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Analyst View: Q&A with Pioneer Consulting Asia Managing Director Virat Patel

5G Asia: What do you see as the key challenges for the global telecoms industry in developing 5G networks?

VP: Many telcos have barely started commercialising 4G networks and they are facing commercial pressure from rapidly falling voice and SMS revenue which is not made up by increases in data revenue (although data volumes are increasing above expectations) already there is talk of the next set of advanced services that could be enabled by a 5G network.

So, the question for the global telecoms is industry is: Is 5G a solution looking for a problem to solve?

We don't think so.

Advanced applications across healthcare, automobile/transport, manufacturing, logistics, consumer appliances and entertainment are being envisaged. What is clear is that the emerging services fall in two categories:

  • Transformational services

  • Incremental Improvements on 3G/4G services

Given the high number of cells needed to provide 5G service, the investment requirement to deploy a 5G network will weigh heavily on telcos. Optimizing this investment will be another challenge.

Other challenges are the uncertainties in standards – (how quickly will they be agreed, will there be a single agreed standard or many variants?) and the timely availability/allocation of spectrum to rollout 5G services.

With all these uncertainties, we believe 5G services will emerge somewhat later than the 5G evangelists predict today. If your recall, the take-up of 3G was similarly slower than first expected.

5G Asia: What particular challenges and opportunities can we see in the Asia market?

VP: The Asia market is anything but a homogeneous market so there isn't a simple answer. Every country is likely to have its unique challenges and opportunities. Hence, at the highest level, we think it is best to consider developed and developing markets in Asia.

In developed Asian markets e.g. Singapore, Korea, Japan, where income levels are relatively high (and where governments are likely to promote advanced services), we believe 5G services are likely to emerge relatively quickly driven by services such as autonomous driving/connected cars, control of remote medical devices, widespread use of video streaming (instead of downloads), etc. In these markets, there is a strong possibility of 5G services evolving as quickly as, if not earlier than, 5G services in Europe and the US.

In developing markets, where income levels are lower and where governments cannot afford to push advanced services, business cases for 5G will be fragile and hence emergence of 5G is likely to be slower.

Pioneer Consulting Asia has extensive experience of assisting telcos and other players across Asia to analyse opportunities, develop go-to-market strategies and assist with implementation.

5G Asia: How will OTT players continue to impact the market, and how will relationships with operators evolve?

VP: We believe OTT players and telcos will need each other even more as services and infrastructure evolve. We believe both parties will continue to look for ways to work with each other which will include identifying customer niches that telcos and OTT players can target together to unlock value. Pioneer Consulting Asia has a tried-and-tested methodology to identify micro customer segments and design digital services for telcos.

Collaboration will not be a smooth process with telcos continuing to seek regulatory assistance to get OTT players to pay more for the infrastructure. Clearly, how the net neutrality arguments pan out will have an impact on this relationship.

5G Asia: How strong is the business case currently for 5G and where will operators likely see the most commercial success?

VP: Inevitably, this is a big unknown at present.

We believe that for a nationwide rollout of 5G the business case will look fragile. But, 5G economics will make sense for a phased approach: if the service is introduced in urban areas to satisfy the early applications e.g. for autonomous cars, public security, etc. and over time, as demand emerges and unit costs reduce, to aim for wider rollout.


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