These range from enhanced mobile broadband for consumers to real-time services for industrial applications and the connection of millions of devices in the 5G-enabled Internet of Things. Just like an athlete, a 5G network or device needs to have different abilities and strengths, for example very high capacity, speed, low latency, high reliability or the ability to connect a massive number of devices per square kilometre. And then it needs to perform with these qualities in each of the different disciplines, in so-called "network slices". So, in 5G are not competing in a single discipline; we are in a decathlon, with several disciplines in parallel.
From a European perspective, it seems to me that the priority is not necessarily to be the first to launch 5G, but rather not to be late, in particular in those areas that are strategic for our society and economy and that represent the real differentiator with 4G networks. Europe is strong for example in the automotive and smart manufacturing areas; these are certainly the areas where 5G can have a huge impact in digital transformation and we want these digital ecosystems to develop in Europe. But we also need to be ready for 5G services for consumers and not to repeat the slow start of 4G, which led to early development of the newest mobile devices and apps elsewhere in the world.
This was the spirit of the 5G Action Plan of 2016, where we called on stakeholders and Member States to join forces to make 5G a success in Europe and world-wide. Actions cover the necessary framework conditions such as spectrum and small cells as well as 5G innovation in strategic areas such as 5G corridors and 5G city platforms.
To monitor its progress and make sure the 5G Action Plan is fully implemented, we launched the 5G Observatory last year, where everyone can see where we stand in the 5G Olympics. The second quarterly report was released a few days ago.
Where do we stand today?
All of the world’s leading economies, i.e. China, Korea, Japan, the US, and of course the EU, are advancing in 5G deployment, in spite of some business uncertainties. Comprehensive roll-out is expected to start in 2020 in all these regions. Some operators in other regions are proposing it as a form of fixed wireless broadband to replace fibre connectivity (for example Verizon in the US is connecting households with broadband through a 5G Fixed Wireless Access (FWA) service at 28 GHz using pre-5G technology) – but this is not what 5G truly offers. The three large mobile network operators in South Korea launched the first fully-fledged commercial 5G offerings last December based on the early 5G “release 15”. The current service is limited to enterprise customers but consumer mobile services are expected to be launched in South Korea as from March 2019.
Some European players have announced their plans for pre-commercial trials in 2019. The Finnish operator Elisa claims that it has commercially launched 5G, while reporting its 5G network carried a 5G phone call on June 2018, with a 2.2 gigabit data speed.
Analysts expect to see more commercial launches take place throughout 2019. However, these rollouts should be limited mainly to pre-5G equipment and functionalities that are largely addressing specific early market needs such as fixed wireless as a substitute for fibre to the home, or hot spots in limited areas. Early mobile coverage might be pursued in some regions but definite plans are still unclear. Overall, the pace of market development will be linked to the availability of a broad range of handsets for commercial mobile 5G service, which is not expected before 2020.
Like any major sporting event, the 5G Olympics require good quality infrastructure, and our Olympic stadium is spectrum! All Member States have recognised the need for significant harmonised spectrum for 5G, and have adopted a common deadline for the effective usability of 5G pioneer spectrum bands. However, the current availability of spectrum for 5G in all bands - low, mid and high - is still a challenge in Europe. There is also a legal obligation to assign the three 5G pioneer bands (700 MHz, the 3.6 GHz band (3.4-3.8 GHz) and at least 1 GHz within the 26 GHz band (24.25-27.5 GHz)) in all Member States by the end of 2020. The European 5G Observatory shows some recent progress. However, most of the work is still to be done. We will insist on the 2020 deadline and consider derogations only in very exceptional cases and if fully justified. Currently several Member States have no plan yet for the 5G auctions, and only one has assigned all pioneer bands. We hope the situation will look better at the end of 2019.
In addition to spectrum measures, we are also putting into place a light deployment regime for small-area wireless access points to reduce the cost of deploying small cells, starting with a common definition of small cells for which no installation permit can be required in the EU. We encourage stakeholders to contribute to the ongoing public consultation on this matter.
Of course, an early launch is good for marketing purposes, but what really matters is the ability and commitment by market players to invest in comprehensive 5G rollout and to develop 5G ecosystems.
As far as Europe is concerned, estimations for planned investments by market players in 5G amount in average to €60-100 billion annually in the next five years. As an example, Deutsche Telekom plans to invest about €5 billion annually in 5G until at least 2021. At the moment, actual and planned investments in large-scale trials can be estimated in the order of €1 billion for Europe (private and public).
US investments in 4G and pre-5G are estimated at around US$11 billion annually (up to total of US$33 billion by 2020) for all mobile operators. Verizon has started offering some fixed 5G services as already mentioned. In addition, US operators (mainly Verizon and AT&T) have conducted a variety of live tests and limited trials based on prototype 5G and pre-5G systems for which it is hazardous to estimate the costs (probably between US$50 and 100 million).
In Asia, estimations range from annual investments in Japan of €15 billion to investments in trials in the order of €1-2 billion in Korea and China. Since 2015, China has reportedly built 350,000 new cell phone tower sites while the US built less than 30,000 new sites.
While 5G mobile broadband as a continuation of 4G services will be important for Europe in light of exploding mobile data traffic and the fast evolving app economy, 5G also offers strategic opportunities for digitising our strong European economic sectors. The latter aspect is seen as decisive for the success of 5G and for the estimated investments to materialise, since major investments in 5G will only be justifiable based on revenue prospects in addition to the traditional mobile revenues from consumer and business markets. These deployments for vertical use cases are expected to start in the period 2020-2025 in line with the European 5G connectivity objectives.
Europe’s strengths and weaknesses
Europe has strengths and weaknesses compared to other regions. The US is one big market with strong digital ecosystems, having facilitated an early 4G launch. In particular total investment in the telecom sector in the US is still significantly higher than in the EU at an average of €194 per year per capita (compared to €92 in the EU). In comparison, Europe was late in 4G, mainly because of its fragmented markets and the effect of substantial legacy investments in 3G technology. Enhancing the investment environment, notably through the new European Electronic Communications Code, will be key to enable better cooperation in spectrum and the use of regulatory incentives for accelerating network rollout.
Europe does have several strong industrial sectors, such as automotive, manufacturing or health, where the opportunities are significant for 5G. The 5G Observatory reported that Europe is leading with 140 major 5G trials in particular for vertical sectors. Emerging cross-sector partnerships are essential to test technologies, but also new cooperation models across the value-chain. In this context, the Commission and Member States are facilitating large-scale trials and deployment in particular in areas with market failure and of public interest.
The 5G trial platforms and the vertical trials as part of the 5G public-private partnership will be essential to foster 5G ecosystems and deployment. We are putting particular effort into one important discipline, 5G corridors for Connected and Automated Mobility. Several trial projects are now running on these corridors. Looking towards deployment, the Connecting Europe Facility proposal as part of the next EU budget starting in 2021 will be essential to attract private investment to commercial deployment along major transport paths in Europe. 5G in smart cities and communities is another focus for 5G deployment. The recent WiFi4EU call has shown the huge demand for connectivity in European municipalities.
As with the actual Olympics, there will many different winners in the 5G Olympics, across a wide range of disciplines. We have already seen what some of these disciplines will look like in the first phase of 5G standards, the so-called release 15. The evolution of this standard and its successor Release 16 will be key to enable more advanced industrial use cases. Connected and Automated Mobility (CAM) certainly offers one of the biggest potential for new growth, but also for societal goals such as zero accidents and zero CO2 emissions on European roads. 5G can also be enabler for personalised medicine, by bringing together massive health data used by artificial intelligence systems. This has the potential to increase life expectancy by several years.
It is important to keep in mind that 5G needs scale and operates across siloes. The various 5G disciplines cannot be seen in isolation. A world-class 5G infrastructure is the basis for the development of the digital society and economy.
I am looking forward to the Mobile World Congress in Barcelona. On 26 February I will hand over the first "medals" together with GSMA, the European 5G Pioneer Award, one of the Global Mobile (GLOMO) Awards, which will give recognition to a front runner in 5G deployment in Europe.