Chong, who is responsible for the introduction of 5G in 21 countries including Australia and his home country of Singapore, seems to have the right mix of scepticism, pragmatism and commercial nous when it comes to making a realistic assessment of 5G.
He says 5G will struggle without a blockbuster product to drive consumer uptake of 5G devices as happened with release of the iPhone on the 3G networks about a decade ago.
“5G needs an iPhone moment,” says Chong in an exclusive interview with Chanticleer in Singapore.
“When Steve Jobs created the smartphone that saw the rise of 3G and 4G. We need that sort of breakthrough to generate excitement among consumers and enterprises. To be honest, consumers are generally happy about 4G.”
Instead of an iPhone moment, the reverse seems to be happening with 5G. Thanks to a dispute between iPhone maker Apple and chip maker Qualcomm, there is not expected to be a 5G compatible iPhone for two years. One is expected in the last quarter of 2020.
That is significant for the consumer adoption of 5G in Australia because we have one of the highest iPhone uptake rates in the world with an iPhone market share of about 56 per cent of all mobile devices sold.
Another significant dampener on consumer demand for 5G smartphones is the fact that Telstra does not stock phones made by Chinese company Huawei, which also happens to be banned from supplying 5G telco equipment in Australia.
Huawei sells two of the best three smartphones in Australia according to Financial Review journalist John Davidson. Telstra’s lack of support for Huawei handsets is significant because Telstra has more than 50 per cent market share in the mobile market.
While it is true that Samsung will bring one of the world’s first 5G-compatible smartphones to Australia early this year, the Korean company only sells about a quarter of smartphones sold in Australia.
Chong freely admits that the telco business case for 5G will rely primarily on selling 5G services to businesses. He just as readily admits that selling 5G to business will not be easy.
“We have the arrival of a new technology but the world still has to develop the applications that can benefit from the technology,” Chong says.
“That requires a whole ecosystem development meaning it’s not just the network alone. You need new devices, new interfaces, new applications which are very business oriented.
“If it is business oriented then businesses need to catch up with that kind of thinking. Its success will depend upon what applications are developed and what new business models are deployed.”
Chong warns that the hype about 5G will tend to work against telco operators because it will encourage others to think it is an opportunity to make a killing. He thinks councils, city municipalities and building owners will be tempted to charge telecommunications companies excessive fees to install 5G network equipment.
A feature of 5G is the use of micro-cells which have to be installed throughout the coverage area. Already, in some municipalities in Australia there is opposition to the installation of 5G equipment.
Another factor that could slow the uptake of 5G is the cost involved because of restrictions placed on the supply of 5G equipment by Huawei. The Chinese company is regarded as having the most advanced 5G network equipment in the world. Also, it has entered new markets with a strategy of offering the lowest priced equipment.
Its 5G equipment is at least one year ahead of anything offered by its two major global competitors, Ericsson and Nokia, according to an article at the weekend in the Wall Street Journal. The Australian government ban on Huawei in Australia on national security grounds means 5G network technology installed here will be more expensive and less advanced than in other countries.
Huawei in a bind
Huawei has pointed out the apparent contradictions inherent in the ban on its involvement in 5G in Australia. It says many non-Chinese brand name companies manufacture their products in China, and are subject to the same speculative threat that has been suggested for Huawei and indeed operate freely within Australia’s critical infrastructure without the level of oversight that Huawei is subject to.
Huawei quotes an internet article saying the equipment supplied to the NBN by Nokia comes from a factory called Shanghai Bell based in Shanghai. This factory, which is a joint venture between the Chinese government and Nokia, will supply 5G equipment. The chairman of Shanghai Bell is Yuan Xin, the party secretary of the Nokia Communist Party branch.
Chong refuses to comment on SingTel’s relationship with Huawei but it is common knowledge the two companies have been working together for more than 15 years. Huawei will supply 5G equipment to SingTel in its home country of Singapore.
This is occurring with the active encouragement of the country’s telco regulator, the Infocomm Media Development Authority (IMDA).
“IMDA encourages telecommunication operators, including mobile network operators, to ensure vendor diversity to mitigate risks from dependency on any one vendor,” the regulator said in a statement. “In addition, operators should ensure that the performance and reliability of equipment purchased from vendors meets their commercial operational needs and IMDA’s regulatory requirements.”
Another factor that will influence the cost of 5G in Australia for both telco companies and businesses wishing to take advantage of it is the capital cost of rolling out new networks. It would obviously make sense to jointly fund a 5G network that could be shared by all carriers but that is not going to happen.
In fact, the opposite is true. The Australian Competition and Consumer Commission believes Australia needs four network operators to encourage competition. It is threatening to stop a merger of TPG Telecom and Vodafone Hutchison Australia to force both companies to build separate 5G networks.
This is slightly bizarre given that the ACCC has not stopped TPG and Vodafone sharing fibre network resources.
The other slightly weird thing about Australia’s 5G rollout is that amid all the hype there is little or no discussion about the government owned NBN Co having in its possession some of the best 5G spectrum in the country. Yet it has no concrete plans to use it.
In hindsight, it is obvious that NBN should not have been given the 3.5GHz band spectrum and that it should be utilised for the public benefit. It is possible the sale of the spectrum owned by NBN could help ameliorate the financial damage from writing down the NBN as part of a plan to deliver Australia globally competitive broadband prices.
Cut through the jargon
Before giving Chong the last word on 5G it is beholden on Chanticleer to cut the jargon and reveal what network slicing on 5G means.
“Network slicing working in standalone mode provides a customised, isolated and guaranteed end-to-end dedicated connection,” according to a Huawei promotional document distributed in Australia earlier this year, and now redundant because of the government ban on its involvement in 5G.
“A network slice instance includes the network functions and resources of the access network, the transport network and the core network. This could work for manufacturing plants requiring low latency connectivity with guaranteed uptime.”
Chong says it is understandable that there is lots of hype about 5G.
“There will always be people who are very exuberant because there’s a lot of new tech and indeed transformational capability if you can harvest it,” he says.
“Then you have a group of people who say: ‘That’s great but you know a lot of work still needs to be done before you can really harness the technology’.”
He says SingTel is watching for the “iPhone moment” that will make 5G live up to the hype. If it happens it will be highly disruptive and possibly sweep away old technologies regarded as essential, Chong says.
“When Steve Jobs produced the iPhone the world went crazy,” he says. “Then he produced the iPad and the world went even more crazy.”
Chong says the next iPhone moment is “something that we cannot see”.