Davos 2020: How to foster innovation in the 5G-enabled digital economy

5G will be the foundation for innovation in the Fourth Industrial Revolution. That is a big statement and I believe in it wholeheartedly. Let’s look at three ways we can all change the world with 5G, plus what it will take to fulfill its potential.

1. Breaking the energy curve
Every previous new generation of mobile networks has increased energy consumption and carbon emissions until now. 5G is the most energy efficient standard ever developed and will help break this trend in the mobile sector.
In addition, ICT solutions can enable reductions of 15 percent across other industrial sectors by 2030. That’s more than EU and US emissions combined. Emerging technologies – enabled by 5G – will be fundamental means for industries, cities and countries to reduce their carbon footprints exponentially and put us on track for a 1.5C future.

Figure 1: Breaking the curve of product energy performance with 5G

2. Mobile broadband is the key to economic development
Connectivity is the backbone of digital transformation. Investment in digital technologies is an investment in the new era of national sustainable and inclusive economic growth, development and competitiveness.
In research with Imperial College London on the economic impact of broadband, we proved for the first time that the deployment of mobile broadband networks spurs economic development. The results show, on average, that a 10 percent increase in mobile broadband adoption ratio leads to a 0.8 percent increase in gross domestic product.
According to our “internet for all” report, mobile broadband will provide network coverage to about 92 percent of the world’s population by 2024.

3. Creating jobs and profits with 5G
Across the digital economy, 5G networks will be as important for enterprises as 4G was indispensable for smartphone users. By 2030, two-thirds of the global workforce will use the 5G platform.
For industries, the frontrunners first to 5G will enjoy industry leadership with the global scale of a horizontal platform. This is already becoming a reality in manufacturing and production, electronics and the automotive industries.
In our report 5G for business: a 2030 market compass, we estimate that industry digitalization will generate an estimated USD 700 billion addressable market opportunity for service providers by 2030.  And that is only 47 percent of the total 5G-enabled value.

5G as a platform for innovation

But while we know that 5G will change the world, we still do not know how.  5G will be a platform for innovation, and we cannot predict what the world’s innovators will do with it.

It was the same situation with 4G.  Innovation came on top of the network.  No one knew that streaming, ride-hailing and social media would be the killer apps for 4G. 

And the frontrunners in 4G – largely in the US and China – became the big winners of the “app economy.” The same dynamic will play out with 5G but on a massive and industrial scale. 

Creating the conditions for 5G success

5G will be a mandatory baseline to compete on the world stage. With this in mind, regulators must ensure a rapid 5G buildout.  However, we already see steep inequalities emerging from the rollout of 5G, and countries are at risk of being left behind.

Networks are as important to countries as roads and electric grids and airports. And governments can support their development with a range of policies, ranging from funding 5G pilots to spectrum auction mechanisms.

Governments and regulators must align spectrum pricing with policy goals and license as much spectrum as possible as quickly as possible. This means factoring in the long-term value of a strong network instead of upfront license fees.

We need industry transformation

There must also be structural changes to our industry, if all service providers are going to benefit from 5G. Particularly when we look at 5G in Europe. Here, many barely return cost of capital, making it very difficult to justify investments in new technology.

There are two changes that will make service providers more competitive.  The first is consolidation. Again, particularly in Europe, there are simply too many service providers in the same markets, especially compared with countries like the US. Market fragmentation restricts investment.

The second is pricing.  In most markets, mobile broadband costs less per month than a few cups of coffee.  This is also not a feasible long-term business model. Ultimately many countries risk deepening social and economic inequality and potentially falling years behind 5G superpowers such as Korea, the US and China.

5G will change lives

The promise of 5G and Industry 4.0 includes creating jobs, improving and expanding access to health care. It will also help to reduce carbon emissions, improve education and raise the quality of life in cities around the world.

With countries all over the world already deploying 5G services, this is an important window for alignment. We cannot afford to let this window close and slow the societal and economic benefits of 5G on a global scale. 

We must work together with the ambition to aim for a more sustainable world.  We’re in.  Are you?

Read more

As a lead partner behind the Exponential Roadmap, we believe that digitalization and 5G will be fundamental to halving greenhouse gas emissions every decade. To learn more, visit the Exponential Roadmap.

Visit the Ericsson sustainability pages to learn about the latest use cases where we’re deploying technology for good.

Learn more about the opportunities of 5G in our 5G for business: a 2030 market compass.

This article was recently published on the blog of the World Economic Forum.