The 5G standard will be finalized in 2018
The next generation telecom standard will generate additional revenue for telcos
Consumers will be able to enjoy much faster data speeds and see newer use cases of data
The next generation mobility service has lots to offer consumers as well as service providers, as I learn through my conversation with Nunzio Mirtillo, who heads South East Asia, Oceania and India market for Ericsson.
As I get into a conversation with Mirtillo, I find that the context is clear. I reminisce the early days of my career – wiring up wireless networks. From over a decade ago, I personally have worked as an engineer on GSM networks. And since that’s a part of my past, telecom infrastructure, and the joys of connecting them to the unconnected resonates with me till this day. It’s beyond a job, it’s beyond a business. It’s as impactful as connecting the disconnected with reality. Of giving the voiceless, a voice. And helping them discover the internet, a vast powerhouse of information.
As I introduce myself to Mirtillo, and we get into passing references of the state of the Indian telecom market, he opens up by telling me how we as a nation aren’t quite aware about the scale of the Indian market.
He recalls an amusing conversation he had at the back of the Indian Mobile Congress earlier this year, “One funny thing we were discussing was that GSM was going to disappear. Because by 2020, only around 200 million people will still have GSM. So 200 million people is as big as Europe.” This is what highlights what an interesting market India is.
From a business point of view, India on its own has the scale to justify working here. This isn’t the case everywhere else. In that sense, Mirtillo believes not only is it huge, but brings with it ‘fantastic opportunity’.
From Jio and beyond
As we get talking about the Indian telecom market, my mind swiftly rushes through the past year and half. Since launching itself as beta with employees, Reliance Jio has gone on to earn itself the opening slug for any headline around telecom trends in India – Reliance Jio impact. The scale with which it has impacted metrics has seen India catapult itself several notches in terms of average data speed, peak data speed and average data consumption. Obviously what drove that was free data. But what we cannot discount is the insatiable appetite for data that is inherent in the Indian market.
The Indian market, emergence of change beyond 5G
It’s a known fact that the Indian telecom sector has been immensely competitive over the past few years. It’s primarily been a voice market, with some data consumption. But over the past 12 months, India has gone from being among the leading markets to the top spot. “The average data consumption per user per month stands at about 4GB. This is higher than the global average. In fact, it is the highest in the world,” Mirtillo says.
He’s quick to add that currently, the more data a telco provides, the more it is consumed. That’s in line with what’s happened in other markets as well. In effect, a telco needs the latest technology to maximize available spectrum. That enable the telco to offer as much data as possible to the consumer.
With such a vast appetite for data, and a young 4G VoLTE market, we’re already talking about 5G. Mirtillo says, “We’re not moving our investment from 4G to 5G.” He says Ericsson will increase its investment in 5G. “But we’re also increasing our investment in 4G,” he says. He’s aware that they need to invest in 4G to stay in this market, and adds that they are doing so, and will continue to do so.
However, Ericsson is also working on 5G simultaneously. He mentions, “We are leading in 5G. To be precise, we have 38 agreements with service providers around the world. We are obviously the major contributors in the formulation of the standard specifications.”
The formulation of 5G
5G as it is meant to be, in terms of the specification of the standard, will be finalized in 2018. Ericsson is already working to make the technology available, and it’s conducting live tests of 5G. On the sidelines of my interaction were test beds for 5G demos. Taking this from a demo bed to a commercial launch isn’t too far into the horizon. Mirtillo assures, “We are preparing for a commercial launch in 2018-2019 in some markets around the world.”
He believes the strategy of simultaneously investing in 4G and 5G will pay off. He believes the two are connected, and will focus on delivering on current needs of the market, while aligning future investments in such a way that the current 4G investments line up for the time when 5G is operational in India. The priority right now is to be 5G ready. He explains, “On the network, you have the radio and computing storage capacity. This piece is already 5G ready. So whatever baseband we will install from now on, that can be used for 5G launch.” In simpler terms, there’s a radio that transmits within the network from one node to another. There’s also communication with handsets that happens. The network component is 5G ready. It’s the components that connect the dots, that need to get upgraded eventually.
Mirtillo explains that for the network, in terms of transmission, “it doesn’t matter if it is 4G or 5G, it just needs to transport. It has to be 5G ready. And this is possible”. He adds that it is very much on companies such as Ericsson, and also the telcos “to make sure that the huge investments they are undertaking are 5G ready. It is possible. This happens every time we think about a new technology. Obviously we think about the new functionalities which we can then touch upon, but then also we think about putting yourself in the shoes of the operators, and how can we reduce the investment for them. Or on the other end how can we maximize the investment they have already deployed and that is and that is what is driving us when we we brainstorm on 5G and 4G simultaneously”.
5G and India – what this means for consumers and operators
Whether or not India is ready for 5G isn’t the question according to Mirtillo. India is absolutely ready for 5G. “From a market demand point of view, absolutely yes. Because the demand is in the market. From a technology point of view. I don’t think India needs anything,” he adds. What needs to happen now is that the business will need to overcome challenges. When India moved from GSM to 3G and then from 3G to 4G it wasn’t a problem. But the move to 5G isn’t just about radio.
The faster an operator can provide data, the faster users will move. So operators need the technology to deliver faster data rates, and yet at the same time, there’s need for handsets. Current 4G handsets will not be compatible with 5G. However, newer 5G handsets will be backward compatible with 4G.
For an operator, there lies greater opportunity in 5G. According to Mirtillo, “Latency will be improved, network response time will be reduced. You can generate up to 1000 times the traffic. You can generate much more traffic per user. But this technology enhancement will basically give you the possibility to go for use cases that aren’t possible today.”
Whether or not India is ready for 5G isn’t the question. India is absolutely ready for 5G
He gives an example of fix wireless access turning into a sound business case with 5G, if not with 4G. He also adds that mobile operators could “address huge scale or massive machine type communication. Typically, you get four use cases. One is mobile broadband announcement. Everyone understands we need more and 5G will bring more. Even as you add new frequency spectrum. Two, you will have fixed wireless access for places where it is not convenient to reach directly to home with fiber till the end. Third, you will be capable of managing massive IoT business case with very good battery life. Lastly, the critical mass with high bandwidth, very low latency use case like automation like a car, or working in the mine or remote surgery.”
He believes that if the service provider taps into the enterprise market like manufacturing, agriculture, healthcare and transport “they can change the way these sectors work. They can introduce new business models. They can provide the service for that. That will be an addition of $27 million to the existing business, which is projected to be around 60 billion in 2020-23. And then if you scale up, this will be an additional business opportunity of around $90 billion for the service provider.”
Mirtillo believes in the capability of the global standard in ensuring the success of 5G. He says, “Usually, the reason for the success of 4G, 3G or GSM has been the global standard. And what is happening with 5G is exactly the same. When you have a global standard. What has happened in the last 20 years is that the cost has continuously come down. Whether it is the terminal cost, the cost of GB, or whatever costs are associated. So 5G is a leapfrogging technology. We enable the use of spectrum in a more efficient way. With 4G the cost of GB is going down, and with 5G we can continue that curve.”
He adds, “The price point will continue to go down. We believe that in 2023, basically 1 billion people will get access to smartphones which means all India will be connected with very high bandwidth. Which means Digital India, or Make in India will be a reality because of this accessibility. And 5G as we’ve been saying at the beginning it’s always kind of small and then it will scale up. I have no doubts because in India or China where we have the majority of people in, the business case is there. So it might start in the U.S. and here and there. Not in one particular market. And India is a big piece of the world. You can say that in a different way – I mean the world without India will be a different world.”
Ericsson currently employs around 20,000 people out of India. In addition to having a network operations center (NOC) in India, Ericsson also monitors several networks around the world from here. In 1994, Ericsson built a factory here to manufacture 4G and 3G radios. With these capabilities, Mirtillo hopes to produce in India and export to Asia.
The company has already signed an MoU with Bharti for 5G. In addition there’s another MoU with Indian Institute of Technology, Delhi where the company hopes to build a 5G lab in Q1 2018. “It will be a kind of university for 5G where we will teach and also learn. Because people will get a lot of doubts. And we are doing that not only in India but also around the world. Through these interactions, we are also learning,” Mirtillo says.