Editor’s note: The advent of faster-than-ever wireless networks in the form of new 5G means plenty of change and challenges for the communications industry. Technology Business Research Analyst Dan Callahan provides an overview in the first of a multi-part report.

PLANO, Texas – The telecom industry in the Americas continues to prepare for 5G. The ever-increasing data consumption and output from content-hungry consumers and businesses seeking to take advantage of Internet of Things (IoT), among other emerging technologies, drives R&D and deployment of 5G.

The telecom industry seeks to prove 5G will increase value to businesses and consumers and drive revenue opportunities that elude them in the increasingly commoditized 4G era. Telecom vendors are betting 5G will lead to massive infrastructure build-outs. However, the prize of new revenue from 5G is still not crystal clear. While the 5G Americas operators and vendors were still confident in the 5G technology capabilities, the telecom industry is unable to tell a compelling story for the business value of 5G.

First, the technology itself will take nearly a decade or longer to build out and become widely available. 5G will gradually become widespread as new future-proofed infrastructure is deployed for current standards with good market traction such as LTE-M. However, many businesses do not have the time to wait for 5G to be widely economical, proven and deployed. By the time 5G is ubiquitous, many customers will have deployed alternate technologies or architectures, such as private networks, LTE-M, long range (LoRa) and Narrowband IoT (NB-IoT). Second, the business case is not there yet, with most vendors and operators unable to offer any solid use case or cost justification other than generalities of increased precision, density and throughput.

Many of the current standards, such as LTE-Advanced (LTE-A), LTE-M, LoRa and NB-IoT, are “good enough,” offering the balance of throughput and cost that make them effective for most IoT use cases, where stationary machines are sending tiny, intermittent messages to edge computing consoles. TBR does not expect that to change in the next five years.

However, operators, with the help of telecom vendors, will develop 5G regardless, to handle expanding bandwidth demands from consumer data consumption and enterprise IoT use cases. Customers will find the precision, density, latency and throughput useful, and use cases will emerge over time. But there are no proposed use cases that will drive an explosion of new revenue for telecom vendors and operators because 5G is not a panacea for IoT connectivity.

Rather, similar to how IoT is adopted, TBR believes 5G will be a gradual evolution as customers slowly adopt it where advantages are seen and pricing is normalized due to standardization and competition. If operators seek to fully monetize IoT, and escape commoditized connectivity, monetization will be from their IoT practices, platforms and services.

  • The technology road map of, and potential for, 5G is outlined

Data demands are growing.

The 5G presentation, kicked off by Paul Greendyk, chairman of the 5G Americas Board of Governors and vice president of Mobile Core & Network Services at AT&T (NYSE: T), outlined numerous projections to support that statement, such as global monthly mobile data growing from 8 billion gigabytes in 2016 to 76 billion gigabytes in 2021 and data traffic growing 70% globally from 1Q16 to 1Q17. Those in the telecom community see 5G as the technology to support these expanding numbers. Some 5G advantages outlined included:

• Enhanced mobile broadband: 5G can provide ultra-high bandwidth, high efficiency, denser networks and energy efficiency.

• Ultra-reliable and low-latency communications: For use cases that require precision, such as in IoT, 5G will provide low latency, low access and synchronization times, and high reliability.

• Massive machine-type communications: For use cases that need lower precision but more span, and include massive amounts of devices, 5G can facilitate the density and low power requirements necessary.

Leveraging analyst research, Greendyk indicated 5G will have a massive economic impact as well, with claims 5G will enable $12.3 trillion in global economic output by 2035.

Pre-standard 5G network investments are estimated to reach $250 million by the end of 2017, and 5G network infrastructure investments are expected to land around $28 billion annually by 2025.

Some operators are already trialing 5G, with AT&T, Sprint (NYSE: S) and T-Mobile (Nasdaq: TMUS) highlighted at 5G Americas. The operators and vendors that hold membership in 5G Americas are closely contributing to and following the international standards body 3GPP in their 5G build-outs to foster accelerated adoption and a vendor ecosystem.

5G is planned to roll out in two phases:

Phase One, a set of standards aimed to support some priority use cases, is expected to be complete in 2018; and Phase Two, expanding on the use cases of Phase One, will begin being built out in 2018 and be ready by 2020. LTE will be the mobile broadband foundation for 5G and interoperate seamlessly. LTE-A and 5G will work together to address the existing and new business cases.

Next: Building the business case

(C) TBR