The 5G future is arriving faster than many had predicted. For a struggling telecom industry, it still can’t arrive fast enough.

The mobile industry has left behind an era of easy growth, driven by smartphone and tablet adoption. And newly hyped innovations like virtual reality and the Internet of Things haven’t yet picked up the slack.

But as telecom leaders gather in Barcelona for Mobile World Congress this week, the mood is imbued with newfound optimism. That’s because amazingly, the industry has managed to put aside the squabbling and politics that usually accompany a new wireless standard to place 5G on the fast track to reality. With momentum building for actual rollouts later this year, there is hope that 5G networks will soon release an avalanche of investment and inspire a wave of new services that profoundly change the world while also returning the telecom industry to a new era of prosperity.

Yet before the industry can spin spectrum into gold, it must confront a whole new set of challenges on the road to 5G glory. Speaking at an Intel press event Sunday to discuss the 5G experiments at this year’s Winter Olympics, KT (formerly Korea Telecom) executive vice president HongBeom Jeon said the company is increasingly focused on just what people and businesses can do with an almost unfathomable amount of mobile bandwidth.

“The big issue is if 5G can make money for us,” he said, as the crowd laughed nervously. “It’s not only the technical issues. It’s the business issues. At the Olympics, we demonstrated many interesting applications. But we don’t know what is the killer application for 5G.”

The need for speed

By the numbers, this should be an extremely grim MWC gathering.

Last week, Gartner reported the first year-over-year decline in smartphone sales for the critical holiday quarter since 2004. Once a hotbed of smartphone launches, this year’s MWC announcements of smartphones didn’t generate much excitement, an indication that smartphones seemed to have hit an innovation plateau for the moment. And many companies, including Xiaomi, chose to postpone their announcements.

The malaise extends beyond gadgets. Verizon’s annual revenue in 2017 was still below its peak in 2015, while AT&T reported that annual revenue in 2017 was down from 2016. Intel and Samsung have returned to growth thanks to stronger chip sales, but Qualcomm has reported three straight years of sales declines. Meanwhile, equipment maker Ericsson said it had cut 10,000 jobs, while rival Nokia continues with thousands of layoffs that were part of a $1.3 billion cost saving program announced a year ago.

But rather than mourning, the telecom industry rides into MWC on a tidal wave of 5G announcements over the past two months that include network launches, chipsets, equipment architecture, and even some progress on endpoint devices.

“This industry badly needs 5G,” said Stéphane Téral, executive director of research analysis, mobile infrastructure, and carrier economics for research firm IHS. “They are trying to revive the industry. The idea is to pull the whole infrastructure business out of its funk.”

AT&T, Verizon, and Sprint have all announced timetables for commercial 5G rollouts in the U.S. ranging from late 2018 to 2019. China Mobile and Japan’s NTT Docomo are targeting 2020 for its 5G launch. On the chip side, Qualcomm has been making an aggressive push, including signing deals with 19 phone makers and 18 carriers for 5G. (Qualcomm’s 5G traction has also made it the target of a hostile takeover bid from Broadcom.) And Intel has partnered with PC makers to develop 5G-enabled laptops for 2019.

Much of this is happening even faster than many in the industry would have predicted at MWC a year ago. That’s because in December, the 3GPP industry group formalized the first set of standards for 5G, which were sufficient to let hardware and chip companies start building equipment. Indeed, on Sunday, Huawei announced the first commercially available 5G chipset. A second set of standards is expected to be finalized in June.

In past transitions, such as those from 3G to 4G, industry players waited until standards were finalized before initiating more serious development standards. But the existing 4G LTE networks, or “long-term evolution,” were designed knowing a new standard would come along eventually. LTE will allow carriers to evolve those current networks rather than build new networks from scratch.

That also means that with standards coming together quickly, players across the industry have already been conducting trials before the final standards were locked in.

“It allows the silicon guys to start building the silicon based on the lower layer of the spec, and then upper layer gets finalized by June,” said Gordon Mansfield, AT&T’s vice president of RAN and device design. “In the past, it was 18 months after a standard was completed before commercial deployments. Now it will be within six months. It’s a major acceleration from previous generations.”

Baby 5G steps

This accelerated timetable for 5G, however, has left many players scrambling to develop the products and services to leverage these new networks.

This is not an unusual dilemma. With any network transition, whether it’s mobile networks moving from 2G to 3G or home networks moving from dial-up to broadband, it’s not obvious just how people will use all that bandwidth. But in the past, the basic market appeal was compelling enough from the start to justify the massive infrastructure investment: Whatever people were already doing, they would be able to do it much faster and more often.

5G is a different kind of beast. While the current 4G LTE offers theoretical speeds up to 100 Mbps, 5G will eventually offer 20 Gbps. But the technical appeal for 5G goes beyond that. 5G will allow a nearly limitless number of connections within a small area, and delays in data transfer, known as latency, will virtually disappear. That combination of speed, density, and fluidity is what potentially makes 5G far more radically transformative than recent network evolutions.

“Everyone questions what you’re going to do with it and why anyone would need it,” Mansfield said. “It’s going to be very interesting to see how people might be able to use 5G’s capabilities.”

Exciting, but it also means the telecom industry faces an unprecedented degree of complexity to realize the full potential of 5G and make it a business success. Where past upgrades were about faster smartphones and tablets, 5G will be driven by the development of thousands and thousands of devices and endpoints that connect factories, self-driving vehicles, fields of robots, and virtual reality services that no longer need to be tethered to a PC. And of course all the uses that no one has even imagined yet.

But those more fanciful uses, in terms of both the business cases and the endpoint technology, are far from ready.

Instead, initial rollouts are focusing on more straightforward services, such as selling faster connections, hoping that will be sufficient to justify deployments. In some cases, companies will use 5G to sell fixed wireless connections that replace cable or landline connections, or to deliver broadband to places where it previously couldn’t reach.

In recent days, Samsung and Huawei both announced customer premise equipment that would allow homes and businesses to receive 5G connections. Huawei said its first commercial deployments would “take place in buildings and densely populated urban areas.”

Téral said this is a logical way to start the rollouts, but it will be far from transformative. And he worries the hype carriers are making around 5G is going create the impression that the initial reality is a letdown.

“Despite all these announcements, there is going to be a lot of disappointment,” he said. “This is not something you’re going to have on your smartphone for a long time.”

The great leap forward

As usual at MWC, telecom companies aren’t being shy about letting their imaginations run wild. Roaming the showroom floors, one can find displays for autonomous flying taxis, virtual reality surgical training programs, futuristic smart city platforms. It is a nonstop digital Wonkaville of wireless delights, minus the Oompa Loompahs.

Above: Huawei’s MWC booth displays an autonomous air taxi.

Image Credit: VentureBeat/Chris O'Brien

But many of these gadgets lie somewhere between the fever dreams of engineers and the research lab. For those that have progressed further — say, more sophisticated virtual reality experiences — it’s not clear what the actual business cases look like.

Take the VR experiments that Intel did with KT at the Olympics. Attendees could use special VR headsets and tablets to watch livestreamed, 360-degree views of some skiing and ice skating events. It was a technical success. But imagine someone wanted to do the same for the 2020 Super Bowl. Would that VR viewing be sold by the cable provider? The broadcaster? The NFL? And would there be enough of the right VR headsets in use to justify someone paying to place the right cameras around the field?

Reinventing entertainment will be tricky enough. But imagine going to a factory owner and explaining the wonders of 5G and saying all their manufacturing systems could be reinvented. The World Economic Forum has noted that adoption of so-called Future of Production technologies is already lagging because factory owners find them too complex and remain dubious about the benefits. 5G will only make that calculation even more complicated.

In January, Spanish carrier Telefonica decided to tackle that adoption problem head on by partnering with Nokia and Ericsson to build 5G networks in two small towns: Segovia and Talavera de la Reina. Telefonica will use the towns as testbeds where partners can experiment with 5G connected services for consumers and businesses.

“With 4G, there was a very clear demand,” said Javier Gutiérrez, director of strategy and network for Telefonica España. “But with 5G, we can’t say the same. The killer applications, we’re doing a lot of market research because we don’t want to build something and no one is using it. There are concept use cases. But the services are not developed yet, and they are not developed commercially. This is very important in terms of the value proposition for 5G. Are these uses commercially interesting or not?”

And before such things are even possible with 5G, the industry still needs to figure out the architecture and such things as the endpoint device designs. Even when those are in place, conceptions of data centers will have to be rethought. Several speakers at MWC worried that the current centralized data centers companies use won’t be able to handled the exponentially larger amounts of data generated as billion and billions of objects get connected. Companies will have to find ways to process that data closer to the endpoints to make it effective.

“The size of the data we have to deal with is going to be huge,” said Kenichi Murata, general manager of connected strategy department at Toyota. “It should be handled somewhere in the network. The centralized cloud is not capable of not doing that.”

Nokia was one of the equipment providers in recent weeks to unveil an end-to-end network solution, which it dubbed Future X, to allow development of these next generation services to begin. Jane Rygaard, head of 5G marketing at Nokia, is confident that while there are still huge challenges, the more transformative use cases will emerge as more people have access to 5G. “It’s the earlier adopters in previous generations who came up with the right business cases over time,” she said.

Rushing slowly in the future

ARM, the leading maker of chips for mobile devices, doesn’t plan to sit around and wait for things to evolve. Last year, the company hired Drew Henry, formerly of Silicon Graphics, Nvidia, and SanDisk, to be senior vice president and general manager of a new Infrastructure Business Unit it created. The mission of this new unit was to start co-designing products and services with potential partners so that ARM could simultaneously start work on the necessary chips to power them.

“I’m thinking about it from the context of what needs to happen when you have a trillion devices at the edge,” he said. “And what is the way all those devices are going to get connected. And what does it mean for the world to have a trillion devices connected. The architecture of that is still in its early days.”

But from his initial work, he’s also felt a surge of excitement about the momentum that is building. He said it’s hard to find a company in any industry that’s not thinking about the implications of 5G. And that’s generating some interesting conversations as everyone tries to figure out what 5G means for their industry and their lives.

Even more thrilling for Henry, however, is the realization that many of the companies that will drive some of the biggest transformations and innovations around 5G may not even exist yet.

“There’s going to be a new class of companies that are going to show up because of this transition,” Henry said. “There’s going to be big IPOs, maybe some of the biggest we’ve seen. It’s going to be fun.”