5G: With great power...

As telecommunications march into a brave new era – bringing much desired speed and capacity to networks – Martin Allen-Smith considers how some of the weighty benefits could be counterbalanced by some potentially considerable pitfalls

Among the few certainties in an unpredictable business world is that technology never stands still, and nowhere is that truer than in mobile telecommunications. The latest wave of mobile network developments sees the roll-out of the new 5G network, promising some pretty seismic improvements to what has gone before.

5G can enhance existing technology through benefits including peak data rates 20 times faster than 4G and simultaneous connections for one million devices per square kilometre. The extreme speed paves the way for innovations in artificial intelligence, robotics and large-scale Internet of Things usage. For businesses, this means more extensive machine-to-machine communications, using self-driving vehicles and better overall infrastructure.

There is much to suggest that the introduction of 5G could bring with it some huge benefits for businesses across a multitude of industries. A new Barclays report says that it could significantly increase annual UK business revenues, with the sectors set to see the highest revenue growth being distribution (£3.6 billion), manufacturing (£2 billion), professional services (£1.1 billion) and business services (£1 billion).

The report, ‘5G: A Transformative Technology’, analyses a series of potential scenarios that UK businesses could face when implementing 5G. Under an ‘optimistic scenario’, which anticipates an accelerated rollout of 5G and an enhanced uptake amongst UK businesses and consumers, the UK would see a £15.7 billion increase in business revenue by 2025. A slower-than-anticipated rollout and limited use would deliver around £8.3 billion of added revenue to the UK, whilst at the current pace of development, added revenue would reach £13 billion.

The optimistic scenario could be a reality for British businesses, as mobile providers are already beginning to introduce 5G capabilities on a large scale this year, including pilots underway in London, the Midlands, Edinburgh and Belfast. The government is also supporting 5G by incorporating it into its Industrial Strategy, having pledged £1 billion towards digital infrastructure.

The report warns that some of the potential opportunity for business could be missed, however. Despite the demand for current communications technologies and the potential applications for 5G, the Barclays survey of 526 British businesses found just four in ten (39 per cent) business decision makers know how their business can make the most of 5G. When it comes to preparing for 5G, only 15 per cent of businesses are thinking about how to harness the new technology. The sectors most likely to have plans for 5G are TMT (23 per cent), logistics (18 per cent) and hospitality and leisure (17 per cent) – but it is abundantly clear that a large majority of businesses are not ready to successfully join the 5G revolution.

Sean Duffy, head of technology, media and telecoms at Barclays Corporate Banking, said: “The rollout of 5G offers a huge opportunity for the UK. While the government and network providers are already working hard to introduce 5G in the UK, we found that businesses do not yet have enough clarity about how they will benefit in the long-run. What’s more, nearly four in ten business leaders still aren’t entirely sure what 5G is.

“To ensure the UK can realise the full potential of an accelerated rollout, the Government, mobile operators and other corporate partners have a job to do in order to raise awareness amongst businesses so they can harness 5G. This support is crucial for businesses to make smart investments which will unlock the power of 5G.”

Such potential reward is rarely without accompanying risk, however, and 5G comes with plenty of potential obstacles to its success. To allow for functional network coverage and increased capacity overall, more antennas will be needed, including acceptance of higher levels of electromagnetic radiation. In some jurisdictions, the rise of threshold values will require legal adaptation. Existing concerns regarding potential negative health effects from electromagnetic fields (EMF) are only likely to increase, with a rise in liability claims a potential long-term consequence.

A recent report by Swiss Re into 5G’s potential impact on the insurance sector also highlights concerns on cyber exposures, which increase with the wider scope of 5G wireless attack surfaces. Traditionally, IoT devices have poor security features. At the same time, hackers could also exploit 5G speed and volume, meaning that more data can be stolen much more quickly. A large-scale breakthrough of autonomous cars and other IoT applications will mean that security features need to be enhanced at the same pace. Swiss Re warns that without this, interruption and subversion of the 5G platform could trigger catastrophic, cumulative damage.

With a change to more automation facilitated by new technology like 5G, Swiss Re also highlights worries about privacy issues, security breaches and espionage. The focus is not only on hacking by third parties, but also potential breaches from built-in hardware or software ‘backdoors’. In addition, the market for 5G infrastructure is currently focused on a couple of firms, and that raises the spectre of concentration risk.

Other, less predictable objections have also been raised to the new technology. In the US, meteorologists have warned that signals from weather satellites could be disrupted by 5G mobile data networks. A group of scientific bodies – comprising the American Geophysical Union, the American Meteorological Society and the National Weather Association – has written to authorities to say that the situation is “deeply concerning”, urging a delay to the auction of radio spectrum for 5G uses.

In response, the GSMA – a member organisation that represents mobile network operators – has said that it believes 5G services and weather sensing services can co-exist, claiming that concerns over disruption to weather forecasting are alarmist and ignore the other effective and available alternative methods of communicating weather data via internet services. “5G and weather forecasts can and will co-exist – it’s ludicrous to suggest otherwise,” said Brett Tarnutzer, the trade body’s head of spectrum. “We cannot allow these scare tactics to prevent us from reaping the huge societal and economic benefits of 5G networks. We urge everyone to simply look at the facts and not get drawn in by misleading rhetoric.”

Discussion of 5G on the world political stage has focused largely on one company, Huawei, and the fears among some senior British and American politicians over the Chinese company’s activities – all of which has thrown additional scrutiny on the process for establishing the necessary infrastructure for the full roll-out of 5G.

In a recent speech at Chatham House, Ciaran Martin, CEO of the UK’s National Cyber Security Centre, suggested that while much of the global debate had surrounded Huawei, the work of the NCSC and other security bodies is far broader. “There is a structural and sustained problem in the way telecommunications markets have worked in the past which has not incentivised sufficiently good cyber security.

“There are also a wide range of threats. The most significant attack on UK telcos in recent years that we know of was Russian and we don’t have any Russian-owned or flagged kit in our telco networks. We need to use this opportunity to change fundamentally the way we do telecommunications security to bake in cyber security and resilience into our infrastructure. There’s much more to 5G security than Huawei.”

So what’s the outlook for 5G’s rate of growth? The answer to this question seems to depend largely on the scale of investment in what is inevitably an infrastructure-heavy technology. A survey by EY earlier this year found that while 5G investment is set to catch up with IoT spend over the next two years, doubts surround its readiness and relevance. Just over one-third of respondents feared that 5G was too immature, while 32 per cent believed it lacked relevance to overall technology and business strategy.

Despite concerns, 50 per cent of businesses surveyed said their were planning to invest in the technology over the next two years and an additional nine per cent were already investing. In comparison, nearly a third of businesses surveyed (27 per cent) had already adopted IoT technology and 33 per cent were planning to invest over the next two years. Praveen Shankar, EY’s head of technology, media and telecommunications for the UK and Ireland, said: “5G is much more than just a ‘plain vanilla’ upgrade in speed, capacity and latency. It represents a huge opportunity for telecoms providers to tap into new demand scenarios and build stronger relationships with their customers.

“Telecommunications and technology companies need to move beyond the supplier mindset on to more of a partnership. Telecoms providers therefore need to focus on explaining the business benefits of 5G, and engage in consultative dialogue that positions 5G within the broader context of enterprise transformation. They need to be ready with robust solutions that convert business potential into operational strength.”

This article was published in the July-August 2019 issue of CIR Magazine.

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