Podcast Transcript

Craig 0:04

Hi, everyone. Welcome to the sixth episode of TNC's "Down The Wire" podcast. My name is Craig Northveth, I'm the CTO at Network Collective, I'm going be your host for the next 20 minutes. As I'm sure everyone joining knows, TNC is the UK's largest independent telecoms strategy and sourcing consultancy, supporting over 280 major UK multinational companies to get the best commercial, technical, operational and contract results from their network telecoms and mobility solutions.

I'm delighted to be joined today by Adrian Joyce, who's our Head of Consulting at TNC and our resident guru on today's topic, 5G. Adrian, would you like to introduce yourself, please?

Adrian 0:40

Yeah, as you say, you've given my name, given my title. I've been involved in mobile since very early in my career, I think mid-90s I worked for a mobile company. And although I've moved into other fields over recent decades, should I say, I've always maintained an interest in mobile. And clearly it has relevance to both today's topic, but also my role here at the Network Collective.

Craig 1:03

There's me thinking you're still in your twenties Adrian.

Adrian 1:04

I know, I know,

Craig 1:05

You're doing well. You're doing well. Okay, then. So today's topic, 5G, we've just touched upon that, and it's certainly a hot topic at present. I think you know, on the face of it, it appears to bring lots of exciting opportunities, both from a, I guess, a Consumer, and Enterprise world. I guess the question that I would like to answer today, and I'm sure one that our listeners would like to be answered as well is, is this all hype around 5G? Or is any of it a reality? So I think, you know, a good place to start with this is at the basic points. So you know, what, what does 5G actually bring? How does it compare to existing technologies that are available in the market today?

Adrian 1:41

Yeah, you're definitely right about the hype. So hopefully, most of our viewers will have heard of the key benefits of 5G. So certainly, 'speed': the bandwidth that you can get through 5G is phenomenal in comparison to previous iterations of cellular technology. Certainly, we're seeing speeds in the hundreds of Mg's and testing speeds, at one Gig, maybe even two Gig. 'Low Latency': is the other big marketing message. So the speed of transmission of that data is very quick. But you also have some other aspects that are less well known. So 'high density': it can handle - 5G can handle - a lot more devices in a small area than 4G can - very interesting for things like Internet technology, sorry - Internet of Things - even. Other aspects are familiar to us through 4G, so things like 'rapid deployment', and 'publicly available'. So albeit, (and we'll come on to this, I think) coverage is still building out across the country, it's very early days, the beauty of 5G, unlike other WAN access technology for example, is that you don't have to get a circuit put into your location, it's in the air, it's there. So that allows you to install a site on 5G very quickly. And then the last one is probably the 'low unit cost'. Albeit the cost of 5G appears at this stage, no different to 4G, the benefit of having high bandwidth at a similar cost compared to something like Fibre to the Cabinet, or Ethernet services means that 5G technology can be a very low cost option compared to those if you can get the availability.

Craig 3:28

So it sounds Adrian, like we've heard some of this before when you know, when we moved from 3G to 4G, you know, is this any different? Really, I know we've we've had some higher bandwidth, low lower latency, lower costs, you know - is this really going be any different?

Adrian 3:42

It's a really good question. I think if history teaches us anything, probably not. We certainly had it with 3G. 3G was going to... (I was working at MCI WorldCom at the time), ...3G was going to be the solution to putting kilostreams into buildings, you wouldn't have to do it again - and of course, then the world moved on. 4G, as well has had some impact, so it has taken some of the WAN access technology. It's obviously given us a wealth of apps, so if your 4G phone falls back onto 3G, it's amazing how quickly you feel that it's redundant. You know, Google Maps doesn't work; Uber doesn't work; your banking doesn't work; the BBC news website's really slow. Whatever it is you're doing, you really notice a difference. I'm sure 5G will be a continued evolution but you're right, we have heard these things in the past, and we will hear it again. You know, we've got 6G being developed now, believe it or not, and I'm sure in 10 years time (hopefully you and I are still sitting here doing podcasts), we'll probably have the same discussion. So yeah, it's a slow evolution I think, a step change - it will bring about new features, new apps, and ways of working which we probably can't even imagine today, that in five years time we'll be lost without. But again, yes, I think it's a little bit hyped.

Craig 5:08

So you mentioned IoT as well, as part of that. Do you think that, I guess the sunset of some legacy technologies like PSTN, is that going to drive a different approach to things like IoT? And where does 5G sit in that - you know, is it an enabler effectively for some of this?

Adrian 5:27

Yeah, it is. And I think another benefit of 5G that we didn't mention at the beginning was the low power consumption. So you need less power in your device to talk to the 5G network than a 4G network. And of course, you're going to have the sunsetting, not just of PSTN, or ISDN, but you'll also probably find, at some stage, at least some if not all, of the frequencies that are used for 2G, 3G, will as I say, either be refarmed or significantly reduced. Therefore, the IoT devices that are reliant on 2G, 3G will need to be replaced. And obviously, they have a certain age to them, at which point they'll be replaced anyway, but you do have some very difficult devices - particularly, we've worked for a few of the utility companies, and particularly the water companies have little SIMs, in pumps that are, you know, 20 foot under the ground, in massive, - you know, my arms don't go wide enough - massive units. So they're not going to be easily and quickly replaced, but certainly where we see a big uptake in 5G is is in smaller devices, because the power consumption is so much lower. You therefore can get away with cheaper and smaller tags to whatever it may be - stock is a great example, with logistics for example.

Craig 6:56

Okay, so I guess so far, so good then, it sounds promising so far, it sounds like there's some reality behind this. Let's kind of focus a little bit on the kind of 5G in the UK market. So you know, the kind of the reality around availability, and who the key players are? And actually, how usable is it today?

Adrian 7:14

Yeah. So look, despite the hype, the 5G networks first came out, I think, just under two years ago with EE first to the market. So we're only sort of 18 months in, (you know, maybe a little bit more) to this rollout, it's really early days, there's also been some problems with Huawei kits having to be taken back out of the networks and replaced at higher cost, as well as the additional cost of having to replace it. So the rollout is, you know, it's relatively slow paced, and will take another few years; you still have problems with 4G and even 3G coverage in some areas. And we've got the mobile rural network work going on between the four MNOs to try and improve coverage in the rural parts of the country with low or limited coverage. So 5G is going to take a long time to roll out. It's very expensive and the cost benefit to the MNOs is yet to really come to pass - there's you know, the uptake is slow, we haven't got those demands yet, those killer apps that people must use 5G for and so in terms of the coverage itself, you're into the hundreds of towns and cities, I think it ranges from about 100 to 150 odd, on each of the four MNOs - so Three, Vodafone, O2, and EE. However, that comes with a little caveat, because just because they say they've got coverage in the town doesn't mean the whole town is covered; it may mean that they've just got one single mast in that town or city - so a little bit of a health warning. We've also got additional spectrum coming up for auction from Ofcom, that will increase the amount of spectrum and some of the frequencies that can be used. There's also improvements in terms of the release of the underlying technology that's used for for 5G transmission. So again, over the years, we'll see evolutions of this.

Craig 9:20

And what about some mast sharing, and things like that? So what's the kind of current market dynamics - is it going to be any different to where we've seen 3G and 4G rolled out? Or is it following the same process?

Adrian 9:29

Pretty much following the same process. So we've got the mobile rural network where they're sharing masts in specific areas only, but then across the country, you've got a relationship between O2 and Vodafone, and you've got a relationship between Three and EE where they do share masts; they won't share the same technology on the mast, but they do share some of those masts, and I think the the economics of 5G will just encourage that. What we're also seeing as well, is a monetisation of the masts. So we're seeing a lot of setting up of internal companies. I think Vodafone is doing it through - Vantage Towers, I think they've called it - which is the unit within Vodafone that looks after all the towers. And the Press speculation is that they're going to go for an IPO in Frankfurt in the coming months, to sell that unit off and then lease back the masts. So again, that will encourage mast sharing, I'm sure.

Craig 10:28

Okay, so you touched on an interesting point, around monetisation of this as well. So you know what I'm hearing and then what I guess we're seeing in the market, is that the telcos or the MNOs, effectively the expectation is they're gonna deliver 5G. But the reality is, they're probably not going to be able to charge any more money for it so what does that mean for them in terms of, you know, their backhaul infrastructures, because they surely must need some investment in there? How are they going to actually make any money out of it? And what's their incentive around this?

Adrian 10:53

Yeah, this is the big struggle for them. I wouldn't like to be sitting in Slough, or Newbury, or St. Paul's, looking at the maths, I suspect it's quite difficult. As we say, we don't see, either in the consumer or the enterprise sector, much differentiation if any, between the cost of 4G and 5G. Now, of course, you can consume more data more easily on 5G. So you would expect there to be more data consumption but we're also seeing the beginning of - well, not just the beginning, we're seeing the commonality of - "all you can eat" bundles, certainly in the consumer space. So yeah, it's going to be a challenge. But I think perhaps that's the area, where they'll make a little bit more money so if they're charging you five (£5) or ten (£10) pounds a month for a Gig or a few Gig of data at the moment, maybe they can in future years charge you £20 pounds for all you can eat, knowing that the average user might still only use - I don't know, 5 Gig, 10 Gig. So actually, they're getting more pounds in, and does transferring a Gig of data cost them that much more? Probably not. But you're right about the backhaul, they're going to have to or they have been, investing for a number of years now, in lighting up those masts with far bigger circuits, Gigabit circuits and 10 Gig circuits. That comes with the cost for calls. However, you know, the Ethernet market through our other work is also falling dramatically. So the costs that they were incurring or paying if they were using a third party, for their 100 Mg circuit are probably equivalent to their Gig circuit today anyway. So yeah, it's hard but I'm sure they've got some clever people working on it.

Craig 12:33

I guess that's another dynamic as well isn't it Adrian, where you know, we talked about there on the the fixed network, pricing dropping as well. So you know, there's one possibility that actually 5G could be a fixed fixed connectivity replacement at some point where it's available - and obviously, the bandwidths are there and suitable for that kind of technology. But yeah, if the cost of them is falling, again where's where's the incentive from a consumer basis to actually go and do something different?

Adrian 12:59

Yeah, absolutely. So look, I think it's horses for courses. We've got a company we work with in the construction sector, one of the biggest construction companies in the country. They've used 4G across their construction sites for a number of years very, very successfully. They're beginning to use 5G where it's available - back to the caveats of very limited availability - they've described it as phenomenal. So the benefit for them is that they can just rock up to a greenfield site, put up a Portakabin, and immediately have access to 5G speeds. That is amazing. You can't get that with Ethernet, you're talking, what 60/90 days, maybe longer, if it's greenfield. So I think there's spaces where this will work really, really well. Will it compete with you know, a one gig Ethernet into your data centre? Probably not. No.

Craig 13:54

Yeah, that's really interesting. Okay, let's move on a little bit, then. And let's start looking at, I guess, the outlook for 5G. So you know, if we start considering the next three years, what should listeners be thinking about? You know, what is the market going to look like? Is it going to continue to develop and grow at the speed that we've seen it, is it going to accelerate, slow down? What are our expectations around this?

Adrian 14:16

So I think a number of things have happened in recent months. I think one of the biggest has been the launch of the iPhone 12. Why is that important? Well, so many customers use iPhones and until the release of the 12, there wasn't a 5G iPhone. What that does, is it also allows developers who create the apps to have access to 5G. What we're likely to see, is someone very clever sitting somewhere, whether it's in a bedroom in Croatia, or in an office in San Francisco, create an app that we all want, whether it's work-related, whether it's consumer-related, who knows? But at some point, there will be some killer apps out there that are reliant on 5G and that really has been accelerated by the launch of the iPhone 12.

Craig 15:17

But then, so I guess if we kind of follow that thought process through, you know, we obviously do a lot of work with customers, Enterprise customers around mobility, and it is very, very rare for Enterprises to buy the latest and greatest devices. You know, they're all usually around the iPhone 8 mark, maybe some have pushed it to 11 if you're lucky - the Execs - so, you know, who's gonna be buying these iPhone 12s? Is it purely focused at the Consumer market or do you expect it to move to Enterprise at some point?

Adrian 15:47

Yeah, I think there's early adopters, certainly in the Enterprise space, as well, there are some organisations that like to be seen to have the latest, greatest phone - it's a part of their corporate image. You know, we work with some of the high-end estate agents, they drive around in branded company cars, they wear nice suits, you know, it's part of the image to be seen with the latest technology as well. So there will be some early adopters in Enterprise. But you're right, the majority of our customers will sweat those assets for a number of years, and won't want to pay £1,000 pounds or more for a new device, when a £400 pound device works just as well. But what you'll find is over the next couple of years, the iPhone 12, will be the £400 pound device, and will be this sort of low end standard device. So inevitably, you will move towards it, at the same time, you're also having the coverage rollout, so at the moment is still really limited. So even if you did have that killer app on 5G, and you had an iPhone 12 or a Samsung, you're still not getting the coverage to make it usable across the country. But again, in two, three years time, this will be the norm.

Craig 16:59

Okay, so if I if I was a customer, and I was trying to plan out my network and mobility strategy for the next three to five years, what should I be taking into consideration now around 5G? Is it something I should think about, or just forget about?

Adrian 17:10

I think it's something to be to be aware of, to have on your radar: is there a need for you to have 5G devices for all your people at the moment? Probably not, no. If you want your employees to be able to download Netflix really quickly before they jump on a plane, or train, then maybe, but most customers don't think about their employees in that way. That's why it's big in the Consumer space, it's really streaming, getting that rich content quickly onto your device. You've also got consideration of the private use of 5G. So the ability to carve out a piece of that spectrum and have it only for you. And again, that has limited, but very exciting possibilities. What we're seeing is some initial case studies focused on large campus areas. So Felixstowe Ports is one example where they flood the whole port area with 5G technology. Is it better than 4G? Is it more usable than WiFi 6? There's arguments both ways. A lot of the use cases for 5G, when you look at them, you think, well, I could probably do that on on WiFi, or I could probably do it on 4G. So I think it's, again it's going to take a couple of years for that, for those case studies, really to show the benefits over things like WiFi 6, whether it's fewer access points, whether it's the handover between APs, whether it's the latency, whatever it might be.

Craig 18:39

And I guess in that example, you know, obviously, the key difference is, I guess for that example, it's more ubiquitous, isn't it? It's not, it doesn't, you know, WiFi 6, or any kind of WiFi capability still requires some wires to be deployed, APs still need to be hooked up to a network somewhere. I guess with 5G in this model you're talking about, this example we're talking about here, is it's just there, it's always available, they can consume it effectively, wherever they are. So I think yeah, there maybe is a key differentiator there.

Adrian 19:06

Yeah for some, I mean, we were discussing with one of the large supermarkets the other day, the fact that their stores are, you know, certainly the largest stores are like Faraday cages. So the penetration into a building of 4G/5G is still going to be dependent on the frequencies - quite often the higher frequencies have more problem penetrating the building. So until the lower frequencies are refarmed, or auctioned and used, then 5G may struggle to get in. So you might still need to have APs and then I think it becomes a decision: Do you go for WiFi, where you know, all of your existing legacy tech can work on it; all of your customers can work on it; all of your colleagues can work on it? Or do you go for the 5G and find actually only 10% of people have a 5G device? Again, in a few years time, you'll probably find all devices have 5G, and therefore at that point, it might be sensible. Do you want to be ahead of the curve? Do you have 5G AND WiFi? Lots of questions, lots of difficult questions. But you know, you have to look at individual use cases, you can't sort of make generic statements about these things.

Craig 20:15

Yeah, I think that's a really good point; and it's probably good point to close on. You know, I think there is an emerging number of use cases around 5G. And I think they will probably differ by vertical, as we've touched upon in a couple of examples here. And we could probably continue talking about this for hours and hours, around what we've seen in the market and different use cases for different customer types. But unfortunately, I am conscious that we are running out of time. So we will have to draw this one to a close and maybe pick up in another session, in a few weeks' or months' time. So Adrian, thank you very much for...

Adrian 20:47

Thanks Craig

TNC is completely independent of all service providers – always has been, always will be


Other than matters relating to The Network Collective, this research is based on current public information that we consider reliable. Opinions expressed may change without notice and may differ from views set out in other documents created by The Network Collective. The above information is provided for informational purposes only and without any obligation, whether contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the information given or the assessments made.

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