Europe and Portugal are clearly lagging behind in the 5G race. And we must quickly reverse this trend, with well-defined and ambitious strategies. Given the innovation power of the new mobile generation and the digital acceleration brought by pandemic, most organizations want to move quickly to new solutions and services and new business models. Creating strong ecosystems and cooperation and coopetition will be essential to secure the future.
There is no doubt that 5G will clearly accelerate the transformation of all areas, and is a technology with great innovation power. And there is a growing deployment of 5G private networks, which are gaining a foothold in the priorities of all businesses because they are reliable, high-speed, low-latency, and high-density. By the end of 2020 there were already many such networks deployed a bit everywhere, driven by regulatory policies to that effect.
This was one of the conclusions of the most recent edition of "Deloitte's Study of Advanced Wireless Adoption", which this year, for the first time, included the Portuguese market. Pedro Sanguinho, Senior Manager at Deloitte, presented this work at the start of the Talkcommunications on "The Future of 5G In The World: Lessons Learned", highlighting that several sizes of companies and different roles and dimensions were taken into consideration.
According to the speaker, it was clear that Portuguese organizations plan to move forward with a transformation of their network in the next 3 years, to be more innovative. Therefore, they consider next generation wireless technologies, such as 5G, of strategic importance to ensure the success of their business.
Speed, latency, and power efficiency are the characteristics considered most important by organizations to achieve their advanced connectivity goals. So are the security, resiliency, and cost of the technology. Most companies believe that 5G and wi-fi 6 will be the most critical wireless technologies within three years, and the specific solutions will depend on their implementation, but consider them to be technologies that will coexist.
But the interviewees also admit that there are challenges to be faced when adopting advanced connectivity technologies. Such as security, low maturity of the technologies, return on investment, implementation difficulties, lack of spectrum availability, heavy investments already made in network technologies, lack of financial capacity to upgrade or difficulty in identifying the right use cases.
"Exploring 5G is increasingly at the top of the priorities of companies, who want to address new technologies. And they see 5G as a way to develop other technologies, like AI or automation, that will bring new opportunities. Not only for new solutions but also to address new business models. They just have to understand how to install them and how to return the proper financial return", concluded Pedro Sanguinho.
EUROPE IN THE TAIL OF DEVELOPMENT
But if priorities are changing in companies, which want to accelerate the adoption of new technologies, reality shows that Europe is still far behind countries like the United States, Japan and South Korea when it comes to 5G, unlike what happened with 4G. Data advanced by Alessandro Gropelli, Director of Strategy and Communications at ETNO - European Telecommunications Network Operators' Association, from a study this year by Analysys Mason, show that in the 3rd quarter of 2020, South Korea already had 93% population coverage, followed by the US with 76% and Japan with 34.3%. The EU had only 24.4% 5G coverage.
In ETNO's view, there are several obstacles that explain this situation. Starting with those resulting from the spectrum, where Alessandro Gropelli highlights the slow and uneven release of spectrum among member states and the poor investment conditions, faced with auctions that are too high for the operators' capacity. The increasing fragmentation of the European market, with strategies to promote more competition, are another problem.
At the demand level, there are also constraints, resulting namely from the low rate of digital usage by businesses and citizens, as well as by the public sector. The market structure and the innovative environment are also constraints. Added to this are problems of misinformation, namely around health, environment or privacy, as well as differences in the adoption of technology between different EU countries.
Therefore, the head of ETNO considers it very positive that the European Commission has advanced last week with the Digital Compass 2030, where are the European goals for this decade in terms of digital, with equal goals for all countries in terms of qualifications, sustainable and secure infrastructures, digital transformation of businesses and digitalization of public services. After all, "there is an awareness that 5G will allow a sustainable evolution of all areas and has a huge potential in all industries," he guarantees.
Germany is one of the countries that have already made progress with 5G by 2020 and further developments are expected during the course of this year. Alexander Mogg, Practice Leader Strategy & Business Design and Partner at Deloitte Germany, highlights the plans of the three big market players - Deutsche Telekom, Vodafone and Telefonica Deutschland - with operators focusing on spectrum sharing to meet the targets set by the communications regulator in terms of the country's coverage.
However, in a very mature market such as mobile, he believes that operators' plans as well as coverage obligations are below the potential that 5G offers. Although he says there are many coverage obligations, he highlights that they are not ambitious, citing the example of at least 98% of homes and businesses having at least a 100 Mbps internet access speed by the end of 2022. What's more, given that 5G in Germany will have a strong focus on urban areas, with strong competition between infrastructures, what may even happen is an increase in the digital divide between urban, semi-urban and rural areas.
"5G will be more for the enterprise sector, with a focus on IoT, private networks, cloud and edge. There are many use cases that are emerging and the question is how to create an ecosystem to bring those use cases to the market and massify them. There is a big market opportunity, but there are powerful global players that are moving fast. Will it be the OTT's that will win in 5G and, in this context, what role will the operators play to secure their position? This question remains to be answered," he concludes.
Meanwhile, in the national market, several use cases based on 5G are already being worked on. Aveiro is an example, positioning itself as one of the first 5G cities in the country, under the Aveiro Tech City - The Living Lab project. The goal, according to Paulo Pereira, Director of Strategic Innovation and Technology at Altice Labs, is to redefine the way of living and working, through a fully connected city.
To this end, a set of challenges were set to the community, having created an "interesting ecosystem with the municipality, university and business sector", which benefits from the fact that there is a very strong industrial presence in the city, which enhances the creation and success cases of the living lab. Thus, under the project, several advanced proofs of concept are being developed, based on 5G networks developed by Altice and the development of other technologies, such as IoT, cloud and edge.
According to Paulo Pereira, the project has been challenging startups, scaleups and R&D centers to create new products and services, using the Living Lab to test them. "There are many use cases to be tested and demonstrated, to explore how 5G can bring value to the community. We believe that connectivity is very important, but it's much more than that, so we need to have an ecosystem around us," he explains.
COMPETITION VS. RELEVANCE
The Q&A, moderated by Pedro Tavares, Partner at Deloitte, and by Sandra Fazenda Almeida, Executive Director at APDC, once again addressed the issue of excessive fragmentation of the European market in terms of number of operators. This is a real problem, in Alessandro Gropelli's perspective, so we have to think about whether competition is really what we want at this moment.
Because "if competition is important, industrial policies are critical. So, "we need to see where there are opportunities to create European innovation. And the OTT's, which today are more powerful global corporations than states, are the entities we have to negotiate with. Scale clearly matters," he adds.
Alexander Mogg also agrees that this is "a decision between competition and industrial policy. More operators don't bring more value to the table when there is already strong coverage in urban areas. It is better to have regulatory mechanisms and incentives to cover regions outside urban areas, because many companies are already outside urban areas and need access, as well as incentives to accelerate network capacities and speeds. Having four operators build the same infrastructure four times is not relevant. We are talking about a very high investment. There is room to optimize. I'm not saying we should eliminate competition, but there must be mechanisms to redirect these huge investments.
And are there, in fact, lessons learned from what is already happening in 4G? For Pedro Sanguinho, it is that "5G in itself has no value. But it is an open door to new solutions, using the other technologies powered by 5G. Alessandro Gropelli talks about the need to know how to define the right policies, with the operators being part of the solution. "It's fundamental to have a clear idea of what the big goals are. This is a critical moment for industrial policy.
Alexander Mogg believes that "5G and fiber are impressive technologies and we will see some very interesting use cases. I want to see governments defining how we can build an ecosystem in Europe and not leave it to the big players. Joining forces to develop an ecosystem that will develop many use cases."
"Cooperation and coopetition will be key for the future. The investments that will have to be made will be very relevant in 5G, so we have to create the ecosystem and derive benefits from that. There is a need to have startups, SMEs, companies industries that show the challenges they face and benefit from the technology. Because 5G is technology," concludes Paulo Pereira.