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Get Telecoms Smart - 5G

The next big leap in mobile technology is nearly upon us, with 5G set to launch as soon as next year. This week we look at the implications for both the telecoms industry and for communications.

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Get Telecoms Smart - 5G

  2. 2. GET TELECOMS SMART 5G The next big leap in mobile technology is nearly upon us, with 5G set to launch as soon as next year1 . This new level of connectivity is expected to have huge implications for both the telecoms industry and for communications. Here’s what you need to know: What is 5G? 5G is the next generation of mobile wireless technology, the successor to 4G and 3G, and is considered by many as the technology that will lead us into a seamlessly connected world. Theoretically, 5G will be capable of download speeds in the range of 1-10 Gb/s2 , almost incomparably faster than 3G’s 384Kb/s; in practice, a full HD film could be downloaded in well under a minute using 5G. Latency speeds (the delay before a transfer of data begins) will also be reduced - 3G has a latency of 120 milliseconds (a millisecond being a thousandth of a second), 4G has a latency of around 45ms and 5G will have a theoretical latency of just 1ms2 . The reduced latency time will be a huge shift in enabling new connected technology; for example, autonomous cars, which will need to make split second decisions to keep passengers safe. 3G brought with it internet access on the go; 4G added the capacity to stream video; these changes were huge, yet 5G is, arguably, going to be the biggest shift yet. Ovum predicts that by the end of 2022, there will be 400 million 5G subscriptions globally. A study by Qualcomm predicted that by 2035, up to $12.3trillion worth of 5G- enabled goods will have been created, with 5G impacting industries from retail to health care, transportation to entertainment2 . The impact of 5G on operator businesses The introduction of 5G is predicted to have a massive impact across the telecommunications industry, particularly fixed line broadband providers. The predicted latency and download speeds could make wireless 5G home broadband a serious competitor to fixed line broadband providers, particularly among younger, mobile-first consumers – for instance, according to Ovum: “single-person households, people in shared accommodations, and those on a tight budget who cannot afford both a fixed and mobile broadband service”.4 Broadly speaking, however, it is believed that fixed line will remain a preferred choice for home broadband in developed markets, with 5G used as a 1 Forbes, When Will 5G Launch In The UK And Why Is This Exciting?, 2018 2 Qualcomm, ‘Landmark Study on Impact of 5G Mobile Technology Released’, 2017
  3. 3. GET TELECOMS SMART 5G complimentary offering; fixed options will still provide faster speeds and large volumes of data more cost effectively than 5G.4 However, developing markets, particularly those with limited fixed-line service, are ripe for 5G services to disrupt; “For developing countries that have not had an extensive fixed broadband market, 5G will provide them with a much more satisfying alternative.”4 But before universal 5G coverage can become a reality, telco’s need to get the necessary infrastructure in place, with the GSMA admitting that, to begin with, 5G will be limited to an “urban-based technology” 3 . Building the infrastructure needed for wider 5G adoption will be a mammoth task. Timotheus Hottges, Chief Executive of Deutsche Telekom predicts it will cost up to €500billion in Europe alone4 , and telecoms companies must find ways to balance these investments with their profit margins. The impact of 5G on operator’s brands In theory, the shift to 5G is a huge opportunity for telcos to strengthen their brands by reminding people of the value of the services they offer. Over the years, connectivity services have become ubiquitous to the point that many consumers now perceive their services as a utility. The shift to 5G is a huge opportunity to remind consumers of how valuable connectivity is, and telecoms brands must market their 5G products to help consumers justify paying more for these services. However, when 5G services are first introduced, they are likely to be ‘4G+1’ (an enhanced 4G service rather than ‘full blown’ 5G) in chosen busy hot spots5 - this transitional change may make it harder for customers to appreciate the magnitude of the upgrade, and thus to see the value in the higher payments. One area may prove incredibly powerful in helping to communicate 5G’s value will be brand partnerships, which can contextualise the power of 5G and help consumers understand its use cases, rather than simply selling intangible connectivity services. Some brands, such as O2 and 3 in the UK, have already started experimenting with this with their 4G networks by partnering with services such as Netflix, offering streaming from their service without depleting a data allowance. By selling their 4G network as ‘great for streaming’ they are helping the consumer at least understand the cost premium for their service. 3 GSMA The 5G Era 2017 4 Mobile World Live, “DT chief says Europe not behind on 5G”, 2017 5 Ovum, 5G focus needs to be on proposition, not applications
  4. 4. GET TELECOMS SMART 5G How could 5G benefit other brands? A 5G network may help to open up additional opportunities for brands for example by helping technology such as augmented reality (AR), which allows consumers to immerse themselves within and interact with a brand, become more viable in more situations. AR has already been proven an effective way of enhancing a message, having played a crucial role in Clemenger BBDO’s award-winning ‘Meet Graham’ campaign, created for the Transport Accident Commission, Victoria. AR gave visitors a more interactive and immersive experience of the static piece of art, which demonstrated a human capable of surviving a car accident. But with the wireless speeds of 5G, campaigns like Graham could be brought to life faster, in more locations and on-the-go, without being restricted by the confines of today’s connectivity. Closing thoughts So 5G will bring with it a wealth of new opportunities for telecoms companies and other brands alike. The success of 5G, however, arguably relies on effective communication - for telcos to make the infrastructure investment required to bring 5G to life, telco brands will need to persuade consumers of the extra value and potential cost that a 5G service will bring to their lives, and ensure their brand is at the core of this message. If you are interested in learning more about the subject of this article, please contact Giovanni Palazzo-Corner, Researcher, palazzo-cornerg@bbdoknows.com. ABOUT BBDO KNOWS BBDO KNOWS is a planning resource for the BBDO network. BBDO KNOWS offers thinking, strategy, insights and inspiration on key categories, key themes and consumer segments. If you are interested in learning more about the way BBDO thinks please contact Melanie Norris, Global Planning Director, norrism@bbdoknows.com.
  5. 5. GET TELECOMS SMART 5G DISCLAIMER The information and materials in this article are for general information purposes only. Whilst we try to ensure that all information and data in this article is accurate, complete and up to date, it is not intended to be relied upon to influence business decisions, and you should seek independent professional advice before taking any steps in reliance upon any of the insights or data contained in this article. This article must not be shared, downloaded, copied or distributed for commercial purposes without the prior approval of BBDO. © BBDO 2018 All rights reserved