Mobile Experts (www.mobile-experts.com), a domain marketplace, has released market research describing a cross-section of 5G cost. While the wide telecom industry is hyping up 5G, Mobile Experts has been making some hard-nosed financial calculations to determine the applications and scenarios where 5G can be successful.
According to their research, pure speed and low latency are not the primary objectives of 5G. Rather, Mobile Experts has discerned that 5G should be able to achieve a 10x reduction in cost per bit compared with LTE– directed mostly toward video services of various kinds.
“Personally, I don’t believe that new 5G applications will drive a lot of revenue. Virtual reality? No, that’s short-range wireless, not mobile. Massive IoT? No, we have cheaper solutions for that. Critical IoT? Maybe, but that revenue will grow very slowly,” commented Principal Analyst Joe Madden.
According to Mobile Experts, the real problem that faces mobile operators is financial: they are expected to deliver more data, but revenue growth is slowing down. Verizon’s anemic earnings outlook is a good example. They need more data at lower cost, and since about 70% of data traffic is video content, operators really need a cheaper pipe for video.
“We’ve been tracking the estimated cost of a mobile 5G network and the likely architecture that it will follow,” said Joe Madden. “Over the past three years, our predictions about the structure of the 5G network have been correct so far: the LTE control plane will be used, and operators will rely on both low-band (<6 GHz) and high-band (20+ GHz) spectrum to achieve both coverage and capacity. As the industry reaches consensus on these concepts, we've been locking them in to our cost model.” Ten years from now, Mobile Experts predicts that the "phone" will not be a meaningful part of the market. Instead, the battle for control over high-quality movies, shows, games, and VR will define the winners and losers. Mobile Experts suggests that operators use 5G to make video delivery cost-effective—but they also need to work just as hard on developing their menu of entertainment choices.