We’re mid-way through 2017. That’s only 8 months from the Pyeongchang winter olympics – supposedly a poster for 5G technology [Link2]. Obviously, true, commercial 5G will not happen in 8 months, but the hype machine will kick into increasingly higher gears. Hence, I thought to put together a few thoughts on the state of the market and highlight what I foresee as a potential problem the market may come to face in light of how 5G is evolving: the cascading technology trap. The consequences of this challenge is to delay the deployments of 5G beyond the current estimates of analysts and industry players.
To start, the earliest timelines for deploying 5G keep track as 2020 for select markets in form of trials and soft launches. These will be selective deployments in markets such as US, Japan and Korea. The status of these deployments will be called into question as whether they are true 5G, since early 5G technology is planned for fixed services. Fixed services imply desktop or fixed CPE mounted on a house – a different application from mobile services [smartphone-based] that former generations address.
Despite proclaimed 5G deployment timelines between 2018-2020, the most telling factor that further delays are likely is the state of the device silicon ecosystem. It costs $100+ million to develop a baseband modem not to mention almost a two year cycle to establish interoperability and certification. Vendors wait to lock the hardware design after the fundamental parameters and features of the technology are defined. Additional development and fixes in software could follow later, as long as the hardware is not impacted. 5G silicon is not expected on market until 2019 following certain milestones being completed in the standardization process:
- 5G Phase 1: Defined in Release 15 with September 2018 as end date. This release will largely define the mobile broadband use case.
- 5G Phase 2: Defined in Release 16 with as of yet unspecified end date, but in most likelihood in 4Q2019 at the earliest. This release incorporates additional 5G features to enable enterprise services including highly-touted applications such as connected cars, smart factories and advanced robotics, virtual and augmented reality, etc.
The Cascading Technology Trap
The current standards release plan and market status leaves room for 5G deployment timelines to further slip into 2021 or later. For instance, the proximity of Releases 15 and 16, the planned upgrades to LTE networks, and challenges in validating the 5G business case, may give operators a compelling business case to skip 5G Phase 1. At Xona Partners, we call this the cascading technology trap which plagues different areas of technology: technology evolves at faster pace that entities can absorb and implement it commercially. The pace of change is particularly rapid during the early stages in the lifecycle of a technology, hence the higher the likelihood to fall in the cascading technology trap. One example from the wireless industry in the recent past is IEEE 802.16e standard which defined Phase 1 (single antenna) and Phase 2 (multi-antenna). The industry skipped past Phase 1 to focus on Phase 2.
The 5G marketing machine will continue to roll. But unlike 4G, which met and perhaps exceeded all expectations in success, 5G runs the risk of failure, at least in the short and medium terms. The value proposition and business case for mobile broadband remains suspect. The success of 4G and the inability of operators to compete with over-the-top service providers contribute to the cascading technology trap. In the meantime, enterprises remain most difficult to convince of the value proposition of 5G: they require time to validate the business case and become convinced of the value proposition. This again proves that technology is the easy part; but winning the business is most challenging.