1、5G in 2020 Plotting a course from invention to innovation b Introduction 01 Infrastructure-led innovation 02 From invention to innovation 04 Patient for innovation but impatient for infrastructure deployment 05 Opportunities to promote US 5G deployment and adoption 07 Endnotes 09 Authors and acknowl

2、edgements 10 Table of contents 5G in 2020 | Plotting a course from invention to innovation 5G in 2020 | Plotting a course from invention to innovation 1 Introduction Many consumers and businesses expect 2020 to be the year of fifth-generation (5G) wireless networks and are eager to experience this t

3、ransformational technology. However, almost as quickly as 5G is being added to the vernacular of the casual wireless user, we are also witnessing the first signs of disillusionment. Recently published opinions argue that 5G likely will fail to achieve radical differences from the current mobile expe

4、rience and that 5G lacks a “killer app” to leverage its full potential.1 Early hype generated by 5Gs potential, coupled with its limited availability at the end of 2019, are understandable reasons for some skepticism. But how ominous are these signs of cynicism? Are 5G application innovation and ass

5、ociated business model development doomed if users do not experience transformative change as quickly as they expect? Examining previous wireless generational upgrades, 4G-LTE in particular, reveals a lag of two to three years between network infrastructure deployment and innovative applications and

6、 business models. Deloittes analysis in this paper suggests that carriers, applications providers, investors, and users should expect a similar gap for 5G. However, this expected gap between deployed infrastructure and application innovation should not be mistaken for a dormant period, as it is typi

7、cally marked by experimentation, invention, and investmentthe success of which can be determined only after the infrastructure becomes prevalent in enterprise networks and is deployed at scale for consumers. Furthermore, governments should note that this period can provide an opportunity to advance

8、national infrastructure policy through the creation of demand signals that speed up 5G deployment and help enable subsequent innovation. 5G in 2020 | Plotting a course from invention to innovation 2 Each generation of wireless technology has had its hallmarks of innovation. 3G ushered in a wave of s

9、martphone advances, which produced a new ecosystem of mobile apps. Meanwhile, growing data usage generated a reinforcing cycle of network upgrades and propelled the United States to a leading position in 4G-LTE deployment. 4G-LTE itself delivered high-speed mobile broadband, fueled the “on-demand” e

10、conomy, and powered “anytime, anywhere” streaming video, social media, and gaming. 5Gs promise of low latency and gigabit speeds is expected to drive similar innovation, with enterprises anticipated to be early adopters and beneficiaries. Achieving 5Gs benefits likely will require a multiyear journe

11、y. 4G-LTE launched in 2010 and achieved 90 percent coverage of the US population in 2012.2 In the years leading up to 4G-LTE deployment, the US government made spectrum readily available to enable rapid deployment. Between 2006 and 2008, the Federal Communications Commission (FCC) auctioned an avera

12、ge of 142 MHz nationwide in the 700 MHz and AWS-1 bands.3 Between 2010 and 2012, as LTE adoption accelerated and data usage grew, the government auctioned another 65 MHz to help augment capacity. In total, the FCC made more than 200 MHz available to wireless carriers to deploy 4G-LTE.4 Meanwhile, wi

13、reless carriers spent approximately $400 billion on spectrum and infrastructure, including wireless equipment, towers, fiber, and the labor to deploy it.5 Carriers infrastructure and spectrum investments were critical to deliver the high-speed wireless capacity needed to satiate consumers unquenchab

14、le thirst for watching video, uploading user-generated content on social media platforms, and enabling gig-economy services such as ridesharing and meal delivery. However, Deloitte analysis shows that such transformative services and applications did not appear in tandem with the 4G-LTE network (see

15、 figure 1). Rather, they were adopted years after 4G-LTE was deployed at scale. Ridesharing gained 16 million users in 2015, which was five years after 4G-LTE launched and three years after 4G-LTE achieved 90 percent US coverage. Video streaming had two adoption inflection points: The first occurred

16、 in 2014, when both long- and short-form video gained adoption on mobile devices; the second occurred in 2018, when “cord- cutting” became more prevalent. 4G-LTE deployment likely had the greatest impact on the 2014 inflection, which occurred two years after 4G-LTE coverage reached 90 percent of the

17、 US population. Music streaming followed a similar pattern, in which widespread adoption lagged mobile infrastructure deployment by two to three years. Infrastructure-led innovation Transformative services and applications were adopted years after 4G-LTE was deployed at scale. 5G in 2020 | Plotting

18、a course from invention to innovation 3 Figure 1. Innovations enabled by 4G-LTE infrastructure took off years later6,7,8,9 Most of the innovations and business models that depend on nearly ubiquitous 4G-LTE coverage were not envisioned at its launch. These infrastructure-led innovations were born fr

19、om wireless technology advancements that generated ubiquitous coverage, higher speeds, lower costs per bit, and improved reliability. Infrastructure dependence is so great that many gig-economy companies reference their reliance on high-quality mobile networks in their public Securities and Exchange

20、 Commission (SEC) disclosures. Note: Indexed value captures the relative user growth rate or usage growth for various use cases during 4G-LTE. LTE % US pops covered Video, rideshare, and music as % of 2019 stat (indexed) 0% 20% 40% 60% 80% 100% 2010 LTE coverageVideo streamingRidesharingMusic stream

21、ing 20001720182019 SVOD US subs grow to 50M; livestreaming features added to social media; mobile video 1 hour/day by 2017 Growth streaming service providers; music video and podcasts added Video streaming iPhone apps launch Music streaming services launch apps Ridesharing serv

22、ices launch in 2011 and 2012 Ridesharing gains traction; expansion into food delivery and other services by 2017 Wireless carriers cover 90% of US pops with 4G-LTE Wireless carriers add capacity as data consumption increases More than 200 OTT video services Rideshare companies exceed 20M active user

23、s Music streaming exceeds 100M active users 5G in 2020 | Plotting a course from invention to innovation 4 When competing based on infrastructure- led innovations, having first-mover advantage is essential. By definition, a national wireless network is accessible to all, making infrastructure an enab

24、ler rather than a differentiator. But first-mover advantage unlocks the underlying network effects and helps leapfrog international competitors in a global economy. Therefore, the speed at which innovators use the new infrastructure often determines which business model emerges as the winner. Invest

25、ment and experimentation that spawn invention during and immediately after infrastructure deployment have proven key to achieving first-mover status. For example, the most successful ridesharing companies were those that experimented first with 4G-LTE-enabled real-time navigation and location precis

26、ion capabilities.10 These companies innovation offered a unique value propositionease of use, flexibility, and predictability for riders and drivers alikethat fueled their growth. While 4G-LTE was not the sole enabler of successinexpensive capital and an evolving regulatory environment also boosted

27、application innovation4G-LTEs capabilities were an important contributor. Social media, streaming video, messaging, and gaming companies also used the period during 4G-LTE deployment for innovation, including through acquisitions. For instance, Facebook acquired Oculus VR in 2014 to experiment with

28、artificial reality,11 and Twitter acquired Periscope, a live-video streaming company, in 2015.12 Despite 5Gs relative infancy, we are witnessing intense levels of investment in trials and alliances for 5G-enabled consumer and enterprise use casesa situation quite similar to the early days of 4G-LTE.

29、 Among enterprises, 5G networks have gained attention as a reliable, standards-based solution for stores, hospitals, factories, ports, and other locations to help overcome todays challenges of nonstandard point solutions. Enterprises may benefit from the speed that 5G offers, as well as advantages s

30、uch as network slicing, latency, and device density. In addition, ecosystems to ideate and experiment on methods to leverage of 5Gs cross-sector capabilities are beginning to take shape. For instance, auto manufacturers have partnered with network equipment providers and edge computing players to as

31、sess 5Gs potential in smart manufacturing.13 The power to innovate during the gap between infrastructure deployment and product adoption is not confined to startups, cloud providers, or application companies. Wireless carriers should be especially well-suited to innovate, given their advanced knowle

32、dge of 5G capabilities. Moreover, carriers can use this time to orchestrate partnerships with other ecosystem players. Already, wireless carriers and cloud providers have announced alliances as they position for computing and analytical resources on the network edge.14 As enterprises adopt 5G for bo

33、th indoor and outdoor use cases, carriers should continue to expand alliances to include IoT device manufacturers, enterprise software companies, and system integrators with cross-industry experience. Additionally, carriers should take advantage of their 5G cores data aggregation capabilities and ne

34、twork performance control to help add value to their emerging cloud and enterprise partnerships. The COVID-19 pandemic has generated a sharp increase in 4G-LTE traffic for wireless carriers around the world.15 While much of this increase can be attributed to a dramatic ramp-up in remote work and in-

35、home entertainment traffic, there also has been an increase in other forms of traffic driven by innovative service delivery techniques, as previously stringent regulations have been relaxed.16 Telemedicine, as an example, has been given broad-reaching permission and is able to create new data and ca

36、se studies that are likely to permanently alter the role of connectivity in medicine. Remote learning, similarly, has seen a significant rise in utilization, with students using video to interact with teachers and classmates.17 As 5G gains widespread adoption, these services are likely to see additi

37、onal innovation. From invention to innovation 5G in 2020 | Plotting a course from invention to innovation 5 In 2013, a year after 4G-LTE covered approximately 90 percent of the US population, some consumers and businesses still questioned the merits of fourth-generation wireless technology. Despite

38、immediate improvements in wireless speeds, users eager for infrastructure-led applications had to wait two to three yearsuntil after 4G-LTE was deployed at scale. (Figure 2 illustrates the overlap in the first two stages of new wireless generations infrastructure-led innovations.) We expect a simila

39、r time lag for 5G application innovation. Patient for innovation but impatient for infrastructure deployment Figure 2. Infrastructure-led innovation stages of new wireless generations18 Time horizon Deployment (Infrastructure) From invention to innovation (Applications and ecosystems) Adoption, scal

40、ing, and monetization (Applications and ecosystems) Maturity Refine customer value proposition and monetization strategy Drive customer adoption Identify and capitalize on adjacent opportunities Identify customer preferences and use cases Test and implement new features enabled by improved infrastru

41、cture Form partnerships and grow ecosystems Increase capacity and reliability of new wireless generation network Create excitement around technology to drive adoption Identify and deploy new enabling infrastructure Sources: Deloitte analysis of previous wireless generations 5G in 2020 | Plotting a c

42、ourse from invention to innovation 6 Still, a potential years-long wait for 5G applications does not appear to dampen consumers and businesses enthusiasm for this transformative technology. In a recent Deloitte US consumer survey, 67 percent of respondents said they are likely to upgrade to a 5G-com

43、patible smartphone when 5G service is available in their area.19 Similarly, 75 percent of the 400+ business executives surveyed in a Deloitte Enterprise Connectivity study noted that they see advanced connectivity solutions such as 5G as being critical to their business initiatives over the next thr

44、ee years.20 Lessons from successful 4G-LTE deployment and innovation suggest that companies, customers, investors, and governments should be patient for innovation but impatient for infrastructure deployment. The latter is a prerequisite for investment and invention, which in turn yields innovationv

45、ital for continued economic growth, job creation, and national security. Given these positive impacts, an important issue for governments and policy makers is how to create incentives that can help accelerate infrastructure deployment. Creating a policy environment conducive to 5G infrastructure dep

46、loyment may be more complicated than with previous generations of wireless technology because of the scope of 5G functionality and the variants in 5G architecture. While 4G-LTE architecture is generally similar across geographies and use cases, 5G deployment decisions may vary based on population de

47、nsity and desired capabilities. For example, deploying ultra-reliable low latency (uRLLC) communication for solutions such as remote factory or oil rig inspections using drones requires significantly more edge computing capability and enhanced fiber and backbone infrastructure than deploying 5G enha

48、nced mobile broadband (eMBB) for consumers. Similarly, massive machine-type communications (mMTC) for use cases such as smart grids for utility providers or supply chain solutions for logistics providers may require greater network densification than eMBB use cases. These variations also imply that

49、deploying eMBB requires a different business case and policy incentives than deploying uRLLC and mMTC functionality. While the business case for widespread eMBB coverage can be made based on consumer traffic growth and lower cost per bit, the case for low latency and device density typically relies on IoT devices and edge computing capabilities resident in enterprise networks. Moreover, the use cases and financial benefits of uRLLC and mMTC are less certain in the near term, suggesting that the intervening period between infrastructure dep