The 5G Challenge

With the vision of a seamlessly connected society, the fifth generation wireless networks - better known as 5G - has all sorts of buzz around it. Imagine a car equipped with devices that track its movements - not just its location, but driving patterns, such as acceleration and braking frequency. This data is shared in real time then analysed by complex algorithms aimed at automatically alerting roadside assistance should there be a breakdown or to award you a ‘driving etiquette’ score that determines your insurance premium! These sensors and algorithms already exist; however only when you connect them do they fuse into something much more powerful.

This connectivity is referred to as the Internet of Things (IoT) and for which 5G is critical.

Undoubtedly, faster internet speeds will make video streaming and Instagramming easier, but theoretically this will use less than one percent of 5G’s potential 10GBps bandwidth. The rest is required to enable seamless connectivity among devices across industries. This integrated system also poses security risks - if it were hacked, it would allow the perpetrators to harm all connected entities – a reason why the US lobbied hard against the entry of Chinese tech giants into Britain’s cellular infrastructure.

We are currently using only a fraction of 5G’s potential and the network to enable machine-to-machine type communications required for IoT is still a few years away. As of now, only the Enhanced Mobile Broadband sphere of 5G has been explored and according to Ookla there are 110 5G operators worldwide. Jazz and Zong have conducted successful 5G trials in Pakistan, with Zong claiming to have conducted the first ever 5G video call while Jazz users can use 5G in certain locations in Islamabad.

Does this mean Pakistan is ready for 5G?

Unfortunately, several obstacles make it difficult to justify the investment in 5G. Currently, Pakistan is struggling to convert existing GSM users into 4G, or even 3G, users, as a major chunk of the population does not own a smart-phone. Of the roughly 164 million cellular connections in Pakistan, only 45% are 3G or 4G mobile data subscribers, despite coverage of these services reaching nearly 75% of the population. This creates a less than conducive digital ecosystem where telecom entities have yet to figure out reliable revenue streams based on IoT.

Revenues are another challenge due to the price war in the telecom industry. Pakistan offers one of the cheapest rates for mobile data in the world, and according to the International Telecommunication Union such scenarios, albeit desirable for a customer, create instability for the industry because it becomes unsustainable for any telecom entity to provide services. Per GSMA Intelligence in 2019, Pakistan had the 9th highest unique subscriber base in the world yet ranked 50th in terms of revenue- the City of Hong Kong generates more earnings than our market!

With profit margins squeezed, 5G implementation will require substantial investment in infrastructure. In an analysis of a European country, McKinsey predicted that network related expenditures will increase 60% between 2020 and 2025 – which is why the Pakistan Telecommunication Authority should encourage local operators to go in for network and spectrum sharing as it allowed in the Telecom Policy of 2015. McKinsey projects savings of up to 40% for operators if they implement network sharing, along with solving roadblocks of 5G deployment such as visual pollution arising the installation of excessive equipment.

With an estimated 40 million internet users, Pakistan has vast potential as an emerging market and the incumbent Minister of IT believes that 5G will “attract huge foreign investments”. Although the government is committed to building an ‘information superhighway’, we have yet to fully implement previous technologies like 3G and 4G. Hence, there needs to be a frank dialogue with all stakeholders to ensure the sustainable implementation of 5G. Without a pragmatic strategy, we risk increasing the digital divide between Pakistan and the rest of the world.

Ans Khurram is an insights professional working in the telecommunication industry in Pakistan. anskhurram@gmail.com