As regular readers know, Chetan Sharma Consulting has been doing research into the 5G opportunities for a long time. We are proud to release our 9th paper in this series that explores a fundamental question around the notion of the “5G Race.” There has been a lot of noise around the race but no models that can measure the race in an intellectually honest way. This paper attempts to do that.
5G Maturity Model: If 5G is a Race, How should we Measure it?
It has become a cliché to say that mobile has transformed every industry. While the industry was born back in the seventies, it wasn’t until 4G and LTE came along that mobile really started to intersect with the larger global economics. The high-speed broadband capability has its obvious advantages of connecting people and things with information at rapid speed. Not only were the existing industries impacted, but we also started to create some new ones like rideshare that totally upended the transportation sector or mobile video advertising that reshaped not only traditional advertising but also digital advertising. Governments started to realize the importance of a healthy and robust mobile ecosystem for their respective countries. US clearly led the way for the last decade and the economic activity that mushroomed from it has been unprecedented. The likes of Apple, Google, Facebook, Microsoft, Amazon, Netflix, and Uber have thrived in this environment. China found its voice on the global stage with the advent of Alibaba, Tencent, Xiaomi, Huawei, and Baidu. India’s commerce sector started to explode with Paytm, FlipKart, and Ola.
As we stand at the cusp of the 5G wireless network technology curve, the world is looking at the next disruptive cycle with nervous anticipation and heightened expectations. There is a general consensus amongst the governments that 5G is an important element of their economy roadmap so much so that they need to be active in shaping it. In fact, the media and the policy makers have christened the frenzy as “5G Race” and nobody wants to be left behind in this economy-defining disruptive cycle.
So, if we are in a “5G Race,” how should we define it? How should we formulate the variables that can effectively and honestly measure it? There is clearly too much hype, much more than the past, a lot of misunderstanding, plenty of fear-mongering, and no clear consensus on the measurement framework. If you want to get the attention of the policy makers, all you have to do is shout “5G Race” from the top of your roof and you are likely to get more spectrum from the regulators on an accelerated schedule, more funding from congress, and an undivided attention from the top echelons of the government.
However, if we are going to be intellectually honest about the assessment, we must get past the hysteria and develop an iterative framework that can stand the test of time and can prove to be a useful tool for everyone involved. It should be free from bias and forward looking. The relative progress can spur the governments, operators, and local ecosystems to become more energized and inspired to move fast. Being first doesn’t necessarily give one an inherent advantage unless it is followed up with an effort to build a robust ecosystem to take advantage of the new cycle. Just launching a few base stations or small cells might earn you a few useless press releases but little else.
The global economy is complex and so is the mobile ecosystem as such the framework must reflect that. It must be a multi-dimensional model that takes a look at both the subjective and analytical metrics. The framework must look at structural, ecosystem, financial, and, operational metrics that can attempt to provide us a complete picture of the 5G progress in any given country especially as it relates to its peers. While there have been early attempts to “quantifying” the race, they have been primarily written to influence the regulators and government officials rather to provide an objective analysis. Others have been too narrow in their approach for the analysis to be meaningful.
The development of the “5G Maturity Model” or “5G Race” is complex because there are a number of elements that go into analyzing the progress and impact of 5G. Countries come in different shapes and sizes, different GDP and economic fabric, different ARPUs and ARPAs, and different consumer behavior and spending propensity. One has to normalize all of that to get a better assessment of who is ahead. Even though, some of the interpretation of the data will be subjective but our hope is that by building a more comprehensive model that can be iterated over time, one can develop a better lens through which we can peer through the growth trajectory curves. For e.g. if 5G Race is measured by the number of base stations, China will win the race even before everyone is ready or if it measured by % penetration, some of the smaller countries like Korea or Finland will be way ahead of everyone. Or MHz/pop or network coverage or revenue generated, etc. Each of these variables provide an important input to the model and framework but independently they can only provide an incomplete story.
The purpose of this paper is to discuss a first of its kind 5G Maturity Model and the variables that are important to the analysis. This model can not only provide adequate measurement insights but also give guidance to governments, operators, and the ecosystem as to where they stand relative to their peers. Given that we are still fairly early into the cycle, many of the variables don’t have adequate data, some can’t be reliably measured (in such cases we must rely on our subjective assessments), and we might be missing some variables because we don’t completely understand how 5G will shape the global economy. The goal of this exercise is to provide a living model that can be adjusted on an ongoing basis and provide input to strategists and policy makers around the world.
The paper looks at 25 different variables across five different dimensions for 16 major markets to get a sense of where countries are in their 5G journey. While the framework in this paper focuses on comparing nations on 5G maturity, the model can also be used to compare 5G maturity amongst the operators. The 5G Maturity Model is a living framework that can be updated and adapted on a regular basis as more data becomes available to get a sense of global 5G competitiveness at any given point in time.
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