5G to Outpace 4G: At What Cost?

5G to Outpace 4G: At What Cost?

5G to Outpace 4G

At What Cost?

The 5G network is the fifth-generation mobile communication network, that at its’ peak theoretical transmission speed can reach 1GB every 8 seconds, which is hundreds of times faster than previous generation 4G networks. With the birth of 5G technology, the era of sharing 3D movies, games, and ultra high definition (UHD) programs with smart terminals is arriving.

According to the Mobile Economy 2019 Report, by 2025, 15% of the global mobile industry will adopt 5G technology. Moreover, it will be widely used in the consumer market and industrial application market, with the potential to generate $12.3 trillion in sales worldwide. At the same time, 5G will become a new, open and integrated intelligent network, that will be driven by the emergence of new technologies such as cloud computing, big data and artificial intelligence.

5G in Australia

Telsyte’s Australian Mobile Services Market Study 2019 shows that 5G network that boasts faster connectivity than current 4G networks, and will be subsequently favored by consumers and could easily exceed 4G in initial adoption statistics. The Telsyte study also predicted that 4G spent about five years to reach 15 million in “operational services”  whereas, 5G would be able to achieve this in just four years. 

The telecommunications consultancy has interviewed about 1,025 Australians aged over 16 years old. The result shows that one in four individuals delayed their phone upgrades, in order to switch to 5G when it became available. Alvin Lee, senior analyst at Telsyte, said: “Telsyte’s research shows about 15% to 20% of mobile service users change their suppliers each year. 5G will become one of the major churn factors after 2019.”

However, even though the technology is predicted to provide speeds of about 2 gigabits per second or higher for mobile phones, early tests of Telstra’s new 5G network found that its speed is closer to the 4G speed, which is mostly in the 300 to 500 megabits per second range. According to Joe Hanlon, publisher of the phone comparison website WhistleOut “In our limited tests of 5G so far we’ve only seen speed and latency on par with, if slightly better than 4G performance in the same areas, so early adopters will probably struggle to see the promised benefits of 5G right away”. Therefore, it seems like 5G is certainly not an essential upgrade for individual customers currently, and it may take a while to see enough 5G coverage to make it as an important part of someone’s purchase considerations.

As a forerunner of 5G technology in Australia, Telstra insists that 5G will eventually show its capability of exceeding 4G speeds by up to 10 times.

5G technology was born only a few years ago and its implementation has been hotly debated ever since. However, it is estimated that even by 2025, this network will still lag behind 3G and 4G in terms of global mobile connectivity. The popularity of 5G still faces serious obstacles, one of the most important factors being the cost. Initiating the 5G network is not an easy task, given it involves building new infrastructure, upgrading existing mobile stations, adapting existing engineering and adapting signal processing techniques. Edison Lee, a securities analyst at Jefferies Group LLC, said that the cost of building a 5G base station is about 20% higher than building a 4G base station. 

In order to promote their 5G business, network operators may have to break the existing business model. For example, in the UK, the construction costs of 3G and 4G networks are relatively low because they can be promoted on the existing radio spectrum in the UK. However, for 5G to function properly, it requires a much larger bandwidth, that is supported by a completely new device (5G base station). Some analysts believe that large-scale construction and high operating costs will force operators to share the use and management of mobile networks.

Moreover, how much consumers are willing to pay for 5G is also a factor that affects the development of 5G technology and a concern for telecom companies that they want return of investment for shareholders. Telstra launched its 5G mobile plan recently, charging $15 per month for 5G access, on top of the regular network charges. The fee will be waived for the first 12 months of the service, while 5G network coverage is still in the developing stage. Nevertheless, Telsyte’s research found that only a quarter of Australian mobile users are willing to pay an extra fee for 5G, while those who are willing to pay more will pay an average of $5 to $10 a month.

The promotion and adoption of 5G in Australia can still be described as in the early stages. It still requires developments and improvements in the customer 5G service experience and general 5G coverage. Under increasing market competition, the price of 5G will most likely gradually decrease with the popularity of the 5G network and the growth of user demand, albeit in the future.

By Louis Cai

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