Like many of you, courtesy of COVID-19, I’ve spent the past several weeks “fibernating” from home. (Credit to Jim Patterson of Patterson Associates for coining that phrase.) It has given me time to attend on-line 5G events, catch up on industry reading, and hear perspectives from across the 5G ecosystem. My sense is that significant activity is still underway, albeit constrained by what could be the new normal for much of 2020. So, I thought it would be worthwhile to pause and share a couple of thoughts as we all try to determine what will be the new path forward.
5G Deployment Impacts
To begin with, it seems only logical that 5G capex spend will slow in 2Q and 3Q. There have been simply too many logistical delays introduced by COVID-19. Supply chains have been disrupted, permits are being delayed because approvers are working from home, field testing is facing new challenges, and that's just to name a few. What will be the amount of the delay? In one recent industry forum, estimates provided were consistently in the 15% - 30% range for capex reductions this year. That is a heck of a lot! While nobody knows for sure, it is noteworthy that many publicly traded companies, including AT&T, have suspended their guidance for the rest of 2020.
The good news is, as the economy reopens, I believe we will return to reasonable spending levels. While we probably won’t catch up by the end of the year, most industry commentators believe the programmed capital spend for 2020 will roll into 2021. Bigger companies, such as the OEM’s and large deployment companies, should be able to weather this short-term storm. Unfortunately, some smaller companies, who are still a key part of the 5G ecosystem, may not survive financially. This suggests there could be further consolidations or shortages in areas like tower crews when things ramp back up.
One area that could be particularly hit hard is small cell deployment. It was already challenging to navigate local municipalities for necessary permits and approvals, now that is even more complicated as those people are working from home. Macro site work, while still impacted, should be less affected as those processes and approval procedures are more mature.
Finally, 2020 was supposed to be the year of Stand Alone 5G Core deployment by major US carriers. As most of you know, today’s 5G devices are connected to 5G radios, but still rely on 4G LTE cores. While that provides for device improvements in speed, a Stand Alone 5G Core is critical for most of the capabilities typically attributed to 5G. Those capabilities include network slicing, ultra-low latency, and robotics. If there are delays in SA Core deployment this year, that could cause a major shift in the overall 5G deployment timelines.
No one knows exactly how COVID-19 will play out this year, but it does seem inevitable that there will be impacts on 5G deployment. It’s important for companies to act now and be thinking about how these potential delays might impact their critical business objectives for 2020.
2. Potential Shift in 5G Use Cases
The first section of this blog was focused on 5G deployment impacts associated with COVID-19. Now, I want to shift to the demand side of 5G. While we are still in the early stages of this pandemic, it’s not too early to give thought to potential changes in 5G use case priority.
To start with, as a reaction to COVID-19, I expect Industrial IoT (IIoT) and factory automation to become an even higher priority. Manufacturing companies will desire plants that can continue to operate during any future pandemics. These could range from high tech companies all they way to lower tech plants, such as meat processing, that recently had to shut down. In fact, one can contemplate that ANY industrial process requiring human touch and/or clustered human work force will be closely examined. There was already a lot of momentum in the IIoT and automation space driven by projected cost savings, and now we can expect those efforts to accelerate with an eye towards minimizing shutdowns.
On the other hand, it’s possible that 5G in-building applications will become less important – at least in the near term. Currently, companies are becoming proficient at working from home environments out of necessity. But, I’m also hearing reports of increased worker productivity without the distractions in an office and time spent commuting. If you couple this with what I believe will be lingering demands for social distancing by workers even after this current COVID-19 wave subsides, it makes me wonder if the commercial real estate marketplace is about to undergo a fundamental change (or decline). If so, decreased demand for 5G in building services should follow.
I also believe there could be a chilling effect on 5G developments targeting major sports venues. As you might have seen in advertising, the NFL has been working closely with wireless providers to enhance the in-stadium experience. Service concepts include helmet mounted camera shots and customized statistics only available to those in attendance. And while there may still be a demand for those down the road, the question is how comfortable are fans going to be jamming into a crowed stadium in the near term? I am an avid sports fan, but I will tell you that the thought of going to a sold-out stadium right now gives me pause.
More broadly speaking, there are some other COVID-19 impacts that merit consideration. In particular, the areas of e-health and telemedicine are getting more attention. I anticipate an increased interest in developing remote health monitoring via wireless sensors on patients, for example. In fact, any technology development that would reduce the risks to our front-line health care providers should be of interest to health care companies. Also, as COVID-19 has pointed out, there continues to be a discrepancy between health care in more populated areas versus rural areas. I think this will become even more apparent as COVID-19 spreads to less populated areas. It would not surprise me to see public policy incentives developed to accelerate the development of telemedicine applications as a result of this pandemic.
Another area getting a lot more attention is distance learning. Clearly the educational system was blindsided by the sudden shut down of schools, and that’s due to no fault of their own. There is a lack of appropriate educational materials as well as proper training of teachers for remote instruction. With advances in 5G AR/VR, even complex scientific instruction can be accomplished remotely more easily. And, while demand for services like Zoom has skyrocketed, I think everyone would agree that it simply wasn’t designed with remote instruction in mind.
Finally, COVID-19 has further illustrated the digital divide in this country. Students without access to in home computers and high-speed broadband connections are even further disadvantaged. I expect 5G device development and applications to be influenced by this recognized need, with broadband access perhaps even elevated to the level of an essential utility.
I wrote this blog to share a few of my thoughts and hopefully stimulate some of yours. I highlighted a few areas, but obviously there are many more. In fact, now that the initial shock of “fibernating” is wearing off, I’m sure most of you are already thinking about how your business must adapt to the new normal – whatever that will be.
And that is really the key question. What will be the new normal? Will we see a permanent shift in the percentage of the workforce working from home, or will we go back to being primarily office dwellers? Will distance learning significantly change how education is delivered in this country, or will schools and campuses eventually fill back up? And finally, how much will the fear of a second wave of COVID-19, or a some future pandemic, influence all of our lives for the foreseeable future?
As you contemplate these questions, and doubtless many others, would be very interested in your thoughts. There is no doubt that we all are going to encounter some unforeseen impacts as time goes on. And, if you need help preparing your business for the changes ahead, we at the Wireless Insiders Network (www.wirelessinsidersnetwork.com) stand ready to assist you. We are currently reaching out to all our clients to help ensure their continued success through these uncertain times.
Please feel free to contact us. But, in the meantime, stay safe out there.