Fri, Dec 28, 2018 - Page 11 News List

Analysis: Local telecoms reluctant to take the plunge on 5G

‘SMART FOLLOWER’:The government has established a task force to spur collaboration, but carriers balked at paying to create a testing ground for the technology

By Lisa Wang  /  Staff reporter

The nation’s telecoms are not aligning with the government’s eagerness to put Taiwan on the world’s 5G map as they balk at splurging on the expensive wireless technology that has no guarantees for quick returns.

The nation’s five wireless carriers have clearly said that they would not scramble to roll out 5G services, as they face big challenges ahead, including the absence of a profitable business model to sell the revolutionary technology, in spite of all the use cases that have been suggested.

A 5G use case and adoption survey released last week by Gartner Inc found that Internet of Things applications remain the most popular target use case for 5G, followed by video.

About two-thirds of organizations intend to deploy 5G by 2020, it said.

“We know enterprise clients will be early adopters of 5G technology. We also know the benefits of the technology, but people rarely talk about what will be the potential business models,” Chunghwa Telecom Co (中華電信) president Sheih Chi-mau (謝繼茂) said at a Taiwan Communications Society forum on Dec. 14.

“How to make profits from 5G technology is a real challenge for us,” Sheih said. “Whether 5G can create a blue ocean [for telecoms] remains a question mark.”

Local telecoms each burned up to NT$60 billion (US$1.95 billion) to obtain 4G spectrum and build 4G networks. Four years after the launches in 2014, carriers are still struggling to recover those investments.

Stiff price competition has been blamed for telecoms’ plight.

Over the past two years, 4G average revenue per user has dipped 32 percent to NT$555 in the second quarter of this year, government statistics showed.

Taiwan Star Telecom Corp (台灣之星) president Cliff Lai (賴弦五) made a bold forecast, saying that “5G technology will not be a profitable business by 2025.”

“We cannot even find a business case that would allow us to recover 5G investments in the short term,” Lai said at the forum.

Deploying a 5G network remains two to three times more expensive than the rollout of 4G, as telecoms would have to install many more base stations to ensure Internet connectivity to a massive amount of end devices that is 10 to 100 times faster and has a lower latency than 4G, Taiwan Star Telecom said.

Taiwan Mobile Co (台灣大哥大) is also conservative about jumping into capital-intensive 5G technology.

Company president James Jeng (鄭俊卿) said that the firm would not invest heavily in 5G within three years after the release of the 5G spectrum.

“Within the next three years we do not see any scalable business opportunities that are strong enough to support telecoms’ heavy investments on extensive 5G coverage like we did for 2G, 3G and 4G,” Jeng said.

The National Communications Commission has pushed back the issuance of 5G licenses from next year to 2020 due to technological hurdles and expensive telecommunications equipment in the initial phase.

Local telecoms are likely to commercially launch 5G services in the second half of 2020 or in the first half of 2021, about six months after the release of spectrum, Far EasTone Telecommunications Co (遠傳電信) president Yvonne Li (李彬) said.

In other words, Taiwanese telecoms would lag their global peers such as US telecom giants AT&T Inc and Verizon Communications Inc by about two years in offering 5G services. In the US, major wireless service providers have already begun providing 5G services.

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