A new report on 5G technology claims its benefits to Australia’s GDP could be worth up to $2,000 per person, or between $32 billion and $50 billion, by 2030.
The report, “5G mobile technology: Are businesses ready to seize the opportunity?” by Deloitte will be released today at Telstra’s annual innovation and technology showcase, Telstra Vantage.
The report was commissioned by Telstra “to analyse the potential benefits of 5G to businesses and the broader economy”.
Deloitte cites estimates that say the Australian economy is already two per cent larger because of the productivity benefits of mobiles. Its survey of more than 550 business leaders from across Australia revealed that more than 78% said faster, more reliable and more responsive mobile telecommunications would benefit their business.
The rollout of 5G across Australia will bring faster speeds, better reliability and imporved capacity to network users. It’s expected to significantly ramp up the uptake and capabilities of new technologies such as artificial intelligence, drones and augmented reality.
Already, around 80% of businesses say they have implemented at least one emerging technology in their business, or that they expect to in the next three years. Two years ago, that figure sat at 65%.
Deloitte says this will contribute to significant growth in the digital economy in Australia, expected to be worth $140 billion by 2020.
The report notes that the most cited barrier for businesses potentially adopting emerging technologies is that it might be too expensive. More than 40 per cent of businesses said this was one of their top three concerns.
“Interestingly though, close to half of businesses said they would be willing to pay at least 10 per cent more than they currently pay in order to have faster, more reliable mobile telecommunications,” Deloitte noted.
Most say that the biggest impact 5G promises is an increased ability to work remotely or flexible hours (20%) and better customer engagement (12%).
Here’s a breakdown on what to expect from 5G, according to the Deloitte report.
5G won’t replace the current 4G network; rather, it will “complement” the network, as well as fixed line operations.
It will, however, offer speeds up too 100 times faster than 4G – as much as 10Gbps. A Qualcomm simulation showed a 5G app was capable of delivering response rates 7 times faster for browsing, and 12 times faster download speeds.
Let’s hope so anyway, because 5G is expected to be the network of choice for future systems responsible for autonomous vehicles, mobile payments, VR and drones. And life savers using drones:
Deloitte says for that reason, 5G is expected to offer “99.999% network availability for mission critical ‘ultra-reliable’ communications”.
From 2012 to now, mobile phones subscriptions have risen from 0.76 per person to 1.08 in Australia. That’s 27 million mobile handsets trying to operate in Australia right now.
Here’s what that has done to data downloads:
Because 5G networks will use several spectrum bands, including those with higher frequencies, it should be able to support, at a minimum, 1 million connected devices per square kilometre.
It’s not surprising that so many businesses are pushing for better network services. Deloitte says an estimated 72% of Australians shop on mobile, and 35% say they have used mobile payments in a store.
The ability to handle large data sets is crucial. Companies with data‑driven strategies have noted above‑average productivity and profits.
A Deloitte Access Economics analysis of over 50 machine learning applications using large data sets found that returns on investment were between two and five times the cost of implementation.
Not all businesses are on board with the new technology though. Nearly half told Deloitte they would not be willing to pay more for 5G access, and nearly a quarter believed it would have no impact on their business at all.
So what do I get, and when?
Most businesses (69%) expect to be using a 5G network by the end of 2020. The bigger ones plan to get it in play the earliest:
In terms of what it gives us, get excited about:
- increased productivity;
- increased workforce participation; and
- new business opportunities
In 2015, Deloitte found that mobile technology had added $34 billion to Australia’s economic output. When it comes to 5G, the Bureau of Communications and Arts Research (BCAR) estimates the increased productivity could lead to an additional $1,300 to $2,000 in GDP per person by 2030.
And that increase of between $32 billion and $50 billion is just based on Australia’s current population.
The 2015 study found that mobile technology at the time enabled remote workers to add an extra 0.6 hours to their working week, worth an extra $8.9 billion to GDP.
Not so fast
There are some not insignificant barriers in the way of making 5G work for Australia.
Most notably, the Return on Investment (ROI) required to roll out the networks. A recent white paper from Axicom discussed the substantial amount of capex required to buy the spectrum and densify networks required.
According to McKinsey, requirements such as new infrastructure, base stations, backhaul capacity and spectrum in one European country would have to increase 60 per cent from 2020 through 2025 — roughly doubling the total cost of ownership (TCO) during that period.
You’re going to hear a lot more talk soon about the proliferation of “small cells”, site rental and negotiating access to a lot more land to enable 5G to operate effectively.
46% of businesses Deloitte surveyed said they won’t switch to 5G until it is the same cost as 4G, or 4G plans are no longer available.
And of course, there are the security concerns. There has been plenty of press this year about the Prime Minister blocking China telco Huawei from helping build the network.
But ultimately, despite the costs, security concerns and potential for another NBN-like disaster, 5G is coming to Australia. Penn says it’s essential.
“Australia needs an ambitious agenda to fast track the adoption of 5G and make the sophistication and reach of our wireless networks a competitive advantage in the global economy,” Penn says.
“The good news is most Australian businesses are gearing up to be ready to adopt 5G, with over two thirds of businesses surveyed by Deloitte expecting to be using 5G in 2020.”
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