5G so far has been underwhelming – what’s coming is much more interesting The initial version of 5G has underwhelmed, with only minimal differences in services and performance for customers, and price and demand for investors. The latest version, Release 16, is being deployed now, and is materially different. Operators will be able to offer ‘slices’ of the 5G network to different groups of customers. 5G slices can be tailored to specific bandwidth, latency and Quality of Service parameters. This creates the potential to bill based on the quality of service provided, and may help grow revenue. Yet the upgrade decision isn’t simple. The migration to a ‘cloud-native’ StandAlone core is complex, with dispute in the industry as to the best architecture, and considerable execution risk. As a result, most operators (particularly in Europe) plan to deploy 5G radio alongside their 4G core − helpfully termed ‘Non StandAlone’. This will enable operators to get more return from their 4G investment in the absence of any clear 5G business case. After a period of relative homogeneity with 4G, we expect the 5G experience to differ between operators, creating winners and losers for investors. 

Network ‘slicing’ is the service to watch Network slicing creates the ability to customise the network for corporate and consumer needs. This could help reclaim some of the value in the provision of connectivity – a service that is increasingly commoditised. The improved capabilities of 5G will make it relevant to new groups of corporate users. Needless to say, slicing brings its own complexities. Billing, provisioning, and after-sales support are challenges additional to making sure the technology works. Operators are likely to struggle with this – offering opportunity to those who execute well. 

Disruption ahead Services have been relatively homogeneous in the 4G era. Equipment from the same ‘big four’ vendors is deployed to the same timelines. Operators offer the same services and handsets, and the same billing models. Connectivity has become commoditised, and the telecom industry investment case has suffered as a result. 5G promises dislocation, and with it opportunity and risk for investors. On the supply side, accelerated swap-outs of Huawei equipment offer opportunities for smaller vendors and the Open RAN movement. Operators are taking different approaches to the core upgrade, as well as to spectrum and Mobile Edge Compute. We explain why billing based on quality of service is a key indicator, why 5G mobile gaming is a test case for the enterprise, and why the Internet of Things and the connected car are (still) the services of the future.