The predicted boom will come from physical industries and the IoT, reports Chris Middleton. But is the report all that it appears to be?

A new report from multinational ICT and electronics company Nokia claims that 5G technologies will increase global GDP by as much as $8 trillion by 2030.

If correct – which we explore below – this amounts to roughly 10 percent of 2019 gross world product (GWP), as estimated by the International Monetary Fund. A bold claim by any standards.

Much of this predicted uptick will come from what Nokia terms ‘physical industries’, such as manufacturing, utilities, and healthcare investing in or acquiring the digital infrastructures necessary to make their businesses more resilient, adaptive, and responsive to shifting demand.

These include sensors, analytics tools, edge processing, and more.

In the Nokia report’s terms, this trend will reflect the successes of those organisations in retail, media, banking, and more that have reaped the rewards of earlier digital investments – including payback from them during the COVID-19 crisis, as customers have been pushed towards new types of service.

The report says,

“We expect physical industries to increase their ICT investment and adopt end-to-end 5G technologies extensively in the next decade, thus transforming themselves into augmented physical industries.

“This transformation will result in a big value inversion – realised through safety, productivity, efficiency, and resiliency gains across enterprises, plus the creation of new jobs, more employment, higher wages, and an increase in revenues for governments.”

In 2018 (pre-COVID-19, of course), the World Economic Forum forecast that there would be a net gain of 58 million jobs worldwide over the next decade from all so-called Industry 4.0 technologies, such as automation, AI, sensors, and robotics, though some sectors and roles would be negatively impacted by them. Nokia appears to be applying the term ‘5G’ to all of these technologies and more.

While overall ICT spend is projected to grow by 6.5 percent annually over the next decade, Nokia predicts that investment will be 40 percent greater in physical industries than in digital ones. Edge infrastructure/cloud platforms will have the largest share (49 percent) of this growth, says the report.

But this is not the same as making economic predictions for the 5G market itself, in the sense of the supporting infrastructure, hardware, and networks.

Essentially, Nokia is saying that sectors such as manufacturing, energy, and utilities, which have lagged behind the services sector in terms of digitisation, will make increasing use of all types of connected systems, including sensors and other IoT devices.

5G will certainly have an important role to play in enabling that, but making physical industries ‘smarter’ is not a simple matter. For example, Capgemini’s recent report ‘Smart Factories at Scale’ found that just 14 percent of the 1,000 manufacturing companies surveyed described their own digitisation programmes as successful.

Nonetheless, the new Nokia report adds,

“The historic 70:30 ratio of ICT spend between digital and physical industries will shift to a 35:65 ratio, thereby restoring parity with the GDP contribution of these two sectors.”

In Nokia’s utopian vision, therefore – and the company is hardly a neutral observer of the market – the Internet of Things, sensors, and smart devices will all play a significant role in a 5G boom, alongside edge infrastructures, private networks, augmented intelligence, automation, robotics, industry platforms, and as-a-service business models.

But it is more the case that 5G will enable their adoption in some applications. As such, it seems that Nokia is putting a lot of completely different technologies under the ‘5G’ umbrella to reach its predicted total of a 10 percent surge in GWP over the next decade.

Release 16, the latest set of 5G standards from umbrella organisation 3GPP, aims to lay the foundations for some of the most important use cases of fifth-generation communications, from allowing vehicles to connect and communicate directly, to single-tower location mapping, and private network capabilities for the Industrial IoT and robotics.

The release splits data from other 5G functions, opening up the potential for adopting best-of-breed solutions via a single 5G Network Data Layer, theoretically minimising the risk of vendor lock-in – something the Nokia report fails to mention.

Clearly, therefore, 5G is an enabler of a number of new technologies in the sense of speeding up communications between them and making some applications viable at scale, but it is overstating the case to say that these are all ‘5G’ in themselves.

To its credit, Nokia appears to acknowledge this point later in the report:

“In a world that increasingly runs on the transfer of huge volumes of data, the step-change 5G will create in capacity, bandwidth and latency represents a mega-trend that will catalyse multiple technological revolutions,” in the words of Gabriela Styf Sjöman, Nokia’s Chief Strategy Officer.

“Areas of innovation that have been gradually emerging – from blockchain to augmented and virtual reality, artificial intelligence, and robotics – will rapidly accelerate their development as 5G makes high speed, live-streaming data a reliable reality.

“In turn, our capacity to collaborate remotely, to operate autonomously, and to manage resources more intelligently will increase by orders of magnitude. We will enter the era of digital by default.”

This, plus the rebalancing of economic activity across all sectors, is what has real economic potential, whatever the real GWP figure turns out to be by 2030. In the meantime, it is too early to say what impact the coronavirus crisis will have on demand and uptake, not to mention its long-term impact on the global economy.

However, the coronavirus pandemic has made increasing some technology investments an imperative, added Sjöman:

“The significant increase in demand for connectivity resulting from virtual working positions 5G as a growing necessity, not a luxury.”

  • The UK’s own progress in exploring 5G applications – which has been positive in some areas, with promising regional and city-wide testbeds – may be hamstrung by the political row over the use of Huawei equipment.

Earlier this year, Digital Secretary Oliver Dowden told Parliament that banning Huawei from future implementations and requiring operators to remove its equipment from their 5G networks by 2027 would cause a cumulative delay of two to three years in rolling out those networks, at a cost of up to £2 billion pounds.

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