Survey Says: 5G Developments Vary

A McKinsey survey sheds light on progress being made toward 5G deployments.

Gary Audin

February 26, 2019

2 Min Read
Survey Says: 5G Developments Vary
(Image: Pixabay)

Which comes first, the service or the products that use the service? This is a business question, not a technological question. One of the uncertainties that communications industry professionals often express is the strength of the business cases and the deployment economics of 5G. While technology confidence is high, it’s not clear if, when, and how soon 5G deployment will stimulate new products and services that customers are willing to buy and subscribe to for their organizations.

McKinsey surveys telco CTOs

McKinsey & Company conducted a proprietary survey of 46 chief technology officers (CTOs) directly engaged in 5G-development plans around the world and issued a report titled, “Cutting through the 5G hype: Survey shows telco’s nuanced views.” The images in this blog are from the McKinsey report.

5G business case

Economics are not on the side of any wireless networks at present. Monthly average revenue per user (ARPUs) is decreasing (ARPU fell 7 percent in the U.S. in 2017) and data usage is increasing. Operators have decreasing revenues with little expectation that this will change. Making a business case for more investment when income is declining is tough. To deliver the full 5G vision would require a massive increase in cell numbers which would be hugely expensive -- and these efforts would be only to see revenues continue to decline. This is why operators from Europe to South Korea have said that they cannot see a strong business case for 5G.

5G strategic deployment phases

The U.S. hype surrounding 5G can lead to the conclusion that we are well on our way to deployment. However, when you look at the chart below, you will find that the 5G pilot and technology strategies have moved along quite well, with over 50 percent of the respondents completing an approved strategy. The business case is completed for about 37 percent. Operation and maintenance strategies are even less, at 26 percent. The weakest is the commercial strategy, at only 17 percent. This should be of great concern to those who want to adopt 5G. The commercial strategy is not completed. It’s difficult to determine where and when 5G is going to be available in the desired geographic areas. Will 5G be available at competitive prices?

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About the Author(s)

Gary Audin

President, Delphi, Inc.

Gary Audin has more than 40 years of computer, communications, and security consulting and implementation experience. He has planned, designed, specified, implemented, and operated data, LAN, and telephone networks. These have included local area, national, and international networks, as well as VoIP and IP convergent networks in the US, Canada, Europe, Australia, the Caribbean, and Asia. Gary has advised domestic and international venture capital and investment bankers in communications, VoIP, and microprocessor technologies.

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