5G: Look for where motivation and creativity is high

The Important

Nothing in life is a given, especially when industries hit the mature part of the curve

Incentive, creativity, passion, purpose, and public/private sector collaboration can make a difference. Look for these elements when creating 5G investment strategies.

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In a concession to those that are highly skeptical about 5G, we offer this tactical strategy perspective: invest selectively where the potential is highest. Potential can be spotted in high levels of motivation and/or creativity.

For better or worse, the telecom industry is characterized by significant public sector involvement. We have seen cycles where wireless technology was crippled by governments trying to maximize license revenue with the result of diminishing investment capacity. The argument goes something like “spectrum is a public resource, so we have an obligation to raise revenue that reflects the use of that public resource.” Crony capitalism maybe characterized by a plutocracy that does not govern public resources in a way that benefits the public. Conversely, suicidal socialism seeks to punish business for simply getting out of bed in the morning. Business and the public sector need to work together in collaborative ways that provide incentive for private investment, without sacrificing public interest. Those looking to participate in the 5G cycle may wish to take note of which countries are looking to create incentive for private investment. Whether Austria has raised enough license revenue we will not comment on here, but as an example, Austria has signaled that it is not satisfied with its current broadband capabilities, it sees 5G as an opportunity to make improvements, and relative to some other countries, it is looking to provide incentive for investment through relatively low licensing fees. Look for countries like this that are providing similar incentive. Countries where government is mandating the roll out of 5G are also worth looking at, but there is no guarantee business will be in sync, for example pricing plans maybe too high to encourage adoption. So 5G by fiat will have nuances that require examination.

By some analysis, 5G will be the first generation of wireless where the phone will not be the center of attention. Be it fixed broadband substitution, IoT, connected car, or other yet to be imagined use cases, the early success of 5G may not be a manifestation of phone penetration. A good thing too given major brands like Apple do not have 5G offerings planned for 2019. The winners in this dimension may be those ecosystems that can imagine and effectively bring to market non-phone applications of 5G.

What happens with 6G is a story yet to be told, way in the future. Maybe 6G will be based on WiFi as many wish 5G was. But today, the WiFi ecosystem does not seem to be well enough positioned to provide a broad alternative to 5G, in its many imagined uses. For that reason, we see the deployment of 5G as likely, even if the pace is slower than some would like and/or previous cycles. In the short-term, opportunity may be strongest in countries where there is both strong motivation and public sector incentive, as well as anywhere creativity, passion, and purpose drive inspired uses of 5G.

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