5G is coming. 5G is coming. 5G is coming.
The advent of the next generation of super-fast wireless technology has become the rationale for doing all sorts of things these days. It is being invoked for blocking foreign takeovers, allowing previously rejected mergers, lavishing subsidies on profitable companies, and generally undoing years of otherwise sensible telecom policy.
The excitement is understandable, to a point. 5G, expected to be rolled out in some countries as early as next year, can carry 100 times more data at speeds 100 times faster than current networks. That’s fast enough for real-time high-definition video and instantly responsive remote control – tools that will make futuristic applications such as surgery over the Internet and driverless vehicles viable.
Commercialization of 5G is also expected to be hugely expensive, with powerful global players all vying for dominance.
But the potential of the technology to change the way people live and work is causing regulators to rethink some of their long-standing policies, including those promoting free markets and competition.
In March, the Trump administration pre-emptively blocked the takeover of U.S. chip maker Qualcomm by Singapore-based Broadcom, citing “credible evidence” that a merger would threaten national security and put the U.S. behind China in the race to develop 5G.
And earlier this week, wireless companies T-Mobile and Sprint took another stab at getting their previously disallowed merger past antitrust regulators, arguing that they need heft to build out a 5G network.
Even in Canada, industry analysts speculate that 5G’s arrival could eventually weaken the resolve of regulators to stick with the policy of having four wireless players across the country. U.S. approval of a merger of T-Mobile and Sprint “improves the potential for a four-going-to-three scenario in Canada,” telecom analyst Greg MacDonald of Macquarie Capital Markets said in a research report this week.
And that, he argued, could eventually make smaller mobile players Shaw and Quebecor “strategic targets” of their larger rivals. Shorter term, he predicted that Rogers could pursue network sharing deals with Shaw and Quebecor to get access to additional wireless spectrum capacity.
BCE Inc.’s Bell and Telus already have a network sharing deal and would likely share the cost of upgrading their networks to accommodate 5G.
Scotia Capital analyst Jeff Fan has similarly argued that the Canadian Radio-television and Telecommunications Commission may rethink its four-player model if the U.S. embraces consolidation.
BCE chief executive George Cope acknowledged that regulators here and elsewhere will be watching how the U.S. sorts out the competitive landscape in a 5G world.
“Anyone who’s deploying 5G is going to have to deploy fibre back-haul. That takes a lot of scale and a lot of size,” Mr. Cope told reporters after the company’s annual meeting this week.
For now, at least, Ottawa seems more focused on fostering multiple players and cheaper wireless plans.
And yet governments in Canada clearly understand that 5G is an expensive proposition. In March, Ottawa and the governments of Ontario and Quebec announced a $400-million partnership with a collection of private-sector technology companies to create an early 5G research platform. The three governments are investing $67-million apiece in the venture, alongside Ericsson, Ciena, Thales, IBM and CGI.
“5G is the gateway to the future, and we are just on the brink of this technological revolution,” federal Innovation Minister Navdeep Bains said at the funding announcement.
But rolling out 5G on a much wider basis will require a lot more investment, and much more spectrum capacity than the federal government has so far made available.
Industry groups have complained that Ottawa is moving too slowly to allocate the radio frequencies that wireless carriers will need to provide 5G service.
For his part, Mr. Bains said he’s being cautious about divvying up this wireless spectrum because it’s a critical part of setting the ground rules for the future.
“5G has enormous potential for innovation and we don’t want to rush things,” the Minister told the Canadian Press last month. “We want to make sure we get things right.”
Allocating more spectrum to smaller players might be good for competition and consumers. But it could inhibit the spread of 5G technology, which will be driven by the big guys Rogers, Bell and Telus.
Getting it done over Canada’s vast geography will require much more co-operation between players, if not outright consolidation.
Ottawa may find that pushing wireless affordability is at odds with accelerating the deployment of a technology that could revolutionize the way we live and work.