How Do You Sell Really Fast Wireless When It’s Really Fast Already?
In a gold mine hundreds of feet below the boreal forests of northern Sweden, Ericsson AB is seeking the answer to an existential question: Does anyone really want 5G wireless service? The troubled telecommunications equipment maker, suffering as sales of 4G technology falter, has bet its future on the fifth generation of mobile, which is expected to link billions of devices to the internet with connections fast enough to transfer a feature film in less than a second. But even with initial 5G standards poised to be determined next year, no one is sure what applications and services will make customers hand over the billions of dollars the systems will cost to construct. “We need to explore this to understand what we’ll use it for,” says Peter de Bruin, an Ericsson engineer who designed the prototype 5G network the company built in the Kankberg mine, 500 miles north of Stockholm. “The benefits of such fast download speeds aren’t really obvious.”
The 50-year-old mine is one of dozens of locations worldwide where Ericsson and its primary rivals, Nokia Oyj and Huawei Technologies Co., are testing equipment for 5G, which will likely see its first large-scale commercial deployments in 2020. Nokia has worked with China Mobile Ltd. to show how ambulances can use 5G to stream patient X-rays to emergency rooms as they race toward hospitals. Huawei has showcased a remotely driven car. Ericsson, which has devoted the bulk of its 24,000 engineers to 5G, is involved in about 20 projects, including the highest-profile test, in February at the Winter Olympics in Pyeongchang, South Korea. There, the company is working with KT Corp. and Intel Corp. on a network that will guide self-driving buses through the athletes village and allow fans to experience the action live from tiny cameras embedded in the helmets of bobsledders. “We have talked for a long time about 50 billion connected devices, but we need to understand what they are,” De Bruin says.
Ericsson, Nokia, and Huawei are developing 5G radio components; chipmakers Intel and Qualcomm Inc. have showcased modems; and programming houses are writing much of the code that will make the systems tick. Even tiny bits of software or equipment that become part of the global standard could bring riches to those who create them. The 5G Forum, an industry group, predicts the 5G services and equipment market will reach $1.9 trillion in 2026.
Those numbers will depend on industries from health care to manufacturing finding ways to use the technology. Until that happens, 5G’s benefits will be more mundane: improving the speed and quality of mobile services for consumers while dramatically lowering the power needed for devices. That won’t fulfill some of the more futuristic promises of the technology, but “enhancing mobile broadband isn’t a bad place to start,” says Daryl Schoolar, an analyst at researcher Ovum Ltd. “You build a foundation.”
The three leading equipment makers have suffered from slumping demand as 4G networks are largely complete in key markets. Ericsson is more troubled than the others, because it was less prepared for the downturn; its shares plunged 30 percent after a profit warning last year. Even as Chief Executive Officer Borje Ekholm seeks to cut annual operating costs by more than $1 billion to boost profits, he’s pledged to continue investing in 5G—keeping “one foot on the gas pedal and one foot on the brakes,” he told Bloomberg Television.
At Kankberg, Ericsson has built a network of about three dozen antennas to cover more than a mile of tunnels, using equipment that adheres to proposed standards, even though the first set won’t be completed until next summer. Truckmaker Volvo AB has developed a remote-control front-loader for transporting rock. ABB Ltd. is providing wireless devices to monitor air quality. And researchers at Sweden’s Lulea University have created sensors that track seismic activity in the rock. Mikael Staffas, head of mining operations at Boliden AB, the owner of the mine, says 5G will let the company and its suppliers create sophisticated equipment that engineers can’t yet envision. “We get a very capable infrastructure, and we need to think about how to use it,” he says. “It’s a bit uncertain, because no one has really started building applications for the higher speeds.”