toward full 5G would come not from any of these new AI-and-artificial-stuff services, but from the hybridization of 5G and fiber to the node for home broadband and video delivery. None of this stuff generates the heart-throbbing attention that things like virtual reality and robotics do, but the hybrid has the advantage of creating 5G opportunity through applications with proven revenue potential. We will, I’m sure, get to the sci-fi stuff down the road, but not unless we can pass through the initial deployment period successfully.
Nokia told the Street that “To take full advantage of all these features [referencing network slicing, low latency, and high-speed data] requires complete redesign of network architecture.” Well, that sure sounds like a vendor telling the Street that a forklift of all infrastructure for 5G deployment is inevitable, or every feature can’t be provided. I’m telling you that if every feature can’t be justified, no forklifting will be provided.
Are 5G vendors, in an attempt to boost the Street’s vision of their own financial future in 5G, setting the bar so high for deployment that the buyers, the network operators, won’t be able to justify 5G at all? That could happen. On the other hand, how much of the future is determined by an interest in getting to it? I think that the deciding truth with 5G is that a lot will happen with it, if we can just get it started, but most of the happening is out four or five years into the future. As usual, the market exaggerates pace of adoption more than it does what we’re going to be able to do once adoption takes place.