Davos Agenda

3 ways to boost innovation in the 5G digital economy

5G economy jobs opportunity innovation

5G will bring even greater connectivity to the Internet of Things. Image: Mika Baumeister, Unsplash

Börje Ekholm
President and Chief Executive Officer, Ericsson
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Davos Agenda

This article is part of: World Economic Forum Annual Meeting
  • Two-thirds of the global workforce will then use the 5G platform by 2030.
  • Emerging tech, enabled by 5G, will reduce consumption and emissions by 15%.
  • By 2024 mobile broadband will provide network coverage to 92% of the world’s population.

5G will be the foundation for innovation in the Fourth Industrial Revolution. That is a big statement. And I believe in it wholeheartedly.

While we know that 5G will bring significant change, we still don't know how - we cannot predict what the innovators of the world will do with it.

It was the same situation with 4G. Innovation came on top of the network. No one predicted streaming, ride-hailing and social media would be the killer apps for 4G.

And the frontrunners in 4G – largely in the US and China – became the big winners of the “app economy.” The same dynamic will play out with 5G but on a massive and industrial scale.

Have you read?

Let’s look at three ways 5G will change the world, plus what it will take to fulfill its potential:

1. Break the energy curve

Every previous new generation of mobile networks has increased energy consumption and carbon emissions until now. 5G is the most energy efficient standard ever developed and will help break this trend in the mobile sector.

In addition, ICT solutions can enable reductions of 15% across other industrial sectors by 2030. That’s more than EU and US emissions combined. Emerging technologies – enabled by 5G – will be fundamental means for industries, cities and countries to reduce their carbon footprints exponentially and put us on track for a 1.5C future.

2. Use mobile broadband to boost economic development

Connectivity is the backbone of digital transformation. Investment in digital technologies is an investment in the new era of national sustainable and inclusive economic growth, development and competitiveness.

In research with Imperial College London, we proved for the first time that the deployment of mobile broadband networks spurs economic development. The results show, on average, that a 10% increase in mobile broadband adoption ratio leads to a 0.8% increase in gross domestic product.

According to the Ericsson Mobility Report, mobile broadband will provide network coverage to about 92% of the world’s population by 2024.

3. Create jobs and profits

Across the digital economy, 5G networks will be as important for enterprises as 4G was indispensable for smartphone users. By 2030, two-thirds of the global workforce will use the 5G platform.

For industries, the frontrunners first to 5G will enjoy industry leadership with the global scale of a horizontal platform. This is already becoming a reality in manufacturing and production, electronics and the automotive industries.

We estimate that industry digitalization will generate an estimated $US700 billion addressable market opportunity for service providers by 2030. And that is only 47% of the total 5G-enabled value.

5g internet innovation broadband connectivity
The number of 5G connections is projected to grow to 410 million by 2025 in North America Image: CCS Insight, Statista

Creating the conditions for 5G success

5G will be a mandatory baseline to compete on the world stage. With this in mind, regulators must ensure a rapid 5G buildout. However, we already see steep inequalities emerging from the rollout of 5G, and countries are at risk of being left behind.

Networks are as important to countries as roads and electric grids and airports. And governments can support their development with a range of policies, ranging from funding 5G pilots to spectrum auction mechanisms

Governments and regulators must align spectrum pricing with policy goals and license as much spectrum as possible as quickly as possible. This means factoring in the long-term value of a strong network instead of upfront license fees.

We need industry transformation

There must also be structural changes to our industry, if all service providers are going to benefit from 5G. Particularly in Europe, many barely return cost of capital, making it very difficult to justify investments in new technology.

There are two changes that will make service providers more competitive. The first is consolidation, again, particularly in Europe. There are simply too many service providers in the same markets, especially compared with countries like the US. Market fragmentation restricts investment.

The second is pricing. In most markets, mobile broadband costs less per month than a few cups of coffee. This is also not a feasible long-term business model. Ultimately many countries risk deepening social and economic inequality and potentially falling years behind 5G superpowers such as Korea, the US and China.


What is the World Economic Forum doing about the Fourth Industrial Revolution?

5G will change lives

The promise of 5G and the Fourth Industrial Revolution includes creating jobs, improving and expanding access to health care. It will also help to reduce carbon emissions, improve education and raise the quality of life in cities around the world.

With countries all over the world already deploying 5G services, this is an important window for alignment. We cannot afford to let this window close and slow the societal and economic benefits of 5G on a global scale.

We must work together with the ambition to aim for a more sustainable world. We’re in. Are you?

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Davos AgendaFourth Industrial RevolutionEmerging Technologies
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