Editor’s note: Tom Snyder, executive director of rapidly growing Raleigh-based RIoT and a thought leader in the emerging Internet of Things, is the newest columnist to join WRAL TechWire’s list of top drawer contributors. His “Datafication Nation” columns are part of WRAL TechWire’s Startup Monday package. Note: Tom is taking a holiday break. His column will return.
RALEIGH – Despite the marketing hype, 5G has under-delivered in terms of new customer value. I was recently invited to Washington DC to speak to industry executives and government policy advisors about why this happened, and to suggest how we should scope 6G to have a stronger impact.
The first 5G specifications were released in 2017, leading to early fixed wireless networks in 2018 and public deployment in 2019. The cellular carriers began massive marketing campaigns and most of us upgraded our 4G phones to new 5G phones. The carriers made a lot of money in the consumer markets, despite that the new phones don’t really deliver new capabilities that 4G phones couldn’t already provide. 4G brought us video streaming at 70 miles per hour on the highway. 5G hasn’t yet had a killer app.
While the industry has made lots of money in the consumer segment, there has been little traction selling to enterprises. The 5G specification included a new high frequency “millimeter wave” component that promised dramatically increased cellular capacity and near zero communication latency. The expectation was that the real money would be made as companies took advantage of these capabilities. 5G promised to revolutionize industrial process control, enable autonomous vehicles and drones and make real-time holographic displays possible.
While there are examples of enterprise 5G deployments, the market adoption has been slow. So what happened?
One challenge is that the high frequency bands of 5G have extremely short range (and the lower frequency bands are essentially still just 4G, but with better network efficiency for the operators). Unlike the traditional cellular bands, which can transmit a signal over miles of distance, the high frequency signals only transmit a few hundred feet, and don’t easily penetrate walls or other obstacles. This means that deployment in an industrial facility requires dozens of access points, but with the added complexity of engineering analysis to achieve full coverage. It is an extremely high cost of deployment, all to get capability that isn’t really that different from the existing wifi networks already in most facilities.
But I don’t think 5G’s technical limitations are the root cause of the slow market adoption.
The mobility factor
The bigger problem, in my view, is that 5G is at a competitive disadvantage due to the cellular industry trying to apply their traditional business model to applications where mobility isn’t core.
There’s huge value when a device is truly mobile meaning it’s moving all across the city, a state, around the country and around the world. The current monthly data plans make sense for phones and tablets and other truly mobile devices. Most of the enterprise use cases, by comparison, are about connecting machines and equipment, sensors and actuators and other assets that either don’t move at all, or only move a little bit (like within a factory, for example).
These are the use cases where wifi has been ideal. Wifi operates in an unlicensed band of the wireless spectrum, meaning that anyone can deploy solutions on the wifi frequency without paying a license. Sure, companies need an IT department to manage their own network. But networks can truly be private. Importantly, there is no network cost for managing wifi networks and devices.
The cellular spectrum is licensed by the government to cellular operators, who then have exclusive rights to offer services to customers. If an enterprise customer wants to operate equipment on a cellular frequency, they must do that through a carrier. That involves a monthly expense on top of the expensive installation described above.
Large enterprises tend to have their own IT departments to manage wifi networks and other wireless infrastructure. Small enterprises that don’t have their own IT teams usually work with managed service providers – small, local companies and freelancers that will stand up and manage the company’s network for them.
No ‘killer app’
The 5G business model doesn’t handle either of these situations well. For the large enterprise, having a cellular operator “in their network” adds cost and complexity, but doesn’t displace that IT team, so there isn’t a cost savings. Yes, some aspects of 5G technology have higher wireless performance, compared to wifi, but absent a true “killer app”, for most companies the additional cost isn’t justified by new value.
For the small enterprise, the cellular operators can’t possibly offer the customer service and real-time support that they can get today from managed service providers for their wifi networks. MSP’s tend to be freelancers or local small businesses that will set up and manage the IT infrastructure for shops, restaurants and other small businesses. The cellular industry has largely consolidated to three big players (Verizon, T-Mobile, AT&T). While those operators sometimes allow smaller enterprises to resell services (these are called MVNO’s or mobile virtual network operators), there really hasn’t been a concerted effort by the industry to establish an MSP-style industry for 5G support. Because the cellular giants paid so much to license the cellular frequency bands, they want all the business to themselves.
The final component that has really hurt 5G adoption is a lack of equipment. Hardware makers have been hesitant to make a lot of new devices, waiting to see how the adoption plays out. While we might buy a new phone every couple years, the replacement cycle or industrial equipment like injection molding machines or water turbines is measured in decades. Embedding 5G radios into this kind of equipment is difficult to justify, until industry really has demonstrated a willingness to work within the business model being driven by those cellular carriers.
Watch out for LoRa
By comparison, there has been an explosion of innovative new LoRa devices. LoRa is another new wireless technology, with a first specification release about a year and a half before 5G. Like wifi, LoRa is a protocol in an unlicensed band of the wireless spectrum. As such, anyone can experiment and build new devices without needing an account with, or the costs of a wireless operator. LoRa doesn’t compete directly with 5G – it has extremely low bandwidth not suitable for cameras and video streaming. I’m not arguing it is a competitor to 5G. The point is that it is really easy for entrepreneurs and businesses to experiment with the technology, and thus equipment manufacturers have been eager to seed the market with devices.
And so, the enterprise market has mostly remained unchanged. Next, I’ll offer suggestions for how the industry might approach 6G differently, to once again bring value to the enterprise sector.
(Note: Here is that column: https://wraltechwire.com/2023/11/13/next-generation-in-wireless-6g-is-coming-will-world-learn-hard-lessons-from-5g/)