5G is the target on the mobile-phone industry’s horizon, but we believe the technology will be more evolutionary than revolutionary. Doubts linger over the case for using 5G and about its likely cost.

Even tech champions in Asia acknowledge that requirement for 5G remains highly uncertain. Meanwhile, US enthusiasm largely relates to using fixed-wireless where operators lack fixed-line broadband. And in Europe there has been insufficient regulatory support to encourage greater investment.

We do not expect to see 5G in any scale in Europe until 2020 and there is a case for delaying extensive build until 2022. The technology is not entirely ready anyway, especially in areas such as network virtualisation.

Translating 5G’s capabilities into faster revenue growth looks challenging for the telecoms operators, even though some of the areas it is intended to address – in particular, the internet of things (IoT) – show real promise. But success is highly dependent on the IoT market taking off, and so far it has been very slow to reach critical mass.

Ironically, IoT need not even wait for 5G as 4G already incorporates standards such as narrowband IoT and surveys suggest IoT customers often prefer Wi-Fi.

We estimate that the connectivity market for IoT services could add around 1 per cent to the mobile sector’s revenue growth over the next decade. But capital spending on 5G could become extremely expensive because the relatively high frequencies over which 5G will be deployed in many places require more base stations.

Nonetheless, we anticipate that 5G build costs will remain in check. Competition between suppliers should restrain equipment costs and making 5G kit available to all operators simultaneously ought to limit the risk of a race to deploy emerging.

We still think 5G will be rolled out over time, but we would also highlight that several of the claimed benefits are actually independent of the new technology. In particular, massive multiple-input, multiple-output (MIMO) techniques that could materially enhance capacity are also applicable to 4G.

So we do not regard 5G’s capabilities as sufficiently transformative to induce a breakneck sprint by operators to build. Investment will thus be progressive rather than requiring a ‘big bang’.

We estimate the potential annual build costs of a UK 5G deployment would be broadly similar to the cost of rolling out 4G platforms over the past five years – about GBP1.3 billion a year, unless policymakers insist on an accelerated timetable.

The technology will have important strategic implications for the mobile sector in the longer term. Network virtualisation – shifting network intelligence from specialised hardware to software – should lower costs but might also enable the global internet giants to bypass the mobile-phone operators.

Lastly, 5G does not provide the ‘magic bullet’ for operators to add network capacity. They will have to continue to rely on approaches such as adding spectrum, cell-splitting and Wi-Fi offload – none of which are specific to 5G, as well as MIMO, which will also be applied to 4G.

So while we accept that 5G is set to become the best cellular technology available and will surely see large-scale deployment over time, we regard it as very much evolutionary.

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