The status and challenges of the GCC in the race to 5G
The status and challenges of the GCC in the race to 5G
Make room for 5G, because the next revolution in internet technology is quickly approaching.
More than just a simple improvement of its 4G predecessor, 5G reconstructs the telecommunication paradigm by allowing for higher transfer speeds, denser data transfer, and lower latency. The potential for this technology is untapped, and the innovations that will occur with the integration of 5G technology have yet to be imagined.
What is certain, however, is that 5G technology will reshape industries and business models in ways that have never been seen before.
5G technology as a catalyst for the global economy
The integration of 5G’s low latency and high bandwidth technology will encourage the development of new activities that have the potential to disrupt entire B2C and B2B verticals across the whole economic spectrum. From autonomous vehicles to smart cities, the Industrial Internet of Things to Virtual Reality, 5G technology may soon become a catalyst for the global economy.
Telecom and consulting players have already begun to analyze use cases for 5G technology to identify the most promising areas for growth. Figure 1 represents how those activities are distributed based on three factors: the importance of 5G technology, the stage of deployment, and the attractiveness of the use case (assumed to be linked to the market size).
As one can see, industry analysts anticipate that 5G will be a disruptor for industries ranging from agriculture to automotive, media to manufacturing.
The Gulf Cooperation Council (GCC) is one region, in particular, that is already recognizing the economic opportunity of this new technology. By providing cheaper and faster internet access, 5G technology is capable of advancing connectivity through the Internet of Things. Despite some inevitable operational and regulatory bottlenecks, GCC operators are already making strides in the deployment of 5G technology.
The economic potential of 5G is a strong motivator for 5G deployment; some analysts estimate that 5G technology has the potential to boost the GCC economy by $269 billion over the next ten years. According to GSMA (2018), 5G adoption will reach 16 percent in the GCC region by 2025 with 20 million 5G connections – slightly ahead of the global connection rate that is assumed to reach 15 percent globally.
After a few years of moderate growth, 5G mobile connections are expected to gain momentum in 2023. First deployments are ongoing in Bahrain, Kuwait, Qatar, Saudi Arabia, and the UAE this year, while Oman is expected to see its first commercial offerings deployed by 2020.
Compared to the mobile current environment, these deployments represent impressive growth in the GCC Arab States. At the end of 2018, 77 percent of the population were mobile subscribers, while just 67 percent were mobile internet users.
Current status of 5G deployment in the GCC region
The MENA region (and particularly the GCC region) are especially mature markets for the integration of 5G. Because the current fixed broadband structure in the GCC is usually seen as a bottleneck in the communication infrastructure, it is anticipated that 4G networks and early 5G deployments will become the backbone of the regional digitalization trend.
In 2019, several pivotal movements have already been made that will accelerate the deployment of 5G technology in the GCC. The ready availability of 5G Fixed-Broadband Wireless (FBW) services and the anticipated release of smart phones with 5G capabilities are two major developments prompting key operators to prepare for 5G deployment in mature national markets.
In anticipation of these developments, some GCC mobile operators have already led several 5G trials and installed 5G infrastructure in key cities and business districts in Qatar and the UAE. In the gulf region, here’s how GCC nations are leading the race to 5G deployment.
The UAE are at the forefront of 5G deployment
The UAE are currently leading in the race to 5G deployment in the GCC, despite future policies which are expected to clarify infrastructure and spectrum allocation. In 2017, Emirates Telecommunication Group Company PJSC (Etisalat) was already demonstrating its 5G capabilities by using an advanced 5G based drone equipped with a 360-degree VR camera and 4K streaming. Just two years later, Etisalat announced that it expects up to 1,000 5G enabled stations to be operational by the end of 2019.
However, Etisalat aren’t the only telecommunications players adapting to 5G in the UAE. In late 2018, du and Nokia successfully demonstrated 5G capabilities through a soccer-related VR game at GITEX Technology Week 2018 in Dubai. Since that time, du has also been appointed by Smart Dubai to build the necessary infrastructure to deliver the UAE smart cities initiative. In June 2019, du announced that it had started selling the 5G-enabled ZTE Axon Pro 10 handset and anticipates further expand its 5G phone portfolio in the coming months.
Saudi Arabia represents the largest market potential in the GCC region
As the largest nation in the GCC, Saudia Arabia has the greatest market potential for 5G deployment. Although many unknowns currently exist in regard to full spectrum 5G deployment policies, Sudia Arabia has already implemented some policies regarding spectrum allocation and licensing. In particular, the Saudi Vision 2030 roadmap clearly supports the development of information and communications technology (ICT) infrastructure and the digitalization of the Kingdom economy.
With the help of Saudi telecommunication companies STC, Mobily, and Zain, Saudia Arabia already boasts significant mobile coverage throughout the country. Its anticipated that mobile operators from these firms will implement development strategies that target specific verticals as part of the Vision 2030 objectives.
STC is also playing a leading role in the Kingdom regarding the deployment of 5G. In 2018, the company signed a Memorandum of Understanding (MoU) with Cisco to collaborate on the development of 5G communication systems and networks for different use cases – including smart cities. The company also entered into an agreement with Ericson to develop at mid-band 5G network in Saudia Arabia as well as an agreement with Chinese multinational technology firm Huawei for the deployment of wireless network modernization and 5G construction. Huawei will also partner with Viva, a subsidiary of STC, to begin deployment in Bahrain in 2019.
At the 2019 Mobile World Conference, Nokia and STC inked a deal to deploy a 5G network with Nokia’s end-to-end 5G solutions. The deal outlines a network which will first be deployed in the western and southern parts of Saudi Arabia, including the holy cities of Makkah and Madinah. Rollout is anticipated to be completed by the end of 2020.
In Qatar, 5G deployment is not far behind
Qatar may not be as advanced as the UAE or Saudi Arabia in the race for 5G deployment, but it is proving that it is not far behind. In 2018, Qatari telecom company Ooredoo announced that it had already deployed some 5G capabilities, particularly those that allowed the company to perform a real-time video stream demonstration with AR and immersive VR features at the Emir Cup final.. Ooredoo also signed a MoU with Cisco to initiate smart city development that would support its enterprise customers.
While the small nation sprints toward its FIFA World Cup debut in 2022, Qatar may utilize the global event as a catalyst for accelerated 5G deployment.
Oman and Kuwait represent smaller markets
Although other GCC nations have shown significant advancement towards 5G deployment, in the smaller markets of Oman and Kuwait, progress is less certain. Although telecom companies Omantel and Ooredoo have both been involved in testing trials in Oman, there is no clear deployment timeline. However, Omantel has formed an alliance with Huawei to develop innovative smart solutions for security, lamp-posts, energy, and utility management.
In Kuwait, trials have been underway since 2016 and commercial offerings are expected in 2019 for all of its three major telecom operators.
Lessons learned from the GCC’s current 5G deployments
Like any new technology deployment, 5G projects encounter their fair share of issues and challenges. Now that full commercial deployment is quickly approaching in most GCC countries, some best practices have been identified and should be leveraged for future projects.
To ensure success, it is critical for the mobile industry to work in strong partnership with the government and regulators as well as other private players to be able to address the complex issues surrounding 5G deployment.
Areas of focus for commercial operators:
- Operators should focus on specific verticals to validate proof of concepts and develop ecosystems. In the GCC countries, the “smart city” vertical seems to attract a lot of interest which may result in a particularly strong return on experience for operators focusing in this sector.
- Operators should aim to significantly develop 5G infrastructure before the launch of commercial offers in order to ensure the best customer experience. This is particularly true for the B2C segments.
- Operators should prepare clear communications on their deployment roadmaps as soon as possible in order to facilitate exchanges within the 5G ecosystems, attract the attention of individual and industrial customers, as well as clarifying forecast for startup using 5G as an enabling technology.
In turn, regulators also play a key role in the deployment of the 5G technology. Any decision that a regulating body makes in the early deployment of 5G technology can deeply affect the whole 5G ecosystem in a given country.
Policy suggestions for local regulators:
- Regulators should more clearly communicate their 5G roadmap to empower the entire 5G ecosystem.
- Strong and stable policy frameworks are required by operators in order to make the necessary investment in a timely manner. Modifications to policies with regards to spectrum attribution, tax or infrastructure deployment can literally stop the deployment of 5G and endanger players in this ecosystem.
- The lack of clear policies is particularly dangerous because it does not allow any player to launch their projects, which could ultimately cause GCC nations to fall behind the global rate deployment. This is particularly detrimental to mobile network operators who face very significant investments for a 5G-Rollout, including spectrum licensing, physical hardware, specific 5G hires, tests, regulator fees, etc.
- Spectrum acquisition should be made more transparent and international collaboration may be necessary in order to develop national policies for frequencies attributions.
- A more transparent approach to license renewal may also allow for better operator’s empowerment, facilitating their long-term investment arbitrages.
- The possibility to reassign spectrum bands currently used for 4G to support 5G services could be investigated
- Regulators should also specifically focus on some of the regions most promising verticals in order to develop clear policies and support the deployment of new commercial offerings within those verticals.
The future of 5G in the GCC
5G has the potential to revolutionize many sectors and is anticipated to support the development of countless new B2C and B2B services and ecosystems. It represents a very important opportunity for many verticals in the GCC region that includes several players actively preparing for a technological prepare revolution.
In Saudi Arabia, in the UAE or in Qatar, in particular, many new commercial offerings are currently deployed and the arrival of 5G-ready smartphones will further boost B2C applications in 2019. A continuous coordination between all the leading parties – national regulators, mobile operators and hardware providers – will remain key for the success of 5G deployment in the region which is today at the forefront of 5G deployment.
In the coming years, the Expo 2020 event in Dubai as well as the 2022 FIFA World Cup in Qatar will represent great opportunities for the GCC region to demonstrate its continuous leadership in the deployment of 5G at global events. All eyes will be turned towards the region and there is little doubt that the companies involved in those events will test and showcase new, compelling and revolutionary 5G applications.