A new report from Finnish telecommunications giant Nokia has projected that 5G technology and infrastructure will add $8 trillion to global GDP between now and 2030. This equates to a 7 percent lift in global economic activity, reflected in higher workers’ wages, enterprise profitability and government revenues, due solely to 5G-enabled industry output.
According to the company’s landmark 5G Business Readiness Report, released on Monday, Nokia and its technology research subsidiary, Bell Labs Consulting, found that companies at an advanced level of 5G adoption were the only business segment to show a net increase in productivity (10 percent) after the onset of covid-19 earlier this year.
5G-advanced companies were also the only group that was demonstrably able, per Nokia’s research, to maintain or increase customer engagement during the pandemic.
“5G adoption is categorically shown to fuel business success. Organizations that have integrated 5G stand to benefit from advantages that go way beyond faster, more efficient and reliable network services,” said Nokia Chief Strategy Officer, Gabriela Styf Sjöman, upon releasing the report. “As 5G enables businesses to transform, it will also accelerate wider technological and economic trends, with unimaginable possibilities for global economies and societies. The cities, hospitals and factories of the future depend on 5G and the unparalleled ability it offers to move, process and store vast volumes of data.
“Moreover, the biggest challenges we face as a society – from climate change to the pandemic – can be better tackled through at-scale use of the data and technologies that 5G will unleash.”
5G Maturity—> Greater Profitability
Nokia’s research demonstrated a positive correlation between 5G readiness and business growth. Fully 49 percent of companies in the 5G expansion phase and 37 percent in the implementation phase—the two most advanced stages of 5G maturity— achieved rapid growth in 2019. This compared to 20 percent in the planning phase, 11 percent in the discovery phase and 5 percent in the passive phase of 5G readiness.
Nokia also found that roughly 50 percent of companies across 8 economies—Australia, Finland, Germany, Japan, Saudi Arabia, South Korea, the U.K. and the U.S.—are currently at the midway point between early phase and mature 5G readiness. Only a small fraction—7 percent—of companies in those countries are classified as 5G mature. Of these, roughly one-quarter are concentrated in Saudi Arabia and the United States. Nokia found that mature companies are a much smaller concentration of the overall 5G ready segment in Germany, Finland and the U.K.
Edge Infrastructure and Cloud
In the report, Nokia Bell Labs Consulting uses the designation “5G+” as an umbrella term for a broader system of related technologies, including end-to-end 5G, edge cloud infrastructure, private networks, augmented intelligence, automation and robotics, and platform or “as-a-service” business models.
Their research predicts global spending on information and communications technology (ICT) will increase from $2.8 trillion in 2020 to $6 trillion by 2030, with roughly three-quarters of that amount devoted solely to 5G+ technologies and associated applications. More specifically, most of this forecasted spend—49 percent— will go to edge infrastructure and cloud platform investments.
The report points to three key barriers to greater 5G adoption. At the top of the list is telecommunications infrastructure investment.
One-third of technology buyers surveyed by Nokia said government investment in infrastructure or subsidies to drive down costs would encourage them to invest more in 5G, making this the top catalyst for change to accelerate 5G adoption on a global scale.
Nokia concluded in the report that enterprises will not adopt 5G unless the supply from network operators is presented and priced appropriately. This, in turn, relies on governments and regulators to make 5G spectrum in low, midrange and high bands available and affordable.
“Governments can facilitate the deployment of telecom infrastructure by opening up access to physical real estate for 5G infrastructure (small cells), as well as simplification of installation regimes as networks become denser,” said Gabriela Styf Sjöman. “Allowing network slicing and differentiated quality of service (with balanced net neutrality rules) is important as well. As we head toward the ‘great reset’ in the wake of COVID-19, national recovery budgets need to foresee adequate financing for improving connectivity where needed for 5G, and very high capacity fixed networks (fiber).”
Lack of understanding within business about how 5G actually works must also be directly addressed, Nokia found. The report recommends providing companies and consumers with clear information about how 5G can impact their company operations and solve real-world problems.
“Good luck with that”
Finally, companies need to overhaul their operations to accommodate 5G technology, viewing it as more than just a “connectivity value-add,” and, rather, as a way to transform their business and actually drive innovation.
This latter factor poses some challenges, Nokia found, as 5G is “not a bolt-on technology,” but a complex ecosystem of moving parts. One key drawback of such complexity is that companies may be inclined to hold back on investment (possibly in the spirit of creative destruction) and wait for their competitors to assume first-mover risk. This has an inhibiting effect on adoption overall.
“Collaboration between different stakeholders is necessary to drive progress, helping create momentum throughout the ecosystem,” said Gabriela Styf Sjöman. “More collaboration, confidence and understanding on all sides is what will unlock the full potential of 5G deployment. We need to see more knowledgeable and proactive enterprises that dare to explore new business models as well as governments that provide the support that companies need.”
Some key wins for Nokia
Meanwhile, Nokia continues to gain market share as European countries plan investments in telecom infrastructure to enable 5G deployment. Late last week, Reuters reported that European mobile carriers Orange and Proximus will end their association with Chinese telecom equipment maker Huawei and will instead partner with Nokia to provide 5G network equipment in Belgium.
5G vendor relationships in Belgium are of particular interest to global intelligence agencies, as Brussels is home to NATO alliance headquarters, as well as the European Union’s parliamentary and other key administrative buildings. Per Reuters reporting, Belgium has, to date, been entirely reliant on vendors from China for its radio networks—most notably Huawei, which the U.S. has accused of spying on behalf of the Chinese Communist Party via the 5G network equipment that it provides to foreign customers.