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ASCM Insights

Will Your Supply Chain Speed Ahead with 5G?

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Commercials for Verizon, T-Mobile, AT&T and other mobile phone carriers have been teasing the great new advances in service that will be made possible by 5G technology. Although many of the capabilities of 5G won’t be realized for a few more years, the new generation of mobile communication promises faster data speeds with less latency or delays than 4G or 4G LTE. Some 5G services will provide coverage areas with data speeds up to 100 times faster than 4G and almost instantaneous response times. For example, it can take almost six minutes to download a feature-length movie with 4G, which operates at 12-36 megabits per second (Mbps). With 5G, the same movie can be downloaded in as little as 15 seconds at a rate of 300 Mbps or faster (FCC 2020).

The latency feature might not be as noticeable to humans, though. 5G can use high-frequency millimeter waves (mmWaves), which does improve latency but only by less than 1 millisecond. In real-world terms, it takes both 4G signals and low-band 5G signals about 1 millisecond to travel from a device to a cell tower. It takes mid-band 5G signals about half a millisecond, and mmWave signals can make this trip in about one-quarter of a millisecond. When you consider that it takes 100-400 milliseconds to blink, this particular improvement will be imperceptible (O’Donnell 2020).

Still, 5G technology opens up many opportunities for mobile communication. 5G uses higher frequencies and a much broader portion of the radio spectrum than previous generations, which allows it to send more data more quickly and to more devices (Rundle 2020). This ultimately will give society a greater capacity for data transmission, which will provide for critical communications that require extreme reliability and service quality, especially those found in industrial settings (Burkacky et al. 2020). 5G can support smart car and smart city technologies; improve health care, manufacturing and retailing; and more.

5G applications in action

The first applications will build on the 4G infrastructure and primarily focus on consumer services, such as faster mobile phone connectivity, gaming, downloading, streaming and virtual reality.

As the 5G infrastructure expands, other applications in the business-to-business (B2B) arena will become possible. McKinsey & Company identifies the following applications as the most attractive 5G B2B opportunities:

  • Mobility systems: Connectivity will be the foundation for increasingly intelligent mobility systems. Although the automotive industry is at the heart of this, mobility is a broader concept that includes car-sharing services, public transit, infrastructure, hardware and software, and more.
  • Health care: Connected devices and advanced networks could transform health care. Low-latency networks and high densities of connected devices and sensors make it possible to monitor patients at home in real time, which could be a major benefit in the treatment of chronic diseases. Data can flow seamlessly throughout entire medical systems to facilitate smooth operations and coordinate care.
  • Retailers: Stores can use sensors, trackers and computer vision to manage inventory, improve warehouse operations and coordinate activities along the supply chain. Connectivity also can support frictionless in-store experiences by eliminating checkout or adding augmented reality services to share better product information. In addition, real-time, personalized recommendations and promotions can increase sales.
  • Manufacturing: Low-latency 5G networks can enable manufacturing and other advanced industries to run highly precise operations. Smart factories powered by analytics, artificial intelligence and advanced robotics can run at maximum efficiency and optimize and adjust processes in real time. These benefits can be applied on select assembly lines or across multiple plants (Grijpink et al. 2020).

Peter Fretty (2020) adds in an IndustryWeek article: “The three pillars of 5G — ultra-low latency, ubiquitous connectivity and massive data capacity — will enable connected, flexible and responsive manufacturing systems that are more resource efficient, more demand responsive and safer for workers. Manufacturing lines, for example, will see more equipment on the move — whether it is robots and cobots or production stations moving to reconfigure the factory floor. For this environment, wireless systems provide necessary flexibility.”

Others predict that the most relevant short-term opportunities for the 5G internet of things (IOT) will involve Industry 4.0, or the digitization of manufacturing and other production processes. In this segment, 5G will provide clear performance benefits for several use cases. In other B2B segments, such as smart city, smart energy and connected health, 5G IOT will be the technology of choice only for niche applications (Burkacky et al. 2020).

Roadblocks on the route to 5G

When you think about all of the exciting advances that will be made possible by 5G, you might wonder why the telecommunications and related industries are taking so long to switch over to this next-generation technology. The answer lies in the needs to develop the technology; design and implement the required infrastructure; and, finally, to gain the acceptance of the potential users of the new technology: 

Technology: To unlock the full potential of 5G networks, wireless providers need a sufficient mix of low-, mid- and high-band spectrum, which should be made available through a market-based, transparent set of forward-looking auctions (Melo et al. 2020). The U.S. Federal Communications Commission (FCC) is taking action to make additional spectrum available for 5G services. So far, it has released almost 5 gigahertz of 5G spectrum into the market, and it is working to release more than 600 megahertz of mid-band spectrum. The FCC also is working to improve the use of low-band spectrum and creating opportunities for the unlicensed spectrum (FCC 2020).

Once this technology is available, entities will have to work together to coordinate its function. For example, vehicle-to-infrastructure and vehicle-to-vehicle warning systems will require the collaboration of public infrastructure providers, rival automotive manufacturers, connectivity providers, technology players and equipment manufacturers. These groups will need to agree on technical standards as well as data security practices (Grijpink et al. 2020).

Infrastructure: The deployment of 5G services in the mid-band and high-band frequencies will be more challenging than it was for prior wireless generations because of the more limited range of the higher frequencies. To provide continuous coverage for fixed wireless access and mobile applications, 5G small cell sites must be lower to the ground and significantly closer to one another than previous wireless sites that were mounted high up on macro towers. The 5G wireless infrastructure will require 6-12 times more cell sites than earlier generations. Consequently, they will be deployed on nearly every city block. Service providers will need to focus deployment where there is the most need: in the busiest streets, plazas, neighborhoods and business centers. Small cell sites will be mounted on or within existing street furniture — such as stop lights or light poles — impacting urban aesthetics and utility operations.

One estimate projects that the United States could need as many as 800,000 5G small cell antennas, compared with the roughly 200,000 cell towers in existence today. One possible shortcut to this problem would be to use 31,000 U.S. Postal Service (USPS) sites to host some critical infrastructure. This could also help bring broadband service to rural areas (Office of Inspector General USPS 2020).

Another idea that looks promising is the use of private networks for individual companies, manufacturing facilities, distribution centers and other sites. Private 5G networks are like home wi-fi except, instead of a router, they use radios called cell sites, each with a range of a mile or more outdoors. Like a wi-fi router, a cell site must be tied to the internet through a physical cable or wirelessly through another cell site. One big difference is the software running the system. In a cellular system, all the traffic is tightly controlled and centrally organized, giving every connection enhanced speed and reliability. With 5G, it's suddenly possible for many companies — even rural broadband providers — to bypass the traditional network gatekeepers and create their own 5G wireless networks with more bandwidth than ever (Mims 2020).

Consumer acceptance: This situation can be described by Everett M. Rogers’ Diffusion of Innovation theory, which posits that the adoption of new ideas comes slowly in spite of early successes and lively promotion (Rogers 2003). However, given that people have been using the internet for many years now, the adoption process might be faster than it is for other innovations, but only time will tell.

In addition, there are a variety of cost considerations. The cost to install the infrastructure and upgrade technology will be significant. So far, billions of dollars are being spent to acquire spectrum availability and to convince consumers about the benefits of the technology (Duffy 2020). At the end of the day, consumers likely will be the ones to pay the bill for the technology as they pay for 5G services. Furthermore, the companies assuming the cost and risk of investment and managing the implementation may not be the ones that capture the ultimate financial gain. In health care, for instance, hospitals and health providers may be the ones to make the financial investments, train workers and change their day-to-day operations, but health insurers likely are the ones who will profit. Similarly, consumer internet, media and advertising companies have long profited from offering over-the-top services that run on networks built and maintained by connectivity providers, but the providers themselves have struggled to monetize this activity in a proportional way (Grijpink et al. 2020). If 5G is not a priority for an investor, that will slow the adoption and implementation process.

5G implementation schedule

The initial 5G systems will be installed in densely populated areas, such as major cities. This already is underway, as the major telecommunications companies are advertising. Extensions to smaller cities and rural areas will follow, often taking years to complete. The use of private networks may help to provide services, such as the project described by Christopher Mims (2020) in The Wall Street Journal: “In the hills of southwestern Wisconsin, atop grain elevators and silos, a small team of technicians is assembling a next-generation wireless 5G network piece by piece. They work for a rural broadband company, not a telecom giant, and their mission is bringing connectivity to homes that otherwise wouldn't have it.”

Another technology that some expect to aid in the extension of 5G to rural areas is the use of low-orbit satellites. By beaming broadband down from space, they could bring coverage to remote parts of the world where the economics do not work for laying fiber or building networks of towers. However, providing coverage requires a constellation of many satellites orbiting at once, making viability uncertain (Grijpink et al. 2020).

Although low-band applications already are being implemented, it may take the rest of the decade before high-band applications become a significant factor.

In summation, 5G is coming, but it’s not here just yet. For now, the next-generation technology is being designed with flexibility in mind to support future services and applications that may not even exist today. Those who stay informed about the technology and value investment in it will be prepared to take full advantage of the technology when the time comes. However, those who consider 5G as just another blip on the radar will probably end up on the outside looking in as others advance around them.

Editor's Note: This is the first article in a series about 5G from Richard Crandall. Read the second article, "5G Implementation Around the World." 

References

  1. Burkacky, Ondrej, Stephanie Lingemann, Markus Simon, and Alexander Hoffmann. 2020. “The 5G era: New horizons for advanced electronics and industrial companies.” McKinsey & Company, January. https://www.mckinsey.com/~/media/mckinsey/industries/advanced%20electronics/our%20insights/the%205g%20era%20new%20horizons%20for%20advanced%20electronics%20and%20industrial%20companies/the-5g-era-new-horizons-for-advanced-electronics-and-industrial-companies.pdf.
  2. Duffy, Clare. 2020. “How the 5G iPhone kicked off the latest carrier wars.” CNN Business, November 10. https://www.cnn.com/2020/11/10/tech/5G-competition-iphone-12/index.html.
  3. 2020. “5G FAQS.” FCC, October 21. https://www.fcc.gov/5G-faqs.
  4. Fitch, A. 2020. “Pentagon Readies for Battle in a 5G Future.” The Wall Street Journal, November 10. https://www.wsj.com/articles/pentagon-readies-for-battle-in-a-5g-future-11605048589.
  5. Fretty, Peter. 2020. “5G: Benefits Beyond Misconceptions and Concerns.” IndustryWeek, November 23. https://www.industryweek.com/technology-and-iiot/article/21148451/5G-benefits-beyond-misconceptions-and-concerns.
  6. Grijpink, Ferry, Eric Kutcher, Alexandre Ménard, Sree Ramaswamy, Davide Schiavotto, James Manyika, Michael Chui, Rob Hamill, and Emir Okan. 2020. “Connected world: An evolution in connectivity beyond the 5G revolution.” McKinsey Global Institute, February 20. https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/connected-world-an-evolution-in-connectivity-beyond-the-5G-revolution.
  7. Melo, Enrique Duarte, Val Elbert, Antonio Varas, Heinz T. Bernold, and Helen Kondos. 2020. “Building the US 5G Economy.” Boston Consulting Group, September 14. https://www.bcg.com/en-us/publications/2020/building-the-us-5G-economy.
  8. Mims, Christopher. 2020. “Private 5G Networks Are Bringing Bandwidth Where Carriers Aren't.” The Wall Street Journal, November 7. https://www.wsj.com/articles/private-5g-networks-are-bringing-bandwidth-where-carriers-arent-11604725218.
  9. O’Donnell, Bob. 2020. “5G Latency Improvements Are Still Lagging.” Forbes, February 18. https://www.forbes.com/sites/bobodonnell/2020/02/18/5G-latency-improvements-are-still-lagging/.
  10. Office of Inspector General USPS. 2020. “Next Generation Connectivity: Postal Service Roles in 5G and Broadband Deployment.” USPS, September 14. https://www.uspsoig.gov/sites/default/files/document-library-files/2020/RISC-WP-20-007.pdf.
  11. Rogers, Everett M. 2003. Diffusion of Innovation, Fifth Edition. New York: The Free Press.
  12. Rundle, James. 2020. “5G’s Early Business Adopters Explore New Generation of Wireless Applications.” The Wall Street Journal, November 10. https://www.wsj.com/articles/5gs-early-business-adopters-explore-new-generation-of-wireless-applications-11605027402.

About the Author

Richard E.Crandall, PH.D., CPIM-F, CIRM, CSCP Professor Emeritus, Appalachian State University

Richard E. Crandall, Ph.D., CPIM-F, CIRM, CSCP, is a professor emeritus at Appalachian State University in Boone, North Carolina. He is the lead author of “Principles of Supply Chain Management.” Crandall may be contacted at crandllre@appstate.edu.

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