THE 5G REVOLUTION: EMPOWERING PEOPLE, SOCIETIES,

ENTERPRISES AND INDUSTRIESOctober 2020

The fifth generation of mobilenetworks—in short 5G—has thepotential to fundamentally change the world. It will alter how consumers communicate,consume content, work together, and interact with the environment. And it is poised to shift thedynamics of almost all industries, unlocking entirely newgroundbreaking applicationssimply not possible today.

However, telecom companies are proceeding with caution because of the high risks and investments involved in moving towardsubiquitous 5G networks. Forexample, according to a report on 5G spending from Greensill, the world’s biggest non-bank provider of working capital solutions,infrastructure upgrades will need global investment in theneighborhood of USD 1 trillion.Rolling out 5G requires denser (than 4G) arrays of masts and small cells, an intensive fiber-optic backhaul, and many other newinfrastructure elements.Furthermore, additional—mostly high-priced—5G-spectrum has to be acquired. And these are only the anticipated telecominvestments. They don’t include, for instance, upgrading Internet of Things (IoT) devices.

Telcos will need to make these large investments during a period of relatively flat revenue growth. In

2018, the global annualyear-over-year revenue growth in the telecommunicationsindustry was 1.4 percent—less than half of global GDP growth. And this growth is expected to slow to around 1 percent by 2025,according to the GSM Association (GSMA). The poor global financial performance is no different for Indian telecoms that are suffering from stretched balance sheets, a high cumulative net debt, anddeclining average revenue per user.

Furthermore, between 2010 and 2018, telcos spent globally well over USD 1 trillion on upgrading their networks to 4G. They still have to amortize their 4G core networks. Many of them are even stillupgrading their 4G networks to cope with growing demand for bandwidth.

As a result, most telcos will notprioritize the core network in the first stages of 5G deployment.Instead, “islands” of 5G New Radio (NR) coverage will be added to the 4G core, mainly to solve the capacity issue. This evolutionary approach will be natural for most telcos, allowing them to lessen initial investments with the revenue potential remaining small.

ADDRESSING TODAY’S PAIN POINTS OF SMARTPHONE USERSStill, 5G is set to have the fastest globalroll-out of any generation of mobile network technology. The number of 5G subscriptions is growing more quickly than expected. Ericsson just raised its global subscription forecast to 2.8 billion 5G subscriptions by 2025 due to faster than expected Chinese uptake. Although it will take some time to hit critical mass, the race to 5G is clearly on.

South Korea started its first 5G commercial networks on April 4, 2019 and surpassed the three million subscriber mark five months later. Verizon, AT&T, Sprint, and T-Mobilebegan rolling out networks in the same period, providing an increasing number of US cities with 5G speeds and faster wireless connections. Verizon is also very active in rolling out 5G Home—a direct wirelessconnection (instead of a wireline/cable connection) enabling a (WiFi) router toprovide Internet service throughout a house—and plans to deploy this service in every city.

China has invested heavily in the transition to 5G. Since November 1, 2019, China has had the largest 5G network available for commercial use, with the three majorChinese providers offering 5G services to users in 50 of China’s major cities. By 2025, China is expected to account for more than 40 percent of the world’s 5G connections.

In an increasing number of markets telcos have launched commercial 5G services. These early 5G services particularly focus on addressing current pain points ofsmartphone users, particularly those related to the explosive growth in mobile video. The rise in the number of mobile devices used to watch streamed content has contributed to a rapid increase in video viewing time. And the amount of embedded video in social media and the evolution toward higher resolution are further increasing pressure on current networks, resulting in degraded video experiences. The previous mobile network transition from 3G to 4G offered

significant improvements in video viewing, but it has not kept pace with the rapacious consumer appetite for high resolution video content.

DEPENDENCY ON 5G SPECTRUM ALLOCATION

Timing in each market largely depends upon the availability of 5G-compatible smartphones and 5G spectrum allocation, with each country having its own schedule for either reserving, auctioning, or making formal plans for 5G spectrum.

The spread of Covid-19 has made various 5G network spectrum regulators decide to postpone planned auctions of the 5Gspectrum, in particular in many European countries. Also, in India, where 5G auctions may not happen to start until at least 2021, which would push back the launch ofcommercial 5G services until at least 2022.

Covid-19 is only one of the factors that is influencing the timing of the 5G auction in India. The sale of 5G spectrum on short term might not be the best approach because of the poor health of the Indian telcos and the worries that the reserve price forspectrum—one of the highest in the world—is simply too high to attract interest. All the more because the completion of afull-fledged 5G network will require anadditional investment of around USD 70 billion, part due to the country’s lack of a widespread fiber-optic backhaulinfrastructure. The continued US pressure to ban 5G equipment from Huawei and ZTE is another factor that might further slow the process.

This all will set back the country’s 5Gdeployment timeline, but also gives the much-needed time for the government, regulator and telcos to do the things that will improve outcomes in the long run.Moreover, the advantages of 5G primarily lie in industrial applications—not in being first to serve mass consumers—and can only be monetized once the next wave of 5Gtechnology has matured and a 5Gecosystem is in place.

In the 5G era, telcos can no longer be assumed to be the default connectivity providers. 5G could see explosive growth in private enterprise networks, according to a GSMA intelligence report. This nascent movement toward allocating spectrum for enterprise—as opposed to operator—use will likely fuel demand within the next five years.Manufacturers, for instance, might opt to build private 5G networks for their in-factory applications.

Germany has carved out spectrum forprivate licenses in its 5G allocations, even

without auctioning but instead assigning spectrum to applicants on request.German airline Lufthansa has gained a spectrum license for operating 5G in the3.7-3.8 GHz band. As another example,Fujitsu was granted Japan’s first commercial Private 5G radio station license from the Kanto Bureau of Telecommunications.

For telcos, this means that infrastructure competition becomes harder and that“frenemy-style” partnerships with adjacent industries become the norm rather than theexception.

Interestingly, American tech companies – such as Facebook, Google, Microsoft andAmazon - seem to be increasingly keen in investing in India’s mobile sector. These techgiants are very focused on India as thefastest-growing internet market with 650 million users, most of them being serviced by

the mobile telcos. By partnering with these telcos, they are better placed to monetize their vast customer base, while it can help the Indian telcos to (partially) fund the 5G roll-out and to monetize today’s 4G and future 5G networks.

CREATING PRIVATE 5G NETWORKS

BLENDING 5G, EDGE COMPUTING AND AI TO CREATE THE PERFECT STORM5G brings much more to the table than just increasing speed and throughput. In addition to enhancing mobile broadband (eMBB), it will enable massive machine-typecommunications (mMTC) to support mass adoption of IoT services across many industryverticals. Plus, it will offer ultra-reliablelow- latency communications (URLLC) formission-critical applications.

However, 5G is only one of a set oftechnologies coming together to kick off a

new chapter in the history oftelecommunications. It is particularly the combination with edge computing andartificial intelligence (AI) that will helpfundamentally transformtelecommunications. In fact, the blending of 5G, edge computing, and AI holds thepotential to become the foundation for many new consumer and industrialapplications and to support entirely new groundbreaking use cases simply notpossible today (see Figure 1).

Figure 1. The perfect confluence of technologies: 5G, edge computing and AI

TEAMING UP: EDGE COMPUTING AND 5GWithout edge computing, 5G applications and services will rely upon connecting through the core network to centralized cloud resources for storage andcomputing, losing much of the positive impact of the latency reduction enabled by 5G. The basic idea behind edgecomputing is that by storing/accessing data and performing high-demand processing tasks closer to the network edge— that is, on the network gateway, customerpremises or edge devices—networkcongestion and latency are significantly reduced. These reductions are crucial forlatency-critical applications dependent on continuous corrective actions.

Organizations are already capitalizing on edge computing’s capabilities to enable real-time insights from connected devices and systems, real-time equipmentmonitoring, and real-time inventorymanagement. For example, sustainableagriculture companies—such as NewJersey-based vertical farming companyAeroFarms—are equipping plants with IoT-enabled sensors and using edgecomputing to monitor the growth needs and ideal harvest time for individual plants. Automotive companies are essentiallymaking cars into edge devices, equipping them with internal and external sensors that generate data. Tesla, as an example,manufactures cars that make intelligentautonomous driving decisions via powerful on-board computers using edgecomputing for making decisions and actions in real time—from braking to steering and lane changes.

Edge computing’s capability to reduce latency is also useful in the mobile gaming space. Network Next, a start-up based in Santa Monica, boosts internet performance for gamers—where even five milliseconds can help win or lose a game. Edgecomputing helps combat latency to deliver the best multiplayer experience possible.

Figure 2. Top industries projecting increased operational responsiveness from edgecomputing in five years

Organizations are counting on edgecomputing to help them be moreresponsive to changing conditions and customer interactions. In IBM’s 2019 edge computing survey, 84 percent of executives said edge computing applications will have a positive impact on their organization’soperational responsiveness in five years. Executives from the automotive andtelecommunications industries areparticularly confident in edge computing’s capabilities in this area (see Figure 2).

RAMPING UP AI IN 5G NETWORKSEdge computing will require more and more processing power at the edge of networks. Gartner predicts that, by 2022, more than half of enterprise-generated data will be created and processed outside of data centers, and that by 2025 about 75 percent of data will be analysed and acted upon at the edge. AI technology is crucial to process the large amounts of data at the edge and provide the insights to drive quick, local, data-informed decision making. In fact, AI has become the key driver for the adoption of edge computing. Locating AI close to the edge is vital for applications where near-real-time feedback and optimization are a priority forapplications—such as machine control, equipment monitoring, and remote surgery. Faster AI-based decision-making andresponses at the edge also result in better user experiences—for instance, in the areas of AI-assisted driving and multi-playergaming. In addition, edge computingsupports improved security becausesensitive data can be analyzed at the edge and doesn’t need to be sent over the core network to a central cloud, in this waylimiting the amount of data stored in any one location.

Many telcos are already evaluating edge computing on 5G networks. For example, Verizon is developing new 5G edgetechnology that could revolutionizemobility for virtual reality (VR), augmented reality (AR) and extended reality (XR) inenterprise applications. As anotherexample, SK Telecom has launched a 5G edge computing open platform to third parties and enterprise customers. And Bharti Airtel recently announced to work with IBM and Red Hat to launch new edgecomputing services and solutions, backed by a broad ecosystem of partners to helpenterprises and telcos speed their transition to edge computing in the 5G era.

EMPOWERING ENTERPRISES AND INDUSTRIES WITH 5GThe most advanced 5G use cases—and those that offer the greatest revenue growth opportunities for telcos—are found in the enterprise and industrial markets. 5G isexpected to reinvent entire industries. However, this “revolutionary” aspect of 5G remains beyond the near-term horizon. Though the technology strategy is fairlymature, it will still take years to migrate to a 5G environment that makes such atransformation possible. It depends on having a cloud-native 5G core network, leveraging extensive network virtualization, and implementing AI-based automation. Most operators are still in the early phases of developing this envisioned ubiquitous 5G network infrastructure. A significant amount of work remains in standards, regulations, and, in particular, operational and business support systems.

Uncertainty about business cases and the expected return on investment is alsodelaying full-scale 5G deployment.Confidence in the technology is high, but the uncertainties around the strength of the business cases and the underlyingeconomics make many operators hesitant to go full speed ahead with 5G investments. Telcos are also dealing with risks such as increased competition, fast arrival of new technologies, changing regulations, and access to finance.

DELIVERING THE PROMISE OFNETWORK SLICINGHowever, telcos increasingly realize that these investments are important to secure their future in industry verticals. Globally, 49 percent of telecom leaders in IBM’s recent global C-suite survey say they plan to make large investments in the next two-to-three years. With a full-fledged 5G networkavailable, telcos can deliver services to specific industry verticals through network slicing, which provides the ability to deploy any number of virtual end-to-end networks on a single physical infrastructure, with each virtual network representing one slice.

It enables telecom operators to reserve a slice for a specific customer or application at a guaranteed quality of service.Network slicing allows operators todynamically balance disparaterequirements— such as availability/reliability, throughput, and latency—amongdifferent applications, such as those forremote healthcare and autonomousconnected cars (see Figure 3).

Enterprise and industrial applications will especially benefit from 5G network slicing in combination with edge computing.Deploying network slicing and edgecomputing in a 5G core networkenvironment creates the possibility forpreviously unimagined latency-dependent wireless solutions, including those for

connected autonomous vehicles and smart factories, among others.Particularly in the enterprise IoT, the focus is on operations efficiency and effectiveness. For instance, 5G IoT-enabled enterprise resource planning (ERP) systems can couple sensors and other IoT devices to transmit data into the system in real-time withouthuman intervention. In industrial IoT, 5G is the crucial element in the Industry 4.0evolution toward increasingly smarter and more dynamic manufacturing.

INDUSTRY 4.0: MOVING FROMMASSIVE PRODUCTION TO MASSIVE CUSTOMIZATION

Indeed, manufacturing is expected to be the largest beneficiary of 5G services. The unique attributes of the technology could unlock USD 740 billion of value inmanufacturing by 2030. The combination of 5G, edge computing, and AI will be a driver of Industry 4.0 with billions of machines,devices, and sensors just waiting to bewirelessly connected. This will become the backbone of manufacturing and related services in the future. It will be powered by robotics, AI, IoT, 3-D printing, AR, and cloud technologies, all of which will use 5Gtechnology to allow machine-to-machine communication.

Industry 4.0 is completely changing the concept of manufacturing from massive production to massive customization.Industrial connectivity today mainly uses wired connections, which provide the high performance and reliability required for automation but lack the flexibility to meet changing production demands. A flexible and programmable environment based on high speed, low-latency wireless 5Gconnections, the use of edge computing and AI—will link machines, processes, robots, and people. This environment sets up the opportunity for more flexible anddynamic production capabilities to meet rapidly evolving market needs and massive customization.

Figure 3. Network slicing

Industry 4.0 is no longer just a concept, and neither is it only about digital transformation. It’s an entire technological revolution that encompasses 5G, network slicing, edge computing, and AI to create newopportunities and advantages that weren’t previously available without thecombination of these technologies. The concept of 5G with network slicing and edge computing is being evaluated and tested in several Industry 4.0 scenarios, with telcos as one of the ecosystem partners. For instance, Vodafone, Ericsson and theGerman electric microcar company eGO have launched a 5G Industry 4.0 carmanufacturing plant, helping deliversecurity-rich, near-real-time datanetworking across the production chain, from digital material management toautonomous vehicle control. As another example, Singapore-based operator M1 is collaborating with IBM and Samsung to develop and test Industry 4.0 solutions using 5G and edge computing, among others to improve the control of robotic arms and other smart devices on factory floors.

CREATING VALUE IN THE 5GCONSUMER SPACEEarly 5G commercial deployments across the globe are driven by enhanced mobile broadband (eMBB) services—in factelevating 4G Long Term Evolution (LTE) mobile broadband experiences to the next level—primarily connecting consumersmartphones and targeting consumerapplications. These services represent an evolutionary approach for telcos to meet the consumers’ insatiable appetite for faster and better mobile experiences, in particular mobile video.

Also, in India, where online videoconsumption has doubled in the last 2 years, with 65% of video content consumed on mobile networks. Mobile data traffic isgrowing fast as more Indians spend time streaming videos on their mobile devices, which is expected—according to Ericsson—to account for 75% of overall mobile traffic by 2024. This all is increasing pressure oncurrent networks, resulting in degraded

video experiences.The quality of video streaming is a maincriterion that influences consumersatisfaction with provider networks.Four-out-of-five Indian consumers say video streaming quality is important, according to IBM’s 2019 consumer survey. But streaming mobile video still presents many frustrations, in particular with load times, rebuffering, playback, picture quality, andsynchronization. Sixty-five percent of survey respondents in India indicated theyexperience these kinds of problems regularly or often.

CONSUMERS ARE EXCITED ABOUT POTENTIAL NEW EXPERIENCESMore than three-quarters of Indianconsumers say they would probably—orcertainly—opt for 5G, when available, and pay extra if it results in a superior video streaming experience. But one can doubt to what extent this intention is realistic intoday’s Covid-19 impacted economicsituation. In addition, previous mobiletechnology migrations reveal thatconsumers pay close to a similar amount as their previous plans, even though data speeds, data plans, and call allowances have increased. Data-plan tariffs are prone to level out through price competition, which is quite intense in India. As a result, telcos cannot expect enhanced 5Gmobile broadband alone to createsignificant additional revenue. However, percent of survey respondents in India say they would switch to another provider for a better-quality video experience.

5G enables better quality mobile video streaming. Ultra-High Definition (UHD)video streaming is by far the most relevant 5G application for consumers, selected by 71 percent of Indian respondents. Clearly, people are longing for high quality viewing experiences in both linear (for example, live streaming) and nonlinear (on demand) video. In the mid-to-long term, UHD video formats, such as 4K and 8K, will become common for videos on mobile devices. Companies such as AT&T and China Mobile are already test-streaming 4K high-dynamic range (HDR) video over 5G.

PROMPTING REVENUE GROWTH THROUGH IMMERSIVE EXPERIENCESSignificant revenue generation in theconsumer space must come fromcompelling new 5G applications that “wow” consumers. With the performance of 5G technology further improving speed,latency, throughput, and other characteristics, more transformational applications for consumers will become possible.

Future 5G-led applications will include immersive media encompassing deeply engaging, multisensory, digital experiences. But most of these transformationalapplications will take some time to become mature and commercially viable, which likely won’t occur before the middle of the decade. Immersive and new mediaapplications will scale significantly by 2028 and are forecast to generate more than USD 67 billion annually, according to Intel.

Immersive content encompasses deeply engaging, multisensory, digital experiences using technologies such as VR, AR, 360-degree video, and 3D techniques.Immersive content also includes hologram techniques. Current mobile networks cannot meet the bandwidth and latency demands these applications require. However, 5Gnetworks are expected to deliver therequired capability.

Consumers are particularly enthusiastic about future innovations in media and entertainment. For example, 59 percent of survey respondents in India indicated they’re excited about more advanced VR entertainment applications, ranking VRsecond only to UHD video streaming (see Figure 4). Other 5G- immersive applications that spur consumer excitement include 3D-video movies (52 percent), AR(43 percent) and 360-degree video/holograms (40 percent).

Figure 4. Jazzed by 5G: The applications Indian consumers are most excited about

ENHANCING TOMORROW’S 5G NETWORKS WITH AITo prepare for the 5G future, telcos arereinventing networks with cloud-basedvirtualized networking. In this environment, automation of operations is essential tosupport services delivery aligned withcustomer and service-providerexpectations. Virtualization andcloudification allow for an unprecedented level of network automation—important in a world where workloads in mobile networks are becoming increasingly dynamic.

More and more telcos recognize AI’s central role in automating the network. A number of them have already implemented AI in their network operations. The NationalBroadband Network (NBN) in Australiaupdated its network management suite with AI capabilities to enable cognitive troubleshooting as well as automating processes to act on alarms that identify an actual, actionable problem in the network.

AI for network operations (AIOps) helps Nextel in Brazil predict and prevent network outages. By implementing AIOps Nextel has taken network operations from reactive to proactive to predictive. AI helps categorize incidents to get a better understanding of what is happening in the network. Nextel is also working with The Weather Company to predict weather-related incidents andprevent them from impacting service.

And as mentioned earlier, Bharti Airtel’s hybrid cloud network is embedded with AI, designed to automate the network, to facilitate automation in onboarding, and to improve monitoring and predictivecapabilities for different services fromnetwork equipment providers.

AI facilitates faster decision making by capturing and processing network data and performance of key services in real time, and by automating network functions. It helps create a “living” 5G network thatsenses what is currently happening,anticipates changes, learns, anddetermines how to best make required changes. It allows for a new level ofautomation that results in a network that takes action based on a given situation.

AI systems can detect, predict, andlocalize irregularities in the 5G network and take steps to fix them before they impact customers. AI can be used to calculate future states based on various conditions and business policies, enabling zero-touch, automated, and optimized provisioning of network resources to help improve service. This capability is crucial in a world where an increasing number of IoT applicationsrequire very low latency

PREPARING FOR A 5G FUTUREIt will still take several years before we begin to see a significant uptake of 5G. But a 5G future is inevitable, it isn’t really a choice. India must contextualize the benefits of 5G and prepare for a 5G future. Sooner or later Indian telcos will upgrade to 5G and new products and services will be launched. It is important to prepare a solid foundation for seamless 5G on-boarding whenever the time comes. To prepare for—and to thrive in—a 5G world, Indian telcos should do the following:

Prepare for the true transformational power of 5G, in particular in the enterprise space• Drive network virtualization, � cloudification and cognitive � automation. This will be essential to

support advanced 5G services. Invest in related technologies such as network

slicing, edge computing, and AI. Explore new business models for generating

� entirely new revenue streams.• Make sure you have the right knowledge

and skills through acquisitions or � partnerships with specialists or � specialized companies. Build an � ecosystem of innovation partners that

add value to the core connectivity and open up new opportunities.

• Make comprehensive test environments available to rapidly prototype solutions for and with customers and solution

� partners.

Create value in the 5G consumer space

• Drive greater awareness among � consumers of the potential of 5G beyond

high-quality video streaming. Explore how you can differentiate yourself in the next phase of 5G.

• Invest in emerging technologies—such as AR, VR, and 360-degree video; innovate with new business models.

• Partner extensively. Partnering is crucial because creating immersive content requires dedicated knowledge.

Enhance tomorrow’s 5G networks with AI • Start the journey to AI-enabled network

operations; Examine how AI can assist in 5G network slicing to automate the

� process of optimally assigning network slices.

• Assess the potential of AI-enabled edge computing for your specific business cases and identify which use cases need edge AI for immediate decision making.

• Invest in AI and AI-related tools, as well as in skills development, to help you keep up with the network requirements that 5G services demand.

It is key for the telecom industry to do things differently from the past and to focus on the fundamental changes that are needed to optimally benefit from the 5G revolution. Specifically, they should provide theircustomers with capabilities and intelligence to address their pain points, to createcompelling experiences, and to help them create business value in a 5G world.Partnering in ecosystems is crucial.

Image and illustration courtesy: www.freepik.com and unsplash.com

ABOUT THE AUTHOR

Sandip PatelGeneral Manager, India/South Asia, IBM

� Sandip Patel is the General � Manager of IBM India/SA and � Managing Director of IBM India Pvt.

Ltd. He is responsible for all strategic and operational matters related to IBM’s sales, marketing, services and delivery operations in the region, including Bangladesh, Nepal and Sri Lanka. Additionally, he directs and enables India’s capabilities across IBM’s global missions, global centers of excellence, research and

� innovation labs. Prior to this, he was General Manager for the Insurance industry at IBM and was responsible for IBM’s business across all brands in the Insurance industry globally.

� � Sandip has also served as the � President of Aetna International

where he had full P&L � responsibility for the international

businesses at Aetna. Prior to Aetna, he served as the General Manager with P&L responsibility for IBM’s

� Global Business Services division for India/South Asia. He has also worked as a partner in various leadership roles at IBM,

� PricewaterhouseCoopers and � Coopers & Lybrand. � � A qualified Chartered Accountant,

Sandip earned his MBA and MS in Management Information Systems from Boston University’s Questrom School of Business.

� The U.S.-India Business Council represents top global companies operating across the United States, India, and the

� Indo-Pacific. Amid dynamic growth within the U.S.-India commercial

� partnership, we serve as the premier voice of industry and create

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with members to identify and advance key policy priorities. Recognizing that U.S.-India trade is increasingly driven by new business hubs, USIBC is also focused on strengthening connections between cities and states.

� � The U.S. Chamber of Commerce is the

world’s largest business federation � representing the interests of more than 3

million businesses of all sizes, sectors, and regions, as well as state and local

� chambers and industry associations. Its International Affairs division includes more than 80 regional and policy

� experts and 25 country- and � region-specific business councils and

initiatives. The U.S. Chamber also works closely with 117 American Chambers of Commerce abroad.