November 8, 2021

Recommendations on What Private Investors Should Look for and What Governments Should Do to Attract Investment in 5G

In reading the previous post, which is about a report that looks into how mobile and digital technology, including IoT, LTE and 5G, can support industry decarbonization, a client of my consultancy, Global Tactics, sent me an email asking whether or not countries are ready for 5G. While people globally have been touting the benefits of 5G for the past few years, his observation as a chief executive of a multinational IT services and hardware company is that some countries are more ready than others. I appreciate the question as I recently read The Economist Intelligence Unit's (The EIU) report entitled The 5G Readiness Guide: Deployment strategies, opportunities and challenges across the globe.

In providing background on the report, The EIU says it "collected data and information on the 5G environment in the top 60 telecoms markets worldwide, in order to score them on six key metrics: the business environment, spectrum availability, the current level of 5G deployment, 5G network speed, progress on industry trials of 5G and the robustness of 5G policy." The paper also contains a snapshot of The EIU's scores for each region.

The EIU importantly explains that its "assessment is intended to help companies planning to invest in the 5G ecosystem to understand where each country stands in the 5G race, as well as its future potential. It also allows policymakers to benchmark their 5G regulations and policies against those of other countries, and make improvements that could attract more investment into the sector."

Below are the reports key findings:
  • An early start in 5G preparation, along with better management of the coronavirus (Covid-19) pandemic in 2020, has helped many Asian countries to free up spectrum in the higher bands in order to forge ahead on 5G rollouts.
  • Gulf countries are also among the most 5G-ready globally and offer significant market opportunities for providers of next-generation technologies.
  • Despite lagging in spectrum auctions, Western European countries are at the forefront of testing and rolling out 5G-based industrial applications.
  • Inadequate spectrum policy and a lack of regulatory coordination have held back 5G development in the US, but progress is being made under the Biden administration.
  • Most countries in Africa and Latin America are likely to remain focused on expanding 4G and fiber broadband in the medium term, given a lack of funding and the low capacity to monetize 5G.
  • A 5G-specific policy that covers auctions, deployment targets and trials, coupled with government support in the form of tax incentives or low-cost loans, is the best way to support faster rollouts.
  • The US-China dispute over Huawei and other Chinese telecoms equipment manufacturers poses the biggest risk to 5G rollout across all regions, second only to disruption caused by Covid-19.

The EIU also presents the following recommendations bifurcated by what private investors should look for and what governments should do to attract investment.

What private investors should look for:
  • Countries with a national 5G policy that covers auctions, deployments and industrial trials.
  • Governments that enable collaboration between operators, vendors and industry players.
  • Countries with a high mobile-service penetration rate and a high average revenue per user, where 5G smartphone shipments are on the rise.
  • Industrial economies where businesses are keen to adopt 5G technology.
What governments should do to attract investment:
  • Ensure availability of contiguous blocks of spectrum and equitable distribution to all operators.
  • Consult industry players on spectrum base-price prior to auction, in order to avoid delays.
  • Offer single-window clearance for telecommunications licenses and a medium-term national 5G policy.
  • Offer incentives to encourage infrastructure and spectrum-sharing among operators that can reduce investment costs.
  • Partner with vendors and the industry to facilitate industrial trials.
  • Make 5G spectrum directly available to enterprise users, such as manufacturers, who want to deploy a private 5G network.
  • Explore opportunities for public-private partnerships (PPPs).

The EIU correctly notes that while the global rollout of 5G has been affected by the pandemic, "The coronavirus has, nevertheless, accelerated digitalization and opened up new opportunities for telecoms operators. Fast, reliable connections have become vital to businesses, consumers and governments as they try to cope with this global crisis."

The reports adds that "For companies, the pandemic has underlined the benefits of deploying online offerings, automation and developing the Internet of Things (IoT) to manage supply chains. For consumers, it has increased demand for online goods and services. And, for governments, it has highlighted the importance of deploying online services, including healthcare, as well as the potential benefits of advanced data analytics, artificial intelligence (AI) and robotics."

I support The EIU's assertion that "5G will be the launchpad for countless new applications, from self-driving cars and smart cities to augmented reality (AR)." What is more, "5G networks will offer benefits in the form of hyperfast connections, improved reliability, high capacity and low latency (meaning faster response times for requests). For telecoms operators, the upgrade represents an opportunity to move beyond communication services to offer hi-tech solutions to businesses. Businesses can use these technologies to transform their operations and optimize efficiency, while governments can create a robust 5G infrastructure to attract investment, create jobs and drive economic growth."

The report adds that while the "benefits of 5G are significant ... so is the investment necessary for its rollout." Moreover, "As operators and governments decide which markets will offer the best returns on 5G, there are several factors to consider. Strong and affordable infrastructure (with the right spectrum and good coverage of base stations) will be the foundation, but operators will also need to find the right 5G products and service applications to sell. Finally, the business environment will need to support significant research and development (R&D), so that 5G capabilities are developed and used in the most efficient way." As reflected in the map above, "The weighting of these factors differs markedly by region."

Do you agree with The EIU's recommendations on what private investors should look for and what governments should do to attract investment? If 5G is deployed in industrialized countries at a faster rate than emerging markets, how can governments, nongovernmental organizations, and the private sector prevent a digital divide forming which will result in a gulf between those who have access to the internet and those who do not?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

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