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Majority of organisations willing to pay more for 5G, Gartner report finds

15 Aug 2017

The majority of end-user organisations are willing to pay more for 5G mobile capabilities.

This is the main finding from a recent global Gartner survey which revealed that 75% of organisations are ready to pay more for 5G, while only 24% of respondents would be unwilling to pay more for 5G than for 4G.

The objective of the survey was to understand how the demand for 5G is growing and to learn about adoption trends for this technology.

"Those in the telecom industry are more likely to be prepared to pay more than those in other industries," comments Sylvain Fabre, research director at Gartner.

"End-user organisations in the manufacturing, services and government sectors, for example, are less likely to be willing to pay a premium for 5G than telecom companies, which are willing to pay a 5G premium for their internal use."

In addition to offering better prices for industries in which users are less convinced of the business benefits of 5G, the report stresses that communications service providers (CSPs) must create value propositions that entice customers to start 5G migration projects sooner.

The report states that although most of the respondents think their organisations would be prepared to pay more for 5G, only 8% expect 5G to deliver cost savings or increased revenues.

5G is seen principally as a network evolution (59%), and only secondarily as an enabler of digital business (37%).

The survey also found that respondents from the telecommunications sector are less persuaded than those in other industries that 5G will be a revenue enhancer.

Fabre says telecommunications businesses tend to see 5G migration as a matter of gradual and inevitable infrastructural change, rather than as an opportunity to generate new revenue.

What’s interesting is that 57% of respondents believe that their organisation’s main use of 5G is to drive Internet of Things (IoT) initiatives.

"This finding is surprising, as the number of deployed 'things' that need cellular connectivity won't exceed the capacity of existing cellular IoT technologies before 2023 in most regions," adds Fabre.

"And even once fully implemented, 5G will suit only a narrow subset of IoT use cases that require a combination of very high data rates and very low latency.”

In addition, Fabre explains 5G won't be ready to support massive machine-type communications, or ultra-reliable and low-latency communications, until early 2020.

The report also suggests this finding could be a sign of confusion about 5G's applicability as many proven and less expensive alternatives already exist for IoT connectivity. These include Wi-Fi, ZigBee or Bluetooth, which the report claims would avoid the cost and complexity associated with cellular communications.

The report says this degree of misunderstanding is also apparent in the majority of respondents (84%) who believe that 5G will be widely available by 2020.

By contrast, the report also highlights that CSPs' plans indicate that wide availability may not be achieved before 2022. Gartner predicts that, by 2020, only 3% of the world's network-owning mobile CSPs will have launched 5G networks commercially.

"Although standards-compliant commercial network equipment could be available by 2019, commercial rollouts of 5G networks and services by CSPs before 2019 are likely to use prestandard equipment," adds Fabre.

The report concludes that CSPs' marketing organisations need realistic roadmaps for 5G coverage and typical performance to ensure they communicate with customers accurately.

They also need to publish clear 5G rollout plans for the years 2019 to 2021 to help innovators understand when and where 5G will be available for IoT applications.

Over 200 IT and business leaders participated in the survey which was conducted in the second quarter of 2017.

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