Illustration by Mengxin Li

After years of speculation, 2020 was meant to be a big year for the implementation of 5G, the fifth generation of standards for broadband cellular networks. And somewhere between a pandemic and a mountain of misinformation fueled by conspiracy theories, there were a few major developments: Ericsson opened its first 5G-enabled smart factory in the United States, Apple unveiled its first 5G-enabled phone, and carriers like AT&T and Verizon have been preparing their customers for major transition. So has 5G’s moment finally arrived, and what will it mean for consumers? Here, alumni and faculty experts weigh in on some of the assumptions about a hyper-connected world.

The upgrade to 5G will be revolutionary for consumers.

The arrival of 3G, which delivered the iPhone to the world and made it mainstream, was the stuff of real technological revolution, says Alexandre Menard (MBA 2005), a senior partner at McKinsey Paris. Menard, who led the conversion to 4G and today heads the McKinsey Center for Advanced Connectivity, says that 4G was more of a step change by comparison. The advent of mobile video “unlocked completely new applications and use cases around video, and it completely democratized mobile data,” Menard observes. The jury is still out on 5G.

Experts agree that it will bring massive improvements: speeds 100 times faster than 4G, and latency—or time needed for information to travel between the device and network—reduced by a factor of 20. We will see vast increases in reliability and the number of devices connected to one antenna as well as reductions in the cost of data per gigabyte, Menard says. Beyond that, fixed wireless access could enable fiber-like speeds to homes or businesses with a mobile connection, which could be a game changer in developing countries where laying fiber just doesn’t make sense, although there are real questions about cost and sustainability.

Apart from the hard-core mobile gamers, though, what will the average consumer do with all this speed? Perhaps not much. The power of 5G starts to take shape only when you look at the B2B applications, Menard explains. He points to a number of tech disruptions that are happening in parallel, including low earth orbit satellites, cloud storage, edge computing, Internet of Things networks, applications for connected cars and smart cities, as well as analytics and AI. “Think about a world of the future where every traffic light, every car, every street light is connected and they all speak to one another.” These trends all complement and accelerate one another, Menard says, and that bigger picture starts to look like a revolution.

It’s unclear who will benefit the most.

Right now, carriers are spending billions of dollars on spectrum and infrastructure upgrades to deliver this technology, without really knowing if consumers want to sign on for these expensive new services. “If it’s just about the speed, there’s a lot of skepticism that there will be a willingness to pay more just so you can download your movies faster,” says HBS professor David Yoffie. “Most people studying this problem would say that if that’s the business model, it’s going to be highly problematic for the carriers.”

Looking back at 4G, the carriers weren’t the biggest winners. That distinction more likely belongs to Uber and Netflix, Yoffie notes. Uber could never have existed in a 3G world, and ubiquitous mobile video was impossible before 4G. The real winners are the companies that figured out how to do creative things that were unimaginable in a previous generation of technology, he says. Yoffie puts the challenge to his students in the EC course Strategy and Technology: “I tell them that this is real. This is not a hypothetical. This is the world as we will know it over the next five to six years. The exciting question is who will figure out the next Uber or Netflix-like model that can take advantage of the capabilities and deliver a spectacular amount of value.” Yoffie says he wishes he knew. “I wouldn’t be teaching anymore if I had all of the answers.”

The dawn of 5G will create a haven of opportunity.

Monaco, the world’s second-smallest country, implemented nationwide 5G coverage in 2019 and is providing a preview of hyper-connected life of the near future—and the kind of ecosystems that will take shape. “The arrival of 5G is a concrete example of how digital technology is being integrated into all areas of both our society and our economy,” says Frédéric Genta (MBA 2011), a member of Monaco government in charge of digital transformation. In short order, Monaco Telecom made public Wi-Fi available without the need for fiber, and its fire department can now deploy drones with high-definition cameras to the site of a fire, helping to inform decisions on the ground. It’s also testing a diagnostic app that relays data from the site of an emergency to the hospital to save time and, perhaps, lives. Fortunately there’s been only one fire since implementation and one opportunity to use the drones. “It was a success,” Genta concludes.

On the enterprise side, the deployment of 5G is creating an influx of companies that are eager to explore products and services on a 5G playground—like Teale, a smart-building management company, and the AR/VR entertainment company Vizua 3D. This is an important boost to the startup community, which is one of the fastest-growing sectors of the economy and one that could help shore up resilience in a country otherwise focused on tourism, Genta explains. (The coronavirus-related cancellation of the Grand Prix leveled a huge blow to the local economy.)

It is still early days for Monaco’s grand experiment, but 5G dreamers see the potential of this kind of innovation expanding exponentially and being the real engine of growth into the next industrial revolution. McKinsey’s Center for Advanced Connectivity has identified use cases across retail, health care, automotive, agriculture, manufacturing, media, and oil and gas, that it says could enable value creation to the tune of $2 trillion to $3 trillion in the next decade—a figure on par with the GDP of France or Italy.

To create a vision of what that might look like, Professor Yoffie handed the microphone over to Asha Keddy, a VP at Intel and a leading expert on the emerging technology, for his class on 5G in October. Keddy explained it in terms of Lego bricks: Imagine layer upon layer of innovation and opportunity, stacked in every direction, as companies in multiple sectors explore the many possible use cases, from consumer business to manufacturing and smart cities. Video content will continue to expand significantly, and autonomous factories aren’t far down the road. As people swap out their devices for the latest generation, and billions of devices come online, network capacity will have to scale up. “All of these factors play off each other and are force multipliers,” Keddy says, “and eventually, the whole world becomes one big connected computer.”

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