Affordability will drive 5G adoption, ITU says

Global body is confident that technology cost will come down with increased private sector participation

Houlin Zhao, secretary general of ITU, says Middle East is at the forefront of 5G adoption worldwide. Leslie Pableo for The National

The International Telecommunication Union, a UN-backed internet and telecoms agency, says lower priced fifth-generation (5G) technology will facilitate greater adoption globally.

"Pricing is a main problem worldwide … currently hindering the widespread adoption of 5G technology," Houlin Zhao, secretary general of ITU, told The National, adding, "It was a big issue even when 3G and 4G were started years back".

ITU is working towards making this technology “inclusive” but this can be only done by making it “affordable”, said Mr Houlin, who was speaking on the sidelines of the UAE 5G Conference, organised by the Telecommunications Regulatory Authority.

“We do not want only city residents or rich consumers to use 5G and countryside people to rely only on 2G. This [5G] should be available for everyone.”

Infrastructure for 5G is more expensive than for 4G and predecessors because of the need for more towers and radio stations. Due to the high demand on bandwidth, 5G waves travel shorter distances, so a larger number of mini-towers need to be installed at each site to ensure clear reception. In an analysis of one European country, consulting firm McKinsey predicted that network-related capital expenditure would have to increase 60 per cent from 2020 through to 2025, roughly doubling total cost of ownership during that period.

Currently, most telcos are not charging consumers a premium for accessing 5G networks but users end-up consuming more data in a shorter time as networks become faster. The future availability of artificial intelligence applications on 5G will also significantly increase network costs.

A 5G network promises an internet speed of up to 1.2 gigabits per second, which will gradually reach 10Gbps — more than 100 times faster than 4G. Moreover, 5G has a latency of less than one millisecond, compared to 20 milliseconds for a 4G network.

One of the major hurdles in adoption is affordability – services are too costly or devices are too expensive, said ITU, which finalised the basic standards and spectrum for 5G at its World Radiocommunication Conference in Egypt last month.

Industry experts say a main barrier in the adoption of this new mobile broadband technology is the high price of 5G-enabled smartphones. Take-up of 5G devices can be amplified by offering low-cost handsets - most 5G-enabled handsets are currently phones at the top end of the market costing Dh5,000 or more. The Middle East and Africa will have 60 million mobile subscribers to 5G cellular wireless networks by 2024, only 3 per cent of all mobile subscriptions in the region, according to a study by Swedish telecoms firm Ericsson.

The ITU, however, is confident that technology costs will come down with greater private sector involvement in the industry.

“We need to improve the investment climate… I am very confident that with the introduction of new technologies and combined efforts made by authorities and [private] partners, prices will come down,” said Mr Houlin.

Equipment prices for 5G-enabled handsets will be reduced once "more brands will start manufacturing", which will also "propel the growth of subscribers", Chafic Tarboulsi, MEA vice-president and head of networks for Ericsson, told The National in an earlier interview.

"However, it will take some time," said Mr Tarboulsi.

In May, Etisalat — the UAE’s biggest telecom operator — became the first service provider in the region to announce the availability of a 5G network, supporting smartphones for commercial use. It was soon followed by the UAE’s second-biggest operator, du, and Bahrain's Batelco.