It’s been just over a year since I moved to London full time. In honour of the occasion, I decided to take what I felt was a thoroughly English summer holiday earlier this month. So, I loaded the Corgi in the car, drove over to the continent (taking a train through the Chunnel), bought some wine, and got a little sunburned. It’s pretty much exactly what my wife expected when we kicked off this adventure. And, somewhere in the middle of all that, the 2019 edition of summer vacation saw the Jarich household take in a stage of the Tour De France, the FIFA Women’s World Cup Final, and Switzerland’s Fete des Vignerons.

While it wasn’t part of the plan, I also spent some time thinking about the wireless industry and 5G a little during these spectacles. Each lent insight into why special events (including sporting events) are often cited as a key 5G use case.

FIFA Women’s World Cup. I can’t say that I wasn’t somewhat disappointed in the US versus Netherlands final. The gameplay was great and the Dutch fans were impressive in their coordination and congeniality. But from a fan experience standpoint, things were lacking…and that included constrained network capacity (particularly on the uplink). Network capacity might help to explain why we weren’t pushed to apps for real-time match or player stats. Regardless, it was a wasted opportunity. Where it’s increasingly easy to take in an event at a distance (in the rain, on a train, with a goat, on a boat…on a tablet, with a phablet), venue owners and event organisers need to give people a reason to come to the live event: the experience of “being there” only goes so far in justifying ticket costs. Seamless, in-venue connectivity (5G, 4G, Wi-Fi) is a start. Integration with venue operations and the event itself is a necessary follow-on. So is the will to tie this all together into something cohesive.

Tour de France. Network connectivity 3km out from the end of Le Tour’s Stage seven was about on par with the connectivity down at the Stade de Lyon. Not bad. Not great. The missed opportunity to engage with fans, however, was even greater. For those who’ve never been to see the race, let me paint the picture. Each day, riders tackle courses which can run more than 200km. An hour or so before they hit the road, the “caravan” (a promotional parade of vehicles handing out trinkets) travels the day’s route. More than 10 million fans line up all along the route to see the caravan and then the riders across the entire race. Do the math and you quickly realise this means a lot of people spending a lot of time standing around. I think the dictionary has a picture of them alongside the definition for “captive audience.” But, as much as it was great to see people enjoying the great outdoors, reading books and playing with their kids, I couldn’t help but wonder why there weren’t more who were glued to their phones watching a livestream or otherwise engaging with the race. Was it the connectivity issue? A lack of app promotion? Will 5G change that? Would it be different with something like an AR/VR caravan?

Fete des Vignerons. If you’re not familiar with the Fete des Vignerons, you shouldn’t feel too bad. It’s not an annual affair. It doesn’t even come around every decade, much less every four years like the Olympics or World Cup. Nope, it’s a once in every 20 years celebration of Swiss wine that takes place over several weeks on the banks of Lac Leman. Mobile apps weren’t quite a thing at the last one in 1999, but event organisers made sure to have one in place for this edition. And, thanks to solid connectivity in Switzerland (a small country where operators are already hashing out international 5G roaming agreements), using the official FeVi app shouldn’t have been a problem. But it was. Early on, just as everything was getting underway, error messages suggested that the servers were going down. When back up, the app wasn’t always serving up accurate info or anything super-compelling. It was a reminder that connectivity (3G, 4G, 5G, take your pick) is only one ingredient of engaging with people. Solid experiences delivered over that connectivity are more important.

It’s no great insight to note that event organisers need to ensure engagement with fans and attendees. It’s equally obvious that mobile devices are a prime (if not the primary) tool for driving that engagement.

But, given the plethora of potential 5G use cases and applications, it’s easy to ignore some of them or underestimate their value without direct experience: promises of opportunity around every corner are likely to seem more like 5G hype (hope?) than viable businesses. For me, getting out to a few first-class events this summer helped underscore the value of leveraging 5G and improved connectivity (teamed with the right content) to drive fan engagement along with the increasing importance of engagement. Beyond the special event use case, however, this also points to the need to educate stakeholders across all vertical industries around new wireless capabilities while developing a fuller understanding of their needs and operations.

Planning for summer 2020 maybe that means I should start looking at remote, robotic surgery options?

– Peter Jarich – head of GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

The APAC region will be the leading investor in 5G over the next seven years, contributing more than a third of global capex on next generation networks. Three countries, China, Japan and South Korea will lead the 5G evolution in the region, and we forecast that, together, they will invest more than $280 billion from 2019 to 2025 inclusive (see chart, below, click to enlarge). Meanwhile India will have a much lower level of 5G adoption in 2025, but will still have some 88 million connections by that time.

Each of these countries has its own vision of what 5G will look like in the years ahead, and the best strategy for 5G implementation will depend on factors specific to each market. One of the key challenges of 5G deployment is network densification, which means more money spent on RAN. Each country has a different approach to tackle this problem: Chinese operators have an advantage in that they benefit from widespread land ownership by the state, which speeds up site acquisition. South Korean operators, while being extremely competitive, are opting for site sharing. Meanwhile, in Japan, RAN sharing agreements between operators, combined with the government’s green light of hosting RAN sites in traffic signal infrastructure, should help with decreasing the cost of network densification.

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China’s industrial 5G ambitions
We expect that China will quickly become the world’s largest 5G market after the technology launches there later this year. It is determined to lead the 5G industrial revolution by strongly focusing on enterprise use cases and the digital transformation of the economy. The Chinese government is focused on cementing its position as one of the world’s leading economies for decades to come by using 5G to support further automation of its manufacturing processes, which would particularly help as the cost of labour in the country continues to increase. Having obtained the first 5G licences in early June 2019 [2], operators are currently conducting trials and deploying base stations ahead of commercial launches planned from October, with China Mobile and China Unicom each targeting 40 cities, and China Telecom aiming at 46.

One crucial area where China‘s approach differs to other 5G deployment models so far is that all three of its mobile operators have announced plans to rollout 5G using standalone architecture (SA). During MWC19 Shanghai, China Telecom announced it will likely move to SA on both its core and RAN in 2020, to support ultra-low-latency applications and help keep the cost of 5G devices down. SA deployment in China presents a good opportunity for vendors to showcase the use cases not available in a non-standalone architecture (NSA), particularly as network slicing standards will be published in 2020. One example of a use case requiring network slicing is smart ports. China Unicom and Ericsson conducted trials at the port of Qingdao earlier this year, but until network slicing standards are in place, such an application cannot be launched commercially. The same applies to autonomous vehicles. China can act as a role model for vendor case studies of industrial 5G use cases, including massive IoT and ultra-reliable low-latency communication (URLLC) applications, driving the next wave of SA deployments in other regions of the world.

Strong support from the government is playing a crucial role in the scale of China’s 5G rollout. The two major challenges in SA deployment are the difficulty in obtaining sites required for densification, and creating sufficient fibre infrastructure to support the 5G RAN. One of China’s major advantages in deploying highly dense networks catering for low-latency applications is the fact that the land belongs to the government, which makes the process of site acquisition faster and easier. At the same time, the existing high level of fibre infrastructure coverage in China also will help Chinese MNOs to rollout SA at a faster pace and with lower initial transport investment than in other key 5G markets such as the USA.

South Korea – a pioneer of consumer 5G
South Korea was the first market globally to launch commercial 5G. All operators launched 5G at once [3] in April for consumers, following the unveiling of limited-coverage, enterprise-only services in December 2018. Similarly to China, in South Korea the aim was to launch 5G ahead of others to avoid repeating the same scenario as with the 4G launch, when both countries had to play catch-up.

Having used NSA to launch 5G ahead of other markets, South Korean operators are upgrading it on the go. The lack of initial coverage and devices are among the two major inhibitors to user satisfaction with the new technology, particularly as 5G tariffs come at a premium to 4G. Despite that, the Korean media reported 260,000 5G connections one month after the launch and we forecast the market total to reach 3.8 million connections by end-2019.

While the operators have chosen not to use network sharing as one of the ways to speed up the coverage expansion, site-sharing has been employed to decrease the costs of network densification.

After establishing an early lead in the consumer market, South Korea is now aiming at the industrial use of 5G as the next step in its strategy. In April the Ministry of Science and ICT announced its “5G+” strategy, stating its goal to “reach KRW180 trillion [$152.9 billion] in production, 15 per cent of the global market, $73 billion in exports [and] employment of 600,000 people by 2026”.

Japan – playing the long game
Japan is also aiming to be one of the 5G leaders in the APAC region and globally, but is taking a different approach to get to that position, with the country’s operators focused on ensuring quality of service once 5G goes live.

Our forecast of Japan’s 5G investment curve slows a shallow slope from 2019 to 2021, but a significant acceleration after that. This reflects Japanese operators’ caution around all-in 5G deployment, with lots of trials with multiple vendors taking place at the moment. There will be a soft-launch in time for the Tokyo Olympic Games in 2020, but the bulk of investment will only come once the business case is clearer. Nevertheless, the Olympic Games present a good opportunity for Japanese operators to showcase their 5G network capabilities and demonstrate use cases beyond enhanced mobile broadband (EMBB).

These operators face the same densification challenge with 5G RAN as elsewhere in the world. However, there are some steps being taken to reduce capex. For example, KDDI and SoftBank this month agreed on 5G RAN network sharing. Feasibility tests should take place in autumn, and there is also speculation about a possible 5G joint venture tower company to allow the two operators to share the costs of deploying 5G in rural areas. Meanwhile, NTT Docomo has chosen a different strategy and has invested in tower company JTOWER, therefore betting on JTOWER’s existing sites to help with 5G densification.

Another new market player, Rakuten, is yet to show its capabilities in the Japanese market, although it is already cited as an example of a lower-cost network thanks to its cloud-native core, which also means lower operational costs in the long-run. It is too early to speculate about the operator’s pricing, but given that Rakuten’s existing MVNO is focused on low-end subscribers, it is reasonable to assume it will try to grow its 5G subscriber base by offering lower tariffs than its three competitors, although still at a premium to 4G.

India – strong potential despite financial challenges
Not all markets in the APAC region will develop 5G at the same pace. We forecast that only 7 per cent of total connections in India will be on 5G by 2025. One of the major reasons for the slower 5G rollout in India is the investment and adoption pattern for 4G in previous years. The emergence of Reliance Jio in 2016 boosted competition and sped 4G rollout, but also meant the industry’s capex to revenue ratio went over 30 per cent, way over the APAC average which was less than 20 per cent.

At the same time, increased competition drove prices down and hence revenues. So while mobile internet in India has become much more affordable in the past three years, to the point where India has one of the highest average rates of data traffic per connection in the world, operators stretched themselves trying to increase 4G coverage. With ARPU per unique subscriber in India being significantly lower than the APAC average and one of the lowest globally, it will be challenging for Indian operators to fund 5G at the same scale as eventually happened with 4G.

The premium price of 5G devices in the next couple of years will also act as an inhibitor to 5G uptake. However, India is still forecast to invest $16 billion in 5G infrastructure between 2019 and 2025, at a 20 per cent average capex to revenue ratio, and with a steadier investment pace than in the top APAC markets by capex, such as China, Japan and South Korea.

As discussed in GSMA Intelligence’s report India: becoming 5G-ready [4], the steps that can help India in speeding its 5G adoption are more reasonable spectrum pricing, and supportive investment and taxation policies to improve the financial health of the mobile industry.

– Alla Shabelnikova – senior analyst, Financials – GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/wp-content/uploads/2019/07/5G_connections_adoption_capex_APAC.png
[2] https://www.mobileworldlive.com/blog/intelligence-brief-5-ways-to-think-about-china-mobiles-5g-tender/
[3] https://www.mobileworldlive.com/featured-content/home-banner/korea-operators-set-consumer-5g-tariffs/
[4] https://www.gsmaintelligence.com/research/2019/05/india-becoming-5g-ready/761/

How many times have you heard this question? I have heard it on a recent webinar, and the presenter’s answer was that they will all win – but could not elaborate on why. It felt more like a politically correct answer, than a judgement based on analysis.

This got me thinking on the fundamentals that could help in answering this question. One way to look at it is to try to understand what makes a market attractive for OTT providers. This can be done from assessing three main elements, shown below by order of importance:
1. Availability of network infrastructure;
2. Consumer preferences;
3. Traditional pay-TV providers’ (for example satellite, cable and IPTV) propositions.

Availability of network infrastructure
Superfast broadband coverage is a must for OTT services to thrive, but the same can be said about some traditional pay-TV services such as IPTV. This infrastructure is key to deliver seamless high-definition video streaming. For example, the Australian market was for a long time dominated by Foxtel and Telstra, delivering pay-TV content via satellite and cable respectively (see the latest GSMA Intelligence Fixed, TV and Convergence [1] data for forecasts of fixed broadband, voice and pay-TV connections in Australia, as well as nine other key markets).

As the National Broadband Network (NBN, Australia’s government-owned wholesale network) expanded its superfast broadband coverage, so did the take-up of OTT providers such as Fetch, Stan and Netflix.

Consumer preferences
How big is the appetite in a market for OTT services? To understand that, we need to first segment consumers based on their preferences:
1. Convenience. Measures the importance given to having a single bill, user experience (UI, QoS), customer service, ease to start and cancel subscription.
2. Willingness to spend on pay-TV services. Value for money versus minimising absolute spend.
3. Desired content: choice versus limited content.

Figure 1 (below, click to enlarge) tries to illustrate the dynamic across the three variables to identify the consumer profiles for OTT and traditional pay-TV services.

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OTT customers are expected to subscribe to a limited number of services. Perhaps they only need fixed broadband, and mobile voice and data, maybe from different providers. For consumers subscribing to more services (for example fixed voice, smart home, FWA), the convenience from dealing with a single provider increases. Those are expected to be more attracted to offers from traditional pay-TV providers.

In addition, the less consumers are willing to spend on content, the more likely they are to feel attracted to OTT services. On the other hand, traditional pay-TV providers are expected to offer more choice for better value-for-money, sometimes even including the OTT providers’ offer as part of their own proposition.

Traditional pay-TV providers’ proposition
The strength of pay-TV providers’ proposition will limit the success of OTT services, at least to win the race for being the primary pay-TV service at home. The first thing to acknowledge is that some consumers will simply not have the preferences that fit into traditional pay-TV providers’ strengths. Therefore, the proposition needs to primarily cater for the needs of the consumers who do. The stronger providers will have the following characteristics:
Strong bundling propositions. These should deliver value-for-money and the convenience from having a single provider for multiple services. Having bundles that reduce the incentive to have a standalone fixed broadband service can make a difference in resisting the OTT offers. For example, selling the standalone fixed broadband service at a higher price than having it bundled with the pay-TV service.
Inclusion of OTT providers in their pay-TV service. This move offers choice for consumers, but not necessarily value. The consumer would still have to pay for the OTT’s service subscription.
Their own OTT service. This is another channel that can be used to reach out to consumers who may not subscribe otherwise.
Content choice. The priority is to have customers using the platform. This will allow the provider to learn about them and develop more customised offers.

OTT providers are here to stay, as a primary or secondary pay-TV service at home. The two main reasons for that are:
1. Superfast broadband coverage keeps growing worldwide. The rollout of 5G FWA networks should help drive this growth.
2. They cater to a customer segment that values their proposition more than the one from traditional pay-TV providers.

Traditional pay-TV providers lost part of the pay-TV market to OTT providers but are also not disappearing. They cater for the needs of a different consumer profile.

It seems like the politically correct answer I got from that webinar is aligned with this conclusion.

– Nuno Afonso – lead analyst, Multiplay – GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.gsmaintelligence.com/research/2019/07/fixed-voice-broadband-and-tv-forecasting-the-next-five-markets/784/
[2] https://www.mobileworldlive.com/wp-content/uploads/2019/07/GSMAi_Preferred_payTV_provider_based_on_consumer_profile.jpg