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3 Priorities to Prepare for #5GforIoT

by Yiru Zhong, Senior Analyst

May

Blog

 

In April, the 4 mobile network operators (MNOs) in the UK successfully acquired 150MHz of 3.4GHz spectrum for 5G services at a total price of £1.35bn.  Their valuation of 5G spectrum reflects a cautiously optimistic attitude.  It is cautious because the valuation is significantly more prudent than 4G’s 2.3bn in 2013 and 3G’s crippling £22.5bn in 1998. It is optimistic because this auction exceeded Ofcom’s reserve price expectation of £70m.  We would like this cautious optimism to prevail, especially because 5G for consumer services is not the holy grail for MNOs.  Without a doubt, 5G’s technical enhancements inspire awe but consumers are likely to shrug it off as an entitlement with no practical translation into higher average revenue per subscriber per month. Instead, 5G’s value lies with its role in supporting the next stage of IoT development, the tactile internet vision touted by the ITU as early as 2014.  
According to ITU, a tactile internet relies on 5G’s extremely low latency, high availability, reliability and security to deliver improved essential public services such as transport systems, healthcare, education and industry automation.  In practical terms, the most well-defined application is autonomous driving.  5GAA (5G Automotive Alliance) as an industry led community spearheads one of many efforts to define technical and business requirements and, more importantly, to determine the business model.  Other efforts include a recent news from Volvo Cars and Volvo Trucks.  Volvo Cars, owned by Geely Holding Group, and Volvo Trucks, part of Volvo Group, announced in early May that each will share live and anonymised safety data in Sweden and Norway with the other.   
To extend the expected economic value enabled by 5G to other areas, we need to pay attention to three capability gaps in in the market.  First, 5G’s technical capabilities require a more widespread push of intelligence to the edge.  We have seen Microsoft positioning its capabilities in this area, from its recent US$5bn investment fund, to its enhanced Azure Cosmo Database offering announced during its Build 2018 conference this week.  Secondly, the platform market requires additional development, especially in the data analytics and applications enablement capabilities.  These two features are essential to support enterprises’ efforts to expand and upgrade their IoT projects towards more predictive and autonomous decision making. Lastly, best practices in security of IoT systems must already be entrenched or continue to be an on-going priority.  Even though 5G offers significant enhancement in encryption, authentication and privacy management, the scale of devices, and the implications on society, require that simple acts such as device identity, management or just password management must be second nature.

5G will continue to be a hot topic this year, with spectrum auctions scheduled and further progress by 3GPP.  I will be examining this topic further to prepare a position paper to spell out how we expect 5G to influence the way IoT will develop post 2020 and to propose how both IoT eco-system vendors and enterprise adopters should prepare for it. 

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