Conversation: 5G — Challenges and Opportunities for SMEs

Our last episode of DIGITAL SME Live was all about 5G: What’s in it for European SMEs?

The race to build 5G networks and secure rollout across the world is intensifying. 5G technology promises significant benefits to all economic actors. For SMEs, it could be a “game-changer” to help them increase productivity and efficiency and create new opportunities across the value chain. 5G offers a combination of faster speed, higher capacity, and lower latency. Coupled with high mobile adoption rates, SMEs and other companies will be encouraged to adopt a “mobile-first” approach to their business.

Taking a “mobile-first” approach

“Mobile first” could be the preferred channel to offer products/services to customers, and could also provide employees with greater flexibility, which may lead to higher productivity.[1] The COVID-19 crisis has demonstrated the importance of reliant and fast internet access for work continuity. However, SMEs could even challenge traditional telecoms providers in the provision of mobile internet services, for instance by becoming a Virtual Mobile Operator. SMEs have the ability to disrupt incumbents’ business models or introduce new 5G services.[2]

Nonetheless, there are challenges. There is a need to increase awareness among SMEs and public authorities about the societal and economic benefits of 5G.[3] SMEs also need to convince larger organisations that they can fully deliver on 5G if they want to become trusted partners.

The race to build 5G networks

Another challenge is of network infrastructure. The number of companies that are ready to roll out 5G technology is limited, and there is an ongoing debate about how to make sure that these networks are secure. Over-reliance on one provider could be an issue, and so could the risk of foreign interference and access to data shared via the future 5G networks.

This debate has escalated to a geopolitical discussion over the past year, leading to scepticism mainly towards Chinese providers of the technology like Huawei. For instance, the US has clearly excluded Chinese providers from building their 5G infrastructure, and other countries have followed suit.

As a way forward, the European Union seems to be taking a carefully balanced approach between economic and security interests by defining strict security criteria for 5G. While concerted efforts by the Union are welcome, every Member State can still decide on which vendors to include in their networks – leaving the door open to providers from all geographic areas. What will this particular European path mean for building the 5G infrastructure across Europe? How will this affect SMEs and what is the impact on the cost of the technology vs. security?

Two systems, two sets of standards?

If the current conflict between the US and China continues, it may lead to two different 5G systems. Having two systems could lead to two distinct sets of standards.[4] So far, the whole world uses one standard starting with GSM for 2G technology and ending up with LTE for 4G. Having more than one standard for the same technology would lead to fragmented markets, additional costs, and technical barriers to trade.

[1] See https://newsroom.bt.com/how-5g-will-herald-the-next-generation-of-mobile-first-businesses/

[2]See  https://www.atmosphere-eubrazil.eu/5g-business-models-and-opportunities-smes-savvy-providers-5g-applications-and-services

[3]See https://www.scottishfuturestrust.org.uk/storage/uploads/deloittesfteconomicimpact4g5gfinalreportforpublication.pdf

[4]See https://www.ft.com/content/1f864d12-4f88-11ea-95a0-43d18ec715f5, https://www.economist.com/leaders/2020/04/08/open-standards-not-sanctions-are-americas-best-weapon-against-huawei, and https://breakingdefense.com/2020/05/us-risks-losing-5g-standard-setting-battle-to-china-experts-say/

Speakers

– Robert MacDoughall, Head of Enterprise Public Policy at Vodafone Group

– Jacques Magen, CEO of InterInnov

Moderator

Sebastiano Toffaletti, Secretary-General at DIGITAL SME