5G is coming.
Now if we can just figure out what it’s good for.
That’s a little bit unfair, but it does reflect some of the talk around the mobile connectivity standard. What types of business will it support? What will emerge as the “killer use case” for payments and commerce?
As one observer put it: “The fifth generation of connectivity, pithily called 5G, will be ready for prime time later this year. Software is being tested, hardware is in the works and carriers are readying their plans to deploy 5G in select markets by the end of 2018.”
The stakes and expectations are obviously high.
Supporters of 5G say that the faster speed it promises, along with its connectivity capabilities and the long battery life it provides for sensors, will together promote payment- and commerce-related activities, virtual and augmented reality, autonomous driving, industrial automation, the further spread of Wi-Fi-enabled appliances, vehicles and other devices, and other tasks.
That said, the most noteworthy uses of 5G, at least early on, might be far from the direct realm of retail and payments, and involve industrial uses such as better communication among factory robots, or more efficient logistics at container ports. A major 5G trial involving container ships is underway in Hamburg, in fact.
“By 2025, Hamburg will be processing about 18 million containers each year, as well as tens of thousands of trucks per day, self-driving vehicles and about 100,000 sensors, all sending and retrieving data to ensure fluent processes,” said Volker Held, head of Nokia’s 5G market development. “This scenario calls for a new kind of connectivity.”
Still, it’s possible to take a closer look at some areas where 5G may or may not make a big immediate impact on payments, commerce and associated activities.
Most analysts seem to agree that the connectivity standards will be a big player in the world of connected vehicles.
A European bureaucratic debate that could be wrapped up by the end of the year pits the use of 5G as the connected car standard against existing Wi-Fi technology. The question involves how connected cars communicate with outside networks, an area that touches multiple issues related to web-enabled driving – including safety, data collection and management, payment and commerce features, and the further spread of the Internet of Things.
“While the car itself requires relatively small amounts of data, as we move toward self-driving cars (or, more realistically in the nearer term, assisted driving models) they will become both more data hungry, and require lower latency,” said Eddie Hold, president of the NPD Group’s connected intelligence practice area. “Both of these needs are addressed with 5G.”
But as the ongoing European debate shows, the issue remains in its infancy. The connected car ecosystem is still emerging, and the demand for the high data flows enabled by 5G are not yet there. And there is no indication yet of whether 5G data pricing will be low enough initially so that owners of all those connected cars are not hit with high monthly bills.
The new world of 5G also could give retailers, brands and marketers even more insight into how consumers shop and buy. That’s the position of mobile operator O2, among others. “5G will evolve the fixtures and fittings of physical stores to become better connected to shoppers’ smartphones and home appliances,” the company said. “It will allow retailers, advertisers and service providers to leverage real-time mobile data to deliver an easier, more engaging and hyper-personalized experience to citizens.”
Online shopping and delivery — especially the so-called “last mile” — will also benefit from 5G, O2 said, thanks to “low-cost 5G modules [that] will enable better tracking services and allow couriers or drones to redirect parcels moments ahead of delivery.”
The spread of 5G also could help retailers give consumers a more engaging shopping experience — and engagement is one of the big goals these days for commerce providers, as merchants try to go beyond offering just transactions.
According to Hold, an “easier target for bigger, faster networks” than connected vehicles “will be virtual and augmented reality, which should require faster data in order to offer a seamless experience. The benefit here is that the consumer will see the logic of an AR/VR ‘premium service level of data.’” Of course, he cautioned, that “depends on the consumer demand for mobile-based AR solutions.”
Not every person watching the development of 5G is so optimistic about that, predicting that such use cases as AR and VR will perhaps not get the immediate boost that some might expect — or, more specifically, will fall short of the marketing hype, at least in the short term. “When the first 5G networks are launched in 2019 and 2020, the only use case that will warrant billions of dollars of investments is mobile broadband capacity,” said Prakash Sangam, a wireless marketer, in a recent Forbes column. “As networks grow and use cases mature, those exotic apps may become the next phase of 5G.”
Major commerce and payments players are working to shape the first, second and no doubt additional phases of 5G.
That includes Tencent, one of China’s leading providers of internet services (and developer of WeChat), which is working with Nokia to carry out joint research and development work to explore the potential of 5G for new applications. The two companies said they would leverage artificial intelligence (AI) and automation enabled by 5G to promote international standards and an open source ecosystem to expand the development of new services.
Anticipating what the future might hold is an old game of mankind — one that became much more common as the Enlightenment and Industrial Revolution turned humanity’s gaze away from the past and toward the coming decades and centuries. But with 5G, a part of that future is almost here – and now the fun part starts, the part about seeing what sticks and what won’t.