How 5G could speed up global growth

A man hold a mobile phone in Melitopol, Ukraine

Mobile networks are one of the greatest drivers of GDP in history Image: Rodion Kutsaev

Börje Ekholm
President and Chief Executive Officer, Ericsson
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This article is part of: World Economic Forum Annual Meeting

It’s often taken for granted that the most dominant tech companies control the world’s most important technology and communications platforms.

Instead, the truth is that these giants run on top of the world’s most important platform: the mobile communications networks.

But it’s not only the top internet companies that depend on reliable and available mobile networks. The telecom industry reaches into every corner of our economies, societies and private lives, and it is one of the greatest drivers of economic growth and human equality the world has ever seen. For generations, an industry built largely by private capital has enabled communication between people, across borders and between different devices – and in a predictable and reliable way.

Mobile has changed the world

The power of change that mobile technology unleashes is extraordinary. No other technology has ever scaled as fast. You might have gotten your first mobile phone in the 1980s. Since then, we have added some 7.8 billion mobile subscriptions globally, and by 2023 this will grow to a staggering 9.1 billion mobile subscriptions. In a research paper with the Imperial College of London, we found that, on average, a 10 percent increase of mobile broadband adoption causes a 0.6–2.8 percent increase in economic growth, depending on the model specifications. In 2016 alone, this equated to anywhere between US$500 billion to $2 trillion worldwide.

This is transformative, and yet it is only the beginning. The world is moving ever faster, and expectations are changing with equal rapidity. Remember when mobile was only about calling to hear someone’s voice? That was 2G. 3G added data, while 4G did everything 3G could but faster. Without the increased quality of service and capabilities of 4G/LTE, music and video streaming services would not be able to offer a good user experience, while in just a few years, online shopping has moved from desktops and laptops to mostly mobile devices.

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With 4G, we have never seen a technology rolled out to so many people so quickly. It took just five years to reach 2.5 billion people, compared to eight years for 3G. And it has been during the 4G era that the big internet companies have grown exponentially – thanks in part to blazing speeds on uploads as well as downloads – as they rode an almost insatiable consumer demand for video and mobile broadband in smartphones and other devices. Traffic in mobile networks has been typically growing by 50 percent per year, and innovations like Organic LED screens, HD and augmented reality will only drive this trend higher.

5G is the next mobile revolution

Today, we are on the brink of the next big technology shift: 5G. As with all major advances, 5G is discussed with everything from exaggerated skepticism to overstated excitement.

We are excited.

The capabilities in a 5G network will be a step change compared to 4G. When talking about mobile networks, the focus is often on speed, and, yes, with 5G, data speeds will be 10 to 100 times faster than 4G. But more importantly, 5G will provide much lower latency –
down to almost true real time, which opens the technology up to many uses not possible in 4G.

If previous generations of mobile communications were built for human interactions, 5G is also built specifically for machines. The ultra-low latency and reliable communication of 5G networks will allow factories to cut cables to their machines and put more intelligence into the cloud. This will lead to cheaper robots, quicker change times and much more flexible production. Ericsson’s latest 5G business potential study identified manufacturing as one of the single biggest opportunities, with a business potential of more than $100 billion globally for operators by 2026.

The industrial internet is here

The internet of things (IoT) – driven by both LTE and 5G – will also benefit every phase of the manufacturing process, from design and deployment to operations and maintenance. It gives machine operators real-time information not just on a specific component, but the overall status of their project. It allows companies to explore machine-learning and predictive maintenance, which reduce expensive downtime. This has the potential to create a fundamental change in the same way that mobile broadband not only changed consumer behavior but created entirely new businesses and business models.

A real-world example is the connected high-precision screwdriver Ericsson developed with China Mobile and Intel. We attached motion sensors to narrowband-IoT modules on more than 1,000 precision screwdrivers, which transmitted real-time data to a cellular IoT network. This allowed the factory to replace manual maintenance and usage tracking, extending the machines’ lifespan significantly. Payback on the investment in the sensors in the screwdrivers is less than 6 months.

But 5G is not about technology alone. Governments will continue to play an important enabling role for new technologies. A globally harmonized spectrum has been key for the spread of 2G, 3G and 4G, and there is a need for spectrum harmonization between countries planning early 5G deployment.

We also need to realize that in a 5G future not all traffic will be created equal. Service providers must be able to match different services with different levels of access – a concept known as network slicing. Many critical applications, such as autonomous vehicles and remote surgery, will demand prioritized 5G “slices” to ensure service is not interrupted.

Achieving the United Nations' Sustainable Development Goals

If we look at broader society, these paradigm shifts can help heal the fractures in our world. We are focusing on the United Nations’ Sustainable Development Goals (SDGs), and we see communications technology as the common platform to provide solutions towards achieving them. For example, city streets will be able to communicate with cars about road conditions, perhaps seeing a pedestrian in the dark before a driver does. In this world, we might not even need traffic lights. This would bring us closer to achieving SDG #11 (Sustainable cities and communities) – as would other traffic solutions that solve congestion, pollution and safety problems through optimization.

Another possibility is that sensors on our home appliances will help us conserve water and electricity (SDG #12, Responsible consumption and production), while real-time data monitoring of things like air and water quality will lead to a better understanding of pollution flows (SDG #6, Clean water and sanitation). Weather data can support climate resilience and early warning systems, as well as improving agriculture and food production by transmitting data on soil, water, temperature and intrusion (SDG #13, Climate action).

How can we accomplish all this? By doing business according to the principles – such as global access and private investment – that are have been at the foundation of the telecom industry for more than a century. In my experience over the past 30 years in business, investment decisions can be slowed or stopped due to unpredictability in laws and regulatory framework, or if free trade and competition is hampered or access to capital restricted. We must ensure collaboration between the companies that depend on communications, the people that use the services, and the public bodies that can ensure a good investment environment.

Telecom puts smart tools in the hands of smart people in every sector of our society and economy. Innovation will not scale or take off without the mobile networks. They are our primary platform for innovation today, and they will be tomorrow, and not as “dumb pipes” but as smart, adaptable, secure networks.

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