Industry Voices—Raynovich: Who wins in the 5G wars?

While the elements of 5G are starting to coalesce, it's going to take a while to determine the companies and technologies that will benefit the most. (Pixabay)

5G: so much hype, so much fun, right? As all well know, there are a lot of uncertainties about the timing and impact of the rollout of 5G. But, we do know that it will happen. And, the largest impact is on the edge of the network, where service providers will have to scramble to process the deluge of new data traffic. 

This will drive the creation of a new edge-compute market, situated behind mobile radio infrastructure to gobble up and process new bits efficiently. 5G will be a catalyst for edge-compute technology. Applications using 5G technology will change traffic demand patterns, providing the biggest driver for edge computing in mobile cellular networks. Futuriom has outlined all of this in a new report on 5G, IoT, and edge compute trends. 

Let me give you some of the takeaways, since we've spent four months studying what may happen. While the benefit of 5G for existing users and cloud companies is real, the benefit for service providers is less clear. Massive bandwidth and low latency come with a price: New infrastructure will be needed to support the radio access network with smart antennas, and the core network will need new equipment, including mobile edge-compute infrastructure.

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All of this, of course, requires lots of money. And new business models to support the investment of all that money. But it's going to be interesting. We'll see the emergence of new applications that require low-latency networks, such as internet of things (IoT) analytics, machine learning, virtual reality, autonomous vehicles, and gaming.

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OTT and value-added models

In the end, the pattern of history of bandwidth is "Build it and they will fill it." I have no doubt that as 5G emerges over the next few years, consumers will find a way to consume all the luxurious, 5G bandwidth that will blanket the airwaves. And some innovative companies will find ways to monetize this bandwidth. 

But who wins? Will it be service providers? Only the crafty ones. The lion's share of the monetization is likely to fall to cloud companies and the content companies. Cloud companies have a proven track record of inventing new business models attached to bandwidth. Content companies such as Netflix and Disney are set up with over-the-top (OTT) content services for which there is proven demand. 

OTT content models will win because they have low friction, high demand, and user interest. Look for these to multiply as everybody and their brother launches an OTT content or virtual reality service that could get quite interesting. Gaming and augmented reality have high potential to generate winning apps in a 5G world. New cloud edge hosting companies such as MobiledgeX (founded by Deutsche Telekom) and Ericsson's EdgeGravity are targeting this opportunity. 

Another winner with be artificial intelligence (AI) and analytics services. 5G will enable more real-time connectivity to all sorts of data, including video data. As an example, I was recently told about how the railway company BNSF uses real-time video and an IoT to track the condition of the wheels on its trains. Imagine the potential for monitoring highways, buildings, cities, and construction sites -- and then analyze this data in real-time with machine learning (ML) and AI. Amazon and Microsoft are sure to be winners here, as they have built IoT analytics clouds ready to host the applications. 

Edge virtualization infrastructure

Another beneficiary from edge computing is virtualization, as cloud computing and network functions virtualization (NFV) drive down the general cost of infrastructure considerably. Edge compute and virtualization infrastructure is likely to be a big winner with 5G. 

I believe it will also accelerate the open networking revolution. Rather than relying on proprietary hardware and software, operators may procure commercially available off-the-shelf (COTS) equipment and place virtual instances of network functions on the COTS gear. The lower cost structure and greater flexibility applies to more than just traditional core network functions, as edge-compute equipment will also leverage virtualized instances of processing and storage functionality.

The largest opportunity for edge compute is pushing infrastructure closer to the customer using a combination of virtualization technologies and edge-compute infrastructure. A host of networking and infrastructure players such as EdgeConneX, Ericsson, Pluribus Network, Nokia/Nuage Networks, Saguna Systems, Vapor.10 and VMware should benefit here. 

Before we get too excited, I caution that this process may be slower than everybody has described. Because of the unknown return on investment (ROI), the bean counters at the major server providers are going to be carefully evaluating the rollout of 5G services. The wireless infrastructure will take time. But, as new services bloom, it will supply the needed capital to build out the infrastructure. 

Initial use cases will be focused on fixed-wireless solutions for enterprise/industrial applications, before we get to fully wired smart cities, autonomous transportation, and augmented reality. 

But eventually they will build it and we will fill it. 

R. Scott Raynovich is the founder and chief analyst of Futuriom. For two decades, he has been covering a wide range of technology as an editor, analyst, and publisher. Most recently, he was VP of research at SDxCentral.com, which acquired his previous technology website, Rayno Report, in 2015. Prior to that, he was the editor in chief of Light Reading, where he worked for nine years. Raynovich has also served as investment editor at Red Herring, where he started the New York bureau and helped build the original Redherring.com website. He has won several industry awards, including an Editor & Publisher award for Best Business Blog, and his analysis has been featured by prominent media outlets including NPR, CNBC, The Wall Street Journal, and the San Jose Mercury News. He can be reached at [email protected]; follow him @rayno.

Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceTelecom staff. They do not represent the opinions of FierceTelecom.

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