(That Is The 2020 Question)
5G is the hot topic in the telecommunications world and is proving to be the biggest war yet, surpassing prior ‘G’ battles; a war which is already challenging major brands. Take Nokia for example, once one of the early dominating two global market forces in mobile phones who dropped from nearly 50% market share in 2007 to 2013’s sub 5% and recovered as a business through a pivot to network infrastructure provider to the telecoms industry, their race to engage in the building of the Chinese 5G network is now over.
There has been a consistently growing demand over recent years for increased bandwidth, speed and access to richer content as we have seen the demands for rich content create the perfect storm with more mobile lives and ever growing power in smart mobile devices. The one barrier binding us all being the limitations of bandwidth particularly when mobile and the ability to deliver the content we wish to consume to the device we are on at the location we are at. We have all no doubt bemoaned a time when an internet download or stream was not as quick as we would like, especially when on the move, experiencing varying strengths of signal and success.
“5G is poised to create a revolutionary, versus an evolutionary, wave of change and innovation across our world.” John Walsh, Accenture’s group chief executive for communications, media & technology
From the early start on 1G and through 2, 3 we were ahead of user demands, but 4G leapt us forwards with 500 times the potential speed of 3G, but still with limitations when on the move and when user devices saturate. We have now watched as mobile compute and technology power has become ubiquitous and assumed, IOT (Internet of Things) has commoditised both in consumer land and business and user’s adoption of video based content has exploded.
Video streaming is expected to account for 82% of all Internet traffic in 2020. (Go-Globe)
Hence 5G has a growing need and at 35 times faster than 4G with significant faster data rates, higher connection density, lower latency, better battery consumption and overall improved wireless coverage is a technology many are awaiting with bated breath, especially when they recognise the ability to stream a full 4K movie in seconds. Today over half of video content is viewed on mobile devices, with this predicted to quickly grow to around 75%.
More than 50% of live streaming viewers leave a low-quality stream in 90 seconds or less. (TechRadar)
With the delivery of new innovations and applications supporting the need for 5G, it will find a way as an important new technology for the decade ahead. The most competitive market for 5G and possibly the largest and fastest developing is China where the demand for live streaming alone is high and where business 5G networking is in demand for campus networks across an ever-increasing business market.
China’s live-streaming industry has more than 425 million users. (Cx Tech News)
The competitive selection process for 5G includes the need to meet key technical requirements, deployment speed and technical and commercial viability. In China, the world’s biggest mobile phone market, these criteria are stringent and demanding, setting the scene for the battles to come around the globe. For Nokia, a measly 8% of its revenue comes from the Chinese market and with their recent failed punch this looks to fall following the announcement that Nokia has albeit given up on 5G in China. Nokia failed to meet key technical requirements from China’s big 3 carriers across a number of levels including lack of support for the bandwidths required alongside poor performance in proof of concept testing, putting them last in the tests.
I remember the days when Nokia was the name to go to for mobile telecoms and commonly spoken about, I had several early Nokia phones. Now it is rare I hear the name. So where did it all go wrong in China for Nokia and could this be the forerunner for further woes in other markets?
We can start with the fact that Nokia for far too long spent too much time relying on their outdated and clunky Symbian operating system rather than adopting the likes of an Android platform. Nokia also made the mistake of choosing expensive programmable 5G components, making its products less profitable than rivals. Only last year, Nokia alerted investors to difficulties with its 5G products, disrupting its margins, with them partly citing blame to the acquisition of Alcatel-Lucent in 2016. Add to all this reports that Nokia’s equipment in other regions was to blame for rollout delays of 5G and the picture is not an attractive one to prospective clients.
We have seen many prior examples of vendors divesting from the obvious tech choices to find themselves marginalised and at market disadvantage and I have to question how Nokia could make such fundamental errors in a time when the market is far less forgiving.
Where Nokia has reduced its overall R&D spend by an average of about 10% annually, I was surprised to hear at a recent event of Huawei’s speed of innovation outpaces its hardest competitors, investing US$600million on 5G R&D along in recent years. Add to this the leverage Huawei harnesses from its adjacent businesses; infrastructure, systems on a chip and smartphone divisions and you could argue Nokia was in the perfect storm from the outset of these failed bids.
Chinese carriers require some specific technology specifications to be met including provision for dynamic spectrum sharing (DSS) between new 5G networks and existing TDD 4G networks and support for 200 MHz of shared bandwidths to make deployment practical and usable. Nokia was unable to meet either of these criteria and reportedly lags at least a year behind the likes of Huawei in these areas, a big chasm in such a fast-paced market development. One could argue this to be understandable if it were not for the Chinese market being so vast and valuable.
The 5G market need is demanding on all levels, as this will become the foundation platform over time and not the stop gap 4G can be argued to have been (knowing 5G was on the horizon when 4G launched). This is the big battle for the future ahead and this is not simply about the 5G consumer devices, this is about the global infrastructure to support 5G at scale, deployable at speed with reliability and a cost model that empowers acceleration, not hinders.
With this in mind, Nokia’s lacking in speed of delivery is a big risk for potential carriers, who themselves have competitive pressures to be 1st to serve the needs of customers. Nokia has been racking up failure stories including several carriers in South Korea finding that the Nokia decision has significantly slowed down the country’s 5G deployment and left them with interoperability issues.
With the high-speed race to widespread 5G, there is a mantra for equipment that can be deployed quickly alongside existing approved telecoms base stations, (and at a size that accommodates the challenges of deployment space). Simply being in the race will not be enough. I learnt recently how one of the biggest challenges for getting 5G live and widespread is the deployment of the antennas, being that current approved locations are mostly saturated and space is contained, meaning either specially designed smaller footprints are required (Huawei has delivered to this) OR the more difficult approach of provisioning to new locations following planning permission has to be taken.
5G is the purported end game (at least for many years to come) and carriers are going to place their bets carefully and certainly be cognisant of a need to be early to market. Nokia’s defence post loss of the Chinese bids has been that they have chosen to focus on other geographic markets and have not ruled out a return to China? But once 5G is rolled with the 1st to market successes, will there be opportunity left for the late comers claiming they are now ready?
5G will account for as many as 1.2 billion connections by 2025 (Source : GSMA), an increase from the 10 million estimated in 2019 (Source : IDC)
The battle in China leads to the wider scope of what does it take to compete in the 5G market space, what scale, investment and technology foothold does a provider need to win over in this foundation market we are about to enter. Huawei has its geo-political challenges, but certainly is ahead on the technology front, the question will be which plays out stronger. The security side is critically important, but has Huawei be claimed guilty with no evidence and will such a verdict put carriers at a costly disadvantage and impact us as clients.
The likes of Huawei are the powerhouses that have invested heavily to get head on the delivery to meet the needs of this challenging big growth sector. They have already pushed Nokia into the ‘too little too late category’ in China at least and the game is on to achieve the same into other regions.