Earlier today a report commissioned by Qualcomm was released focusing on the impact of upcoming 5G standards and technology on the global economy. (https://www.qualcomm.com/invention/5g/economy) Qualcomm, along with nearly every major player in the technology and wireless industry, believes that 5G will bring about a new era of connected devices with a combined intelligence far greater than what we can demonstrate on today’s offerings. The 5G Economy was led by research firms IHS Markit and PSB, with outside verification by leading economist and professor Dr. David Teece, director of the Tusher Center at the Haas School of Business, U.C. Berkeley, and principal executive officer of the Berkeley Research Group. The results and tone of the report point towards a substantially more dramatic impact of the move to 5G than we have seen in any previous wireless technology migration.
Many consumers and businesses today not only utilize mobile 4G and 3G technology, but have come to depend on it to drive growth and sustain modern business models. 5G will move mobile wireless connectivity to a new level, hitting the landmark of being considered a General Purpose Technology, a designation given to technologies that change the world. Other GPTs include the printing press, electricity, automobiles, and the internet, putting this new predicted classification into proper context.
“The printing press. The internet. Electricity. The steam engine. The telegraph. Each of these discoveries or inventions is part of an elite class of socio-economic mainsprings known as General Purpose Technologies (GPTs). Established through pervasive adoption across multiple industries, GPTs are often catalysts for transformative changes that redefine work processes and rewrite the rules of competitive economic advantage. The profound effects arising from these innovations range widely – from the positive impacts for human and machine productivity to ultimately elevating the living standards for people around the world.”
Moving from a person-to-person or person-to-machine connection infrastructure, and instead facilitating a design associated with a connection fabric, where all devices can communicate and share important information easily, is what brings wireless connectivity into the GPT state. The research paper and IHS Markit base that potential on a 21 unique 5G uses cases impacting productivity and economy around a wide range of sectors.
This leap for mobile communication from its current state to a General Purpose Technology classification offers economists and researchers new economic models with which to make claims and predictions about the future of our world and the future of 5G. The impact on the global economy will be staggering, with key findings from the report indicating $12.3 trillion dollars of total economic output by 2035, roughly equal to the consumer spending of the US in 2016 and more than combined spending of consumers in China, Japan, Germany, the United Kingdom, and France in 2016.
The global 5G value chain (the valuation of 5G enabled products) will exceed $3.5 trillion in output and support 22 million jobs in 2035. That number is equivalent to the revenue of the top 13 companies in the 2016 Fortune Global 1000 including Wal-Mart, Royal Dutch Shell, Apple, and more. Another angle to view these contributions of 5G technology and integrations to the future of our economy is to estimate its real impact on global GDP. From 2020 to 2035, IHS Markit believes that to be equal an economy the size of India, currently the 7th largest in the world. The 22 million jobs connected to the 5G market will be created and supported by fields of network operators, OEM device production, content and software developers, etc.
How does all of this happen? What kind of innovations and changes does 5G bring about other than faster connectivity that can sustain this significant economic shift in just 17 years? Three key areas will drive growth through 5G connectivity: enhanced mobile broadband (EMBB), massive internet of things (MIoT), and mission critical services (MCS).
Perhaps the easiest to understand segment of the 5G shift comes in the form of mobile broadband. With the goal of improving consistency and experiences of mobile connectivity, 5G will be able to extend cellular coverage into a broad range of structures through new installations including shopping malls, office buildings, and large population venues (stadiums and arenas). An increase in total data carrying capacity available on 5G means that a greater number of devices will have the ability to increase bandwidth throughput without adversely affecting the networks of today. Use cases for this area of 5G expansion include fixed wireless broadband deployments, augmented and virtual reality, enhanced digital signage both indoors and out, and enterprise collaboration between locales.
Though we have been hearing about the Internet of Things for years and have seen the roll out of some devices and integrations on today’s 4G technology, 5G will improve the ability for the networks to scale and thus drive new uses and adoption rates across nearly every modern industry category. Improved coverage, low power capabilities, and use of both licensed and unlicensed spectrum will bring about a massive spike in device proliferation. Uses cases like asset tracking, smart agriculture for farmers, smart cities and homes, connected shopping, and energy monitoring are where the transformative culture 5G technology will feed begin to grow. It is easy to see these examples and how they, along with proper implementation, fundamentally change our culture and how we live.
If MIoT is the future we can expect in 5-10 years with 5G, then mission critical services (MCS) is the future we will see in 10-20 years. These workloads require high levels of reliability and ultra-low latency connectivity to ensure the safety and security of people and product. This includes the coming world of autonomous vehicles, drones, automation in industrial markets, remote patient monitoring and health programs as well as a smart grid and energy system. The infrastructure and regulatory investments in this market segment are just in the early stages of creation and thus will see a longer lead time for integration but will be the ones that most fundamentally change how the world connects and operates.
The economic impact of $12.3 trillion through these three areas has been broken down into industry segments in the below graphic. While the full report offers more detail on the breakdown of these contributions, it is straight forward to see the impact that pervasive 5G availability will offer to manufacturing and medicine. Drones will enable a new channel of sales within the transportation sector and this means that companies will need to buy those vehicles. New 5G enabled health tracking devices will accelerate medical spending while also requiring additional manufacturing capabilities at the source. Information and communications sectors, that will create and fuel the 5G networks themselves, will be another significant part of that global spending and investment.
This paragraph from the report can help us understand the effect of ubiquitous 5G connectivity.
“To put these findings in a broader context, one must also consider how many industries will be truly affected by use case. For example, the availability of autonomous vehicles and drones will do more than stimulate sales of driverless cars and unmanned aerial vehicles (UAVs) to consumers. They will also be deployed in agricultural and mining applications ranging from surveillance of remote natural resources to autonomous transport of ores to self-driving tractors. They will be widely used in the transportation sector for driverless transport and delivery of commercial and consumer goods. Municipalities will integrate autonomous vehicles into their transit systems while using drones for monitoring functions. In manufacturing, autonomous vehicles will also be used in intra-plant stocking and retrieval systems. Finally, autonomous vehicles will also positively affect the insurance industry as vehicle accident rates decrease.”
5G will drive new levels of invention
As a part of the research for The 5G Economy, PSB Research conducted a series of polls of in late 2016 to measure awareness of 5G, asses the landscape of 5G companies and explore the barriers to 5G adoption. Questions were asked in more than 3,500 interviews in 7 different countries to an audience of business decision makers, tech innovators, opinion leaders, broad elites and tech enthusiasts. Though this report measures the temperature of those people at the decision-making level of corporations, governments, and innovators, it does provide an interesting look into the importance of 5G for these groups and how they aggressively they might invest in it.
Easily the most substantial survey result is that more than 90% of the participants believe that 5G technology will “enable new products, services, and use cases that have not been invented yet.” Considering the source of the survey, and the industries covered, a percentage that encompassing indicates that even those individuals in the highest levels of development believe that 5G will provide a pathway to innovations no one has ever seen. If you thought the idea of Uber was an amazing advancement in technology and culture, then 90% of respondents to this survey feel we will have more significant improvements as a direct result of 5G integration.
Another interesting angle for 5G technology development is the belief that companies with previous experience in connectivity and the 4G/LTE/3G fields are best suited to create the infrastructure and devices on which 5G should be built going forward. This bodes well for an entity like Qualcomm as we enter the beginning stages of corporate investment in 5G hardware, as no one has as much experience with mobile services, modems, wireless integrations or networking than Qualcomm.
Security was a big focus of the survey respondents’ commentary as well. When asked about the importance of several factors to 5G, “strong security and enhanced protections for sensitive data” was at the top of the list. 5G promises to connect us and our devices to many times more connections than we utilize today and securing those connections and our personal data will become a more difficult and more critical component of wireless connectivity than ever before. Security surpassed both reliability and data speeds in nearly all aggregate responses, underlining the importance to anyone investing in 5G products.
Through many discussions and talks about 5G products and technologies across the industry, including attending conferences dedicated to it like Qualcomm’s 4G/5G Summit this past October, the importance of the shift has always been a key component. The 5G Economy research paper has up-leveled the significance of 5G to not just technology companies, but the entire global economy, putting forth hard numbers as to the impact it will have in medicine, manufacturing, agriculture, education, transportation, retail, and much more. It might seem like 2035 is a distant target, but a $12.3 trillion shift in sales opportunity and infrastructure investment in just 17 years cements the value and import of 5G connectivity.
It also means that those companies and innovators targeting the 5G technology rush as their target demographic going forward will need to properly and expertly execute in order to meet the extensive demands of this market. Though previous success does not guarantee any one company will be the leader moving forward, the complexity of balancing upcoming 5G wireless connectivity with the required fallback technologies of 4G and even 3G to meet mission critical status gives a company like Qualcomm an early edge.
Read the full research report at https://www.qualcomm.com/invention/5g/economy