Analysys Mason: 'Benefits of 5G significantly outweigh the costs'

14 January 2021 Consultancy.eu
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A new Analysys Mason study has revealed that the benefits of 5G infrastructure could add up to more than four times the initial cost of setting up the technology. The total boost to Europe’s economy is pegged at around €200 billion.

The Backdrop is the European Commission’s 5G Action Plan – a broad based strategy aimed at rolling out 5G services across EU member states by the end of 2020, and ensuring uninterrupted coverage in urban areas and along main transport channels by 2025.

Now, as the first planned milestone rolls around, telecom giants Sony Ericsson and Qualcomm commissioned consulting and research firm Analysys Mason to examine Europe’s 5G landscape in detail. “The overall aim of the study is to analyse cost and benefits of ‘full 5G’ use cases in Europe, to support review and potential updating of the European 5G Action Plan,” explained Analysys Mason Principal Janette Stewart.

5G penetration across EU member states

The report kicks off with a status update of 5G rollouts across member states. So far, only 15 out of 27 EU markets have launched their 5G commercial networks, with key markets such as Denmark, France and Portugal – among others – yet to commercialise the new technology.

Leading the way in Europe is Finland, where 5G coverage as a percentage of the population has already crossed 50%. Other countries near the forefront of the rollout include Austria, Italy, Netherlands, Romania, Ireland, Sweden, Germany and Spain – all of which hover between 15% and 40% 5G coverage. The EU average is around 20%.

No doubt, the much-awaited technology is finding its legs in Europe and around the world. Among the bigger hindrances to 5G is the high cost and complexity associated with its infrastructure. Indeed, the entire Huawei debate is born of the fact that few companies have the size and scale to establish the density and sophistication of network towers that is so critical to 5G.

Cost-benefit analysis of 5G as an open innovation platform

According to Analysys Mason’s analysis, the eventual benefits of 5G will far outweigh the costs. By now, many would know of the additional speed, scale and capacity that comes with upgrading to 5G. These direct benefits in themselves are enough to deliver a significant economic boost.

At the same time, the researchers highlight the tremendous value added by 5G’s indirect benefits. With all its extra speed and scale, 5G paves the way for unprecedented advances in all walks of Industry 4.0 technology – including artificial intelligence, machine learning and Internet of Things, among others. 

In turn, these innovations can deliver myriad use cases across all industries and walks of life. This facilitating avatar is what the researchers term 5G “as a total open innovation platform.” And the economic value of such a platform is remarkable.

Sector-wise breakdown of 5G benefits

Based on Analysys Mason’s modeling, the network costs of 5G amount to roughly €50 billion. Using the same modeling technique, the economic benefits stemming from the open innovation platform add up to more than €200 billion – accounting for the additional GDP contributions from each industry and use case. In short, the benefits outweigh the costs by more than four times.

Naturally, these benefits are spread unevenly across sectors. For instance, capital and machinery heavy sectors such as factories, agriculture, mining and construction stand to gain the most from new 5G use cases, in addition to the boost for telecoms. These industries are at the cusp of complete transformation from automation, IoT and other smart technology – and 5G is a key ingredient here.

Other segments such as urban hotspots, municipal buildings, as well as air and sea ports will also be spurred on by 5G technology, albeit to a lesser extent than other industries. At any rate, the research marks a good omen for heavy 5G investments that are imminent in the months and years to come.