Cellular technology innovation has been instrumental in creating wealth in recent years and has contributed significantly to global economic growth, either directly or indirectly. Each mobile network generation, including 2G, 3G, and 4G, has transformed consumers’ lifestyles and has enabled businesses to deploy new tools to enhance productivity and work efficiency.
Next-generation networks, including Gigabit LTE and 5G, will enable new experiences and create new opportunities for a multitude of emerging businesses. The efficiency of these networks will have a direct impact on consumers’ experiences and workplace productivity.
Linking cellular connectivity innovation to economic growth and social life improvement
Cellular technology innovation has been always linked to enhancing the user experience and introducing new types of applications that would not have been possible with previous technologies. Each generation of cellular technology has contributed massively to boosting demand for mobile services and creating business opportunities for new use cases.
Although 1G (analog mobile telecommunication) was the first to enable mobile telephony, the introduction of 2G made mobile calls more reliable, ubiquitous, and cheaper. The technology has been instrumental in democratizing mobile voice and enabling new types of services, such as SMS and MMS. So, it is fair to say that without 2G innovation, mobile network operators as we know them today would not exist. If one applies a formula established by Waverman linking 2G penetration to GDP growth, mobile telephony has helped increase the overall GDP per capita by at least 6 percentage points.
3G has also been instrumental in creating new business opportunities and boosting economic growth. 3G was a key milestone in mobilizing workforces and has offered users the flexibility to access their emails, the Internet, and work servers from anywhere and at any time. This has resulted in a significant improvement of productivity, while enabling users to enjoy a better lifestyle. A market report from the GSMA suggests that 3G has contributed to improving the average GDP by a factor of approximately 1.5%.
On the other hand, 4G has created a far bigger revolution compared to 2G and 3G. It has enabled the use of the mobile Internet on the move and created new business opportunities that would not have been possible with previous generations. For example, transportation technology companies like Uber and Didi would not exist without LTE. Similarly, companies like Snapchat, Periscope, Instagram, and the exponential growth of YouTube mobile would not have happened if 4G and subsequent improvements were not rolled out. Nobody expected that these applications would drive the use of cellular networks when 4G was being standardized 10 years ago. 4G has also helped companies like Google and Facebook grow their ad revenue significantly since the launch of the networks. In 2016, more than 70% of the US$75 billion that Google generated from digital advertising was attributed to mobile clicks, while this ratio did not exceed 7% in 2011. Similarly, Facebook managed to increase the revenue share of mobile ads to 82% in 2016, while this revenue was not accounted for back in 2011 when LTE networks were at a very early stage of deployment. There is no doubt that Gigabit LTE innovation and 5G will continue to improve network performance in terms of both speed and latency, which will increase productivity and further boost GDP growth.
Mobile innovation across different network generations has also helped in shortening time and space for social networking activities, redefining the concept of the community, and transforming the way we communicate, work, and play. Cellular technology innovation has enabled the use of many features and services on the move and has allowed consumers to receive, share, process, and manage information and events as they happen, regardless of the space or time from which they originate.
2G/3G enabled users to stay in touch with their loved ones, irrespective of where they are in the world. In emerging countries, cellular telecommunications helped women improve their social status incredibly, fight gender inequality and domestic violence, participate in shaping their communities, and unlock the communication barriers created by the conservative and conformist societies in which they live. It enabled communities and crowds to better organize and report major events as they happen, including natural disasters or uprisings against discrimination, despotism, and dictatorships. It enabled parents to better supervise their children. Both the senior population and disabled people also greatly benefited from mobile telecommunications, as the technology enabled them to remain integrated within their societies, gain more autonomy, and improve the overall quality of life.
4G has enabled the Internet on the move, greatly impacting consumers’ lifestyles in many ways. For example, 4G has opened new dimensions for personalized entertainment, e-leaning, healthcare and well-being, online shopping, mobile payment, mobile banking, and e-administration; none of this would have been imaginable without 4G. In summary, 4G has enabled consumers to save considerable time they used to spend in line to buy goods, move to get paperwork done, or wait for service. It enabled them to invest more time in improving their lifestyles and reduce stress.
The impact of 5G
The increased performance and speed of mobile networks from LTE to LTE-Advanced, LTE Advanced Pro, and 5G has a knock-on effect on productivity and GDP. This means that the traffic generated from email exchanges, web link clicks, document exchanges, social networking, and video streaming has a positive impact on productivity. Many academic and commercial institutions have linked the data traffic growth to the growth of GDP using dynamic panel data estimation defined by Arellano and Bond. A GSMA study, for example, estimates that each time mobile data traffic doubles in a given country, that country would experience a GDP growth of 0.5% as a result. Using this empirical formula and assuming that LTE traffic has increased 67% between 2015 and 2016, this would mean that this traffic would have improved the average GDP growth by .33% in 2016 compared to the 2015 figure. Using the same formula, ABI Research anticipates that LTE Advanced Pro will help boost the growth of GDP by an additional 2.5% between 2017 and 2022.
Today, the industry is evaluating the benefits of 5G, what new business opportunities it will introduce, and how its deployment will improve global economic growth. Learning from past deployments of 3G and 4G, one can anticipate that faster speeds, lower latencies, and overall new network functionalities will allow the creation of applications that cannot necessarily be predicted. 5G is expected to further improve the average GDP as a result of the extended growth of mobile data traffic and network efficiency, thanks to the superior speed and low latency offered by the technology. However, the biggest value of 5G will not come from connecting humans only, but from its ability to provide seamless connectivity to infrastructure, machines, and things. 5G technology innovation will enable highly automated and intelligent environments that could transform many industries, including automotive, transportation, supply chain, manufacturing, energy and utility services, retail, agriculture, health, education, the enterprise, and many other industry sectors.
For example, 5G will offer retailers abundant bandwidth and low-latency communication to enable customers to enjoy better experiences in retail stores, including augmented access to product information and awareness via AR and VR technologies, reduced transaction time, and improved service experience using robotics, AI, and machine learning technologies. 5G will also enable retailers to better track consumers’ behavior and address their needs in real time. It will enable them to flexibly and dynamically revamp product shelves to better merchandise products likely to sell best by using virtual shelves instead of physical shelves. Such technology will also enable them to save space used for stocking and exhibiting products.
5G is also expected to play an instrumental role in revolutionizing the manufacturing industry in line with Industry 4.0 guidance. Thanks to their reliability, low-latency, and high-bandwidth, 5G networks have the potential to exponentially increase production and operation efficiencies and zero-defect manufacturing. 5G will also enable manufacturing sites to be highly automated, remotely controlled, and maintained, and will allow more optimized logistics flows. All of these elements are likely to save the manufacturing industry billions of dollars in operation costs, while enabling a large-scale yield of goods, which will significantly decrease the overall end-product cost.
Following the track of previous generation cellular networks, 5G also has the potential to further improve our lifestyle and augment the way we interact with smart devices and machines around us. The technology will enable the emergence of immersive experiences, whereby humans will interact with machines in a very similar fashion as they interact with other humans, rather than relying on physical touch. In that way, humans will naturally interact with and control machines around them using human language control, whether that be voice, touch, or gesture. In this case, 5G innovation will play an instrumental role in facilitating communication between humans and machines. For example, the home environment will be highly automated and users will be able to communicate with their lighting, appliances, entertainment and infotainment systems, Internet, and utility systems quite seamlessly and in a natural way. Also, thanks to 5G, users will be able to command autonomous cars and will rely on them to drive safely and reliably, which will significantly reduce traffic crashes and will save users an enormous amount of time currently spent in traffic bottlenecks at rush hours.
So, current-generation networks are designed to handle human-to-human communications and human-accessing information. With 5G, this traffic will amplify 6X within the next 10 years and the network will be able to handle this traffic more efficiently and more reliably thanks to automatic prioritization mechanisms and the sophisticated scheduling that the technology will enable. 5G will also be able to carry new types of traffic generated from machine-to-machine and human-to-machine applications, opening new dimensions for increasing productivity, enhanced consumer lifestyles, and reducing the human impact on the environment.
In conclusion, cellular technology innovation has been critical in creating new business opportunities and in improving global economic growth, and this is just the tip of the iceberg. 5G is expected to be one of the most innovative technologies out there, enabling substantial economic growth across various industries. It will allow networks to be more efficient, and this efficiency will have a significant impact on business productivity, while optimizing overall network resources. 5G will also augment consumers’ lifestyles by enabling automated interaction with things around us in the same way we interact with other humans.
References:
- Waverman, L., Meschi, M., and Fuss, M. “The Impact of Telecoms on Economic Growth in Developing Countries.” In Africa: The Impact of Mobile Phones. The Vodafone Policy Paper Series, no. 2 (2005): 10–23. See also: http://corpo.videotron.com/static/site/static/documents/en/Mobile-GDP-benefits-07-06.pdf
- https://www.gsma.com/publicpolicy/wp-content/uploads/2012/11/gsma-deloitte-impact-mobile-telephony-economic-growth.pdf
- https://en.wikipedia.org/wiki/Arellano%E2%80%93Bond_estimator
- https://www.gsma.com/mobileeconomy/
- https://www.qualcomm.com/invention/5g/economy
