Do the Economics of 5G Add Up?

We are starting to see more headlines about the capacity for 5G to connect smart city and other IoT applications and enable the use of sensors, devices, analytics, and data. Whether this is possible must be weighed against the economics of it all.

It’s an important question for telcos and one of the main pain points when it comes to 5G networks, along with coverage and support for devices requiring long battery life. Whether 5G networks can provide the coverage and be sufficiently resilient to support the rollout of large-scale IoT networks for smart city and smart utilities applications is critical. IoT networks require constant availability of the network and a very high degree of resilience.

As a standalone technology, 5G is just not ideal to support networks that need to stay up and running in the event of sustained power outages or extreme weather conditions, such as flooding and fires. It is also questionable whether it will be economic to provide 100% coverage across an entire city or area, something necessary for IoT networks.

We already know that it is suitable to be integrated with ‘companion technologies’ like wireless mesh. We have seen this in the City of London with its smart street lighting network deployed in an urban landscape of narrow lanes between solid stone buildings mixed with tall buildings made of glass and steel. This environment would create connectivity problems for many wireless communications technologies, particularly cellular, but our Wi-SUN FAN wireless mesh technology complements cellular to ensure reliable coverage and resilience.

Large-scale IoT networks can incorporate millions of sensors and other devices, each of which will typically generate small amounts of data. Many of these devices are expected to operate, maintenance free, for maybe 10 to 15 years, typically powered by a primary battery, with expected battery life also of 10 to 15 years. Direct connection of such devices to a 5G network is undesirable – for the energy efficiency of the device, the data traffic pattern on the network, and the lifecycle of the technology.

IoT deployments tend to be very cost sensitive. The scale of such deployments requires that the initial price of the devices is low, the ongoing charges (per device) must be minimal, and the maintenance or replacement interval is long. IoT requires a very different business model from mobile handsets, where a telco can provide highly desirable applications to the customer but get a good monthly recurring revenue from ongoing service contracts.

So, this raises the important question of how IoT deployments can be both profitable for the telco and priced appropriately for the customer?

The solution is to use a companion technology to attach the IoT network devices and aggregate these devices through a data concentrator, allowing the aggregation of data from 500 to 1,000 devices onto the cellular network. This ensures that IoT devices can be low cost, do not require individually updating as the cellular network infrastructure is updated, can be placed in ‘difficult’ locations like harsh dense urban environments or large remote spaces, and the cellular network can provide high data throughput for the aggregated data.

For more on this topic, read the ITPro article where Phil Beecher is quoted: Why the telecoms industry might struggle more than most in 2023.