Brief

Lockdown’s Data-Hungry Legacy Will Show the True Value of 5G

Accelerating rollout in the Covid-19 recovery can give network operators an edge.

By Herbert Blum and Darryn Lowe

First published on Μαΐου 01, 2020
min read


Before Covid-19, some people dismissed 5G as a “not just yet” technology—one that would be useful at a future date when our roads hummed with autonomous vehicles reliant on instantaneous connectivity, but not essential in the here and now. Little did they know that today’s near-empty streets would offer more immediate confirmation of 5G’s value to telecom operators. The lockdown boom in data usage highlights the sustainable advantage carriers can build through 5G. With billions obliged to work from home, parents are spending hours on Zoom calls while their children fidget in virtual classrooms, stream Disney+ or hang out with friends in Animal Crossing. That extra data demand won’t evaporate anytime soon, as many workers will keep telecommuting for at least part of the week even when able to return to the office (and Animal Crossing is nothing if not addictive). For Our Clients Macro Surveillance Platform For more detail on the business implications of coronavirus from Bain’s Macro Trends Group, log on to the Macro Surveillance Platform. Learn more about the platform > In recent weeks, some operators have taken bold steps to expand 5G coverage to meet the needs of this ever more connected and data-hungry world. That should leave them well placed to scoop up new business from households desperate to upgrade their Internet connectivity so they can enjoy interruption-free streaming and gaming. And that’s in addition to the possibilities that 5G infrastructure unlocks in terms of improving customer experience, automating manual processes and offering new products and services. The 5G adoption trend ought to be particularly marked in the many areas in which users are dependent on copper-wire xDSL connections that are too slow. Whether deployed as an upgrade option by incumbents or as an attacking strategy by new entrants, 5G fixed wireless access can be a smart way to turbocharge home broadband, not least as it shares a network with a carrier’s 5G mobile services (with all the revenue and cost advantages that entails). Rather than requiring heavy upfront capital expenditure to connect a neighborhood before offering services, 5G FWA allows an operator to target an initial 5%–10% market share cheaply and quickly, then invest for additional capacity as demand builds. New 5G technologies such as integrated access and backhaul will magnify this advantage by reducing the need to run fiber to every small cell, saving more money and time. There’s another reason why we think that nimble operators can find fresh momentum for their 5G aspirations in the current crisis: Battling the Covid-19 pandemic has made governments more aware that telecommunications capacity is a source of national resilience. As they gear up to spend trillions to restart their economies, we anticipate that a significant chunk of infrastructure stimulus will be distributed in ways that support 5G rollouts. Operators can prepare themselves now for that possible spending by exploring partnerships with utility companies and other bodies that can speed the deployment of 5G equipment on the ground. Smart cities are a further 5G tailwind: More countries are likely to use 5G infrastructure and Internet of Things–enabled tools (such as thermal imaging robots) to protect themselves against future pandemics. The Covid-19 crisis has already showcased 5G-enabled advances in remote medicine and scanning. Operators should be on the front foot in launching and highlighting 5G applications that can support public safety. Today’s 5G headwinds are not to be ignored, of course. Budgets for capital expenditure are under pressure as CFOs maximize cash flow. Many consumers will have to tighten their belts amid widespread job losses and pay cuts; some will prefer to extend the life of their 4G handsets rather than buy a 5G model. Several countries have delayed 5G spectrum auctions because of the virus. Most bizarrely, online misinformation linking 5G and Covid-19 has encouraged vandals to attack mobile infrastructure. However, operators can take action to mitigate these negatives. For instance, rolling out 5G can add capacity to networks more cheaply than expanding 4G, safeguarding cash. Sales teams can devise longer repayment terms (36 months, say) to encourage consumers not to give up their 5G upgrade ambitions. Dynamic spectrum sharing offers a way around delayed 5G auctions by running services on lower bands of spectrum already available. And the baseless rumors? While they should still be confronted head-on by leadership teams, it would be politic to make antennas and other equipment as unobtrusive as possible. Related Insights Coronavirus The global Covid-19 pandemic has extracted a terrible human toll and spurred sweeping changes in the world economy. Across industries, executives have begun reassessing their strategies and repositioning their companies to thrive now and in the world beyond coronavirus.

Before Covid-19, some people dismissed 5G as a “not just yet” technology—one that would be useful at a future date when our roads hummed with autonomous vehicles reliant on instantaneous connectivity, but not essential in the here and now. Little did they know that today’s near-empty streets would offer more immediate confirmation of 5G’s value to telecom operators.

The lockdown boom in data usage highlights the sustainable advantage carriers can build through 5G. With billions obliged to work from home, parents are spending hours on Zoom calls while their children fidget in virtual classrooms, stream Disney+ or hang out with friends in Animal Crossing. That extra data demand won’t evaporate anytime soon, as many workers will keep telecommuting for at least part of the week even when able to return to the office (and Animal Crossing is nothing if not addictive).

For Our Clients

Macro Surveillance Platform

For more detail on the business implications of coronavirus from Bain’s Macro Trends Group, log on to the Macro Surveillance Platform. Learn more about the platform >

In recent weeks, some operators have taken bold steps to expand 5G coverage to meet the needs of this ever more connected and data-hungry world. That should leave them well placed to scoop up new business from households desperate to upgrade their Internet connectivity so they can enjoy interruption-free streaming and gaming. And that’s in addition to the possibilities that 5G infrastructure unlocks in terms of improving customer experience, automating manual processes and offering new products and services.

The 5G adoption trend ought to be particularly marked in the many areas in which users are dependent on copper-wire xDSL connections that are too slow. Whether deployed as an upgrade option by incumbents or as an attacking strategy by new entrants, 5G fixed wireless access can be a smart way to turbocharge home broadband, not least as it shares a network with a carrier’s 5G mobile services (with all the revenue and cost advantages that entails). Rather than requiring heavy upfront capital expenditure to connect a neighborhood before offering services, 5G FWA allows an operator to target an initial 5%–10% market share cheaply and quickly, then invest for additional capacity as demand builds. New 5G technologies such as integrated access and backhaul will magnify this advantage by reducing the need to run fiber to every small cell, saving more money and time.

There’s another reason why we think that nimble operators can find fresh momentum for their 5G aspirations in the current crisis: Battling the Covid-19 pandemic has made governments more aware that telecommunications capacity is a source of national resilience. As they gear up to spend trillions to restart their economies, we anticipate that a significant chunk of infrastructure stimulus will be distributed in ways that support 5G rollouts. Operators can prepare themselves now for that possible spending by exploring partnerships with utility companies and other bodies that can speed the deployment of 5G equipment on the ground.

Smart cities are a further 5G tailwind: More countries are likely to use 5G infrastructure and Internet of Things–enabled tools (such as thermal imaging robots) to protect themselves against future pandemics. The Covid-19 crisis has already showcased 5G-enabled advances in remote medicine and scanning. Operators should be on the front foot in launching and highlighting 5G applications that can support public safety.

Today’s 5G headwinds are not to be ignored, of course. Budgets for capital expenditure are under pressure as CFOs maximize cash flow. Many consumers will have to tighten their belts amid widespread job losses and pay cuts; some will prefer to extend the life of their 4G handsets rather than buy a 5G model. Several countries have delayed 5G spectrum auctions because of the virus. Most bizarrely, online misinformation linking 5G and Covid-19 has encouraged vandals to attack mobile infrastructure.

However, operators can take action to mitigate these negatives. For instance, rolling out 5G can add capacity to networks more cheaply than expanding 4G, safeguarding cash. Sales teams can devise longer repayment terms (36 months, say) to encourage consumers not to give up their 5G upgrade ambitions. Dynamic spectrum sharing offers a way around delayed 5G auctions by running services on lower bands of spectrum already available.

And the baseless rumors? While they should still be confronted head-on by leadership teams, it would be politic to make antennas and other equipment as unobtrusive as possible.

Related Insights

Coronavirus

The global Covid-19 pandemic has extracted a terrible human toll and spurred sweeping changes in the world economy. Across industries, executives have begun reassessing their strategies and repositioning their companies to thrive now and in the world beyond coronavirus.