Streaming Media
Amid the gung-ho promises for 5G’s money generating tsunami and epoch transforming potential there are also voices of concern about the basic business model.
Giving a keynote at MWC 2019, Mike Fries, CEO and vice chair of pay TV operator Liberty Global, said, “5G was a pipe dream and now it’s become a bad dream for many operators.
“Operators are very nervous about figuring out how to make the economics work. But as a pay TV company with mobile a second and third business for us I am not worried.”
That’s because Fries identified the main driver for 5G on the consumer side as video “content, content, content.”
He said, “From our point of view we need to be aligned to YouTube, Amazon, and Netflix, as well as traditional content providers.”
He described AT&T’s swallowing of TimeWarner as “a defensive move to ensure they have access to content,” then added, “I don’t think you have to own it [be vertically integrated] to be successful.”
Fries defended the role of cable and fixed broadband networks—the infrastructure underpinning his company.
“5G will not replace fixed,” he asserted. “You will get 10Gb to 70Gb with 5G over mobile, but you will see 150Gb to 600Gb in the home. Yes, the ratio [of fixed to mobile] will come down a bit but consumers will want to use so much bandwidth in the home [it will mean] fixed is here to stay.”
Fries also took a shot at mobile operators in Europe suggesting that mobile businesses couldn’t afford to roll out 5G and that the market needed rationalizing.
“There are 450 operators in Europe selling mobile networks to consumers—that’s a million subs per operator,” he said. “In contrast there are just four [main operators] in the U.S. and only two in China. Fragmentation is a real challenge. There will be greater consolidation [in the European market] to enable capital allocation and most will need fixed connectivity to deliver end-to-end services—especially video—to the consumer.”
The 5G bill is expected by one analyst, the financial house Greensill, to top $2.7 trillion USD by the end of 2020.
“Most operators in Europe are nervous about capital outlay and uncertain of the business model,” Fries claimed. “There’s been ten straight years of shrinking revenue in mobile and the biggest issue has been price. Consumers, understandably, want more for less.”
He seized on research from Cisco that predict 400 million 5G subs worldwide by 2022 (5% of the total mobile connections) and over 28 billion machine-to-machine connections by the same timeframe.
“5G is not happening for the consumer [at first],” he said. “Most mobile operators will start with B2B options.”
There is wide industry consensus that the biggest piece of the 5G pie will not be consumer but in industrial and enterprise applications.
“For us the 5G business case stacks up on its own,” said Andy Penn, CEO at Australian telco Telstra. “It makes more sense for me to invest in 5G for the enterprise. Those use cases are starting to become clearer, but how we package the solution for customers is a trickier issue.”
Microsoft’s upgraded mixed-reality headgear HoloLens, unveiled in Barcelona, is not aimed at gamers, visual entertainment, office workers, or casual punters.
CEO Satya Nadella said that Microsoft is targeting use by large corporations in manufacturing, design, and remote training. Companies like Airbus, Bosch, Honeywell, and Saab are already test partners for Hololens 2 and may value the ability to speed product design or diagnose problems on an oil rig or production line with holographic imagery, saving the cost of physically sending technicians.
Cisco research suggests that more than 70% of revenues from 5G will be from the enterprise.
Cisco’s CEO Chuck Robbins declared, “This is going to be a transformative tech like no other we’ve ever seen. This is one tech that feels like the hype is going to be reflected in reality.”
Others, however, were more cautious.
“As an industry we are only just finalizing rollout of 4G,” Hatem Dowidar, CEO of Emirates telco Etisalat. “We have barely got 4G into emerging markets and we need to get return on investment before we rush into 5G which in any case has not even been allocated spectrum in many countries.
“All the industry’s energy is going to 5G,” added Dowidar. “But we need more sanity about using it.”
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