Europe’s 5G approach will help reap tech benefits

27 June 2018

A slow starter in developing 5G networks, Europe may be the best placed to capitalise on the benefits the technology promises

Macquarie's Head of European Telecoms Research Guy Peddy says Europe will have to invest in more expensive communications infrastructure but will ultimately derive greater benefit from its 5G networks.

“5G networks can deliver speeds up to 100 times faster than existing 4G networks," Peddy explains. “But how that speed is delivered will vary between countries and regions, depending on existing infrastructure and the dominant players in the market."

In the US, large mobile carriers such as Verizon and AT&T are developing the country's first 5G networks, with limited availability from the end of 2018.

China Mobile has pledged to build a standalone 5G mobile network that will become operational in 2019 as part of China's push to be a world leader in technology over the next five years.

In Europe, where mobile coverage is impacted by a more fragmented marketplace, 5G will largely be developed on fibre optic networks.

Peddy says while this will slow the development of 5G in Europe, it presents a better long-term option.

“Most European markets and operators have plans for commercial roll-outs around 2020, but we take the view that in the long term, fibre optic networks are the best solution for 5G," he says.

"In the long term, fibre optic networks are the best solution for 5G. They may be very expensive to develop but, once built, they offer the best reliability, scalability and speed. "

"They may be expensive to develop but, once built, their asset base is unlikely to reduce as they offer the best reliability, scalability and speed."

Peddy says this should make Europe's network better equipped to maximise the potential of 5G in areas such as manufacturing and automation.

“Until now, when it came to complex problems, it was often quicker for a human to synthesise data and make a decision. Increased network speeds should allow robots to make complex decisions and work more or less autonomously."

Peddy says 5G also has implications for e-health, and system monitoring, particularly of traffic networks.

“There has been a lot of talk about driverless car technology but, as reliability has to be foolproof, a truly driverless world is still some way off," he says.

"What 5G will more realistically change in the short term is traffic management, especially in high-density European cities - telling cars in real time where there is a quicker route, what they need to avoid and so on, in a much more comprehensive way."

Peddy expects the high barriers to entry in the European 5G market to lead to greater cooperation between carriers, who may join forces to purchase spectrum and build the required infrastructure.

“For 5G to really become transformative, you need 5G networks backing up 5G networks to guarantee speed and latency," he explains.

“That's an expensive exercise, so it makes sense for carriers to pool resources and cooperate."