Can Europe take a leadership position in 5G?

The EC and many national governments are calling for 5G leadership with a variety of action plans and similar. Yet few define what leadership means or how to measure it, let alone whether it is even feasible. This note looks at various possible ways Europe might have 5G leadership and whether they are viable or even desirable.

It is unsurprising that the EC and Governments are keen to establish leadership in 5G. Leadership in any area is generally seen as good, and 5G is part of the digital society that is delivering improved productivity, social engagement and is widely seen as critical to international competitiveness. Having a thriving hi-tech sector is often important in delivering well-paid jobs and in enabling the companies of the future to emerge. Further, mobile communications is seen by citizens as important so there is political advantage in promoting it.

Here we ask:

  • What is 5G?
  • What would leadership entail?
  • Is it plausible that Europe could be a leader?
  • Is leadership worthwhile?

What is 5G? There are many different visions of 5G. For the purposes of this note, the most useful views are the three key services that might be offered:

  1. Enhanced mobile broadband delivering high data rates of up to 50Mbits/s everywhere.
  2. Massive machine connectivity, enabling IoT at large scale.
  3. Super-fast and low-latency networks enabling new services.

Attention has focussed on the first of these, with the 3GPP standards work prioritised towards the delivery of the new radio (NR) technology that could deliver enhanced mobile broadband. The intention is to have a first version of this in the Release 15 (R15) specifications anticipated to be frozen in 2018. Indeed, 3GPP has just decided that R15 will be termed “5G” and hence 5G will become whatever is standardised in 2018. With much in the standard that is likely to be 4G evolution there will be substantial blurring of the boundaries. Indeed, early 5G might just be 4G-based systems. For the purposes of this note we might assume that 5G is defined as whatever is in R15, which is likely to concentrate on mobile broadband mostly through enhancements to 4G such as greater carrier aggregation.

The other service that might enable European leadership is IoT connectivity. IoT is soon to be delivered using NB-IoT and LTE-M variants of the 4G standards as well as via unlicensed solutions such as Sigfox and LoRa. There does not appear to be any work underway on a new type of IoT connectivity for 5G and hence the 4G IoT solutions are likely to simply be re-branded to 5G, perhaps along with R15 in 2018. Therefore, 5G could also be taken to be 4G IoT connectivity.

Super-fast networks are many years away and the key research and interest is in Asia-Pacific and the US. Any significant European activity in these areas seems unlikely.

What would leadership entail? There are many elements to a cellular radio systems where leadership could be delivered including:

  • Radio access network equipment (base stations and similar).
  • Core network equipment (moving rapidly towards software services running on virtualised computing hardware).
  • Handsets and other connected user devices.
  • Network provision and operation.
  • Over the top (OTT) services.
  • Other associated systems such as Wi-Fi networks or even fibre-to-the-home (FTTH).

This list could even be extended to the provision of services to key vertical market segments, such as delivering 5G to autonomous vehicles. It might also be broadened to being a research leader, for example by having the most patents or the largest R&D teams, although that seems unlikely to deliver much in the way of citizen benefits.

Leadership is normally taken to being the first or the largest at a global level. In the context of the points above we might assume leadership would entail:

  • Radio access network equipment. Having a European company which has the largest global share of infrastructure. Or across the region having perhaps more than 50% of the global infrastructure supply. The current situation is that Huawei lead the way with a 30 percent share, followed by Ericsson with 28 percent and Nokia with 24 percent. Both Ericsson and Nokia have announced profit warnings and job losses so it might be expected their shares are more likely to decline than grow in future. Nevertheless, as a region Europe could argue that it is the leader in network equipment supply.
  • Core network equipment. The core network is currently supplied by the same vendors as the radio network. However, over time it is expected to become virtualised with software running on cloud computing platforms. Cloud computing is dominated by US West-Coast companies such as Amazon and Microsoft and it is very unlikely that Europe will challenge this dominance. Hence, while European companies might continue to provide software, it seems unlikely that a leadership position could be established in any meaningful sense.
  • Handsets and other connected user devices. With the demise of Nokia’s handset division, Europe now plays almost no role in cellular handsets (except in the elements within the handset such as ARM cores). This will not change with 5G.
  • Network provision and operation. Europe has a good share of the globally leading operators such as Telefonica and Vodafone. Many have holdings outside of Europe. However, the largest mobile operators are now found in China and the most innovative typically in the US, Korea and Asia-Pacific. It is unlikely that a European operator would either become the world’s largest or be the first to deploy 5G.
  • Over the top (OTT) services. There is a huge breadth of OTT services. The largest is Facebook with other key players including Microsoft, Netflix, Google and Apple. These are all US companies. While there may be thousands of European companies delivering innovative and profitable OTT applications it is highly unlikely that any would be global leaders.
  • Other associated systems. Europe could credibly claim some leadership in IoT. Cellular IoT technology has been partly developed in the UK by Huawei through their acquisition of Neul, and has been pioneered by Vodafone. Unlicensed IoT is being led by Sigfox and LoRa, both driven by French companies. Of course, there is competition from the US and elsewhere which could grow.

Hence, Europe’s greatest chance of leadership appears to be in IoT, with some possibility of regaining leadership in radio access networks. In all other areas, there is very little likelihood or justification for claiming European leadership.

Is leadership worthwhile? Leadership is like apple pie in that it is generally taken to be a good thing. 5G leadership in radio access networks or IoT would translate into some potential growth for companies like Ericsson, Sigfox and similar. However, this is unlikely to equate to more than a few thousand additional jobs and at best a few billions of Euros of additional exports. While these are welcome, they would make no appreciable difference to the economies of the EU countries or to any more than a handful of people living there. They would not necessarily imply earlier equipment availability in Europe or any other advantage in the deployment of 5G since equipment would be sold into a global marketplace. There might be some consequential research in EU universities but again the scale of this would be relatively small. Set against the €700m promised by the EC for 5G research and likely additional funding from member states, it is hard to imagine this could be a good investment.

By far the biggest impact on an economy comes not from manufacturing 5G equipment or developing related software and services, but from the consumer benefit from 5G deployment. If 5G materially enhances consumer welfare, productivity or industrial competitiveness then the gains from early deployment can be substantial. Hence, if there is to be leadership, it would potentially generate the greatest value through early network deployment, even if the equipment came from outside of the EU. However, early deployment carries risks. Equipment is likely to be more expensive as it has yet to undergo cost reduction cycles and intense competitive pressure. Early solutions may need upgrades and may not provide exactly the services required. Further, the business case for deployment may prove weak and 5G investment unnecessary, potentially increasing consumer costs.

With so much uncertainty, making any evidence-based judgement is near impossible. Enhanced mobile broadband seems unlikely to generate substantial consumer value since 4G already delivers data rates well in excess of those required by almost all users and applications. IoT could deliver significant benefits and is also relatively low cost to deploy. Aiming for global leadership in IoT would seem the lowest-risk and most compelling objective and one that is most achievable given Europe’s currently very strong position. Unfortunately, it is the area attracting the least interest for research, funding and publicity.

To many, Sigfox, LoRa and NB-IoT are not worthy of the label of 5G. But given that 5G will be used to describe anything emerging after 2018, and given that those solutions will be deployed in earnest around that time, there is no reason not to label them 5G.

Europe would benefit from clarifying its intent to be a 5G leader by restating it as being the first region in the world to deploy widespread IoT networks and services.

About the Author

Dr. William Webb, Contributing Analyst
Dr. William Webb, Contributing Analyst

Professor William Webb – BEng, MBA, PhD, DSc, DTech, CEng, FREng FIET, FIEEE

Contributing AnalystHorizon Research and Market Analysis

DirectorWebb Search and CEO: Weightless SIG

William is a Director at Webb Search Consulting, a company specialising in providing the highest level of advice in matters associated with wireless technology and regulatory matters. He is also CEO of the Weightless SIG, the standards body developing a new global M2M technology. He was President of the IET – Europe’s largest Professional Engineering body during 2014-2015.

He was one of the founding directors of Neul, a company developing machine-to-machine technologies and networks, which was formed at the start of 2011 and subsequently sold to Huawei in 2014 for $25m. Prior to this William was a Director at Ofcom where he managed a team providing technical advice and performing research across all areas of Ofcom’s regulatory remit. He also led some of the major reviews conducted by Ofcom including the Spectrum Framework Review, the development of Spectrum Usage Rights and most recently cognitive or white space policy. Previously, William worked for a range of communications consultancies in the UK in the fields of hardware design, computer simulation, propagation modelling, spectrum management and strategy development. William also spent three years providing strategic management across Motorola’s entire communications portfolio, based in Chicago.