Tech Transformers

The $3.5 trillion 5G opportunity is at ‘crossroads’ as telco industry clashes over path forward

Super-fast 5G internet will be "revolutionary" and as critical to the future of the digital economy as oxygen is to humans, but the path to the new technology will likely be expensive and require unprecedented levels of co-operation in the industry.

That's the message from leading telecoms executives and regulators at Mobile World Congress, the industry's biggest trade show.

"If Europe is to remain a credible force in this global race, our industry should also move fast … to deploy and trial 5G capabilities," Andrus Ansip, vice-president of the Digital Single Market for the European Commission, said during a panel

"It can and will be a revolution."

From left to right: Ajit Pai, chairman of the U.S. Federal Communications Commission, Stéphane Richard, CEO of Orange, Andrus Ansip, the vice president of the Digital Single Market for the European Commission, and Mike Mike Fries, CEO of Liberty Global. The panel was talking to CNBC's Karen Tso at Mobile World Congress in Barcelona, Spain, on February 28, 2017.
Arjun Kharpal | CNBC

Currently 4G mobile internet is available, but 5G is in its infancy, with the telecoms industry figuring out how to define it and what the standards will be. The promise is that 5G will support technology from driverless cars to the millions of internet-connected devices. It will also mean that large files on smartphones could be downloaded in an instant.

"We think that 5G is going to really give birth to a global and ubiquitous global digital economy," Stéphane Richard, CEO of Orange, said on the panel.

"So 5G will be a hybrid network that will mix telecoms and IT products. Thanks to this technical features, 5G will be the answer to meet all specific needs as it brings connectivity that will become as important to our digital world as oxygen is for life."

The effects of 5G could be huge with a study commissioned by Qualcomm and released this year suggesting that the effects of the technology could result in real global economic growth by $3 trillion dollars cumulatively from 2020 to 2035.

A number of companies have earmarked 2020 as a year when 5G could potentially go mainstream, but not everyone in the industry is convinced.

"I think we are probably at the peak of inflated expectations on 5G," Bengt Bengt Nordström, CEO of Northstream, told CNBC by phone.

"We are not doing ourselves any favors if we are leading investors to believe that there is a trillion-dollar market when it's actually very hard to understand."

Nordström added that revenues among the broader telecoms industry has been in decline in the past few years. Mike Fries, the CEO of Liberty Global, questioned the willingness of telecom operators to invest in 5G, particularly in Europe.

"The one thing that will stop Europe … from realizing this 5G vision … is capital. The estimate is that it will take $275 billion in the U.S. to get 5G running. I don't know what the number is in Europe but probably not that different. And one of the things that will prevent the investment of capital, is of course, the regulatory environment or the competitive environment that makes the return on that capital very difficult," Fries said.

"We think 5G is actually at crossroads, it's not predestined, it really requires more than just spectrum and chips, it requires massive investment and that investment may or may not be forthcoming if the environment we operate doesn't become healthier."