A technician from South Korean telecom operator KT checks an antenna for the 5G mobile network service on the rooftop of a building in Seoul on April 4, 2019. Photo: AFP/Jung Yeon-Je

At 7 am on Friday, a South Korean will buy a Samsung S10 Galaxy smartphone at a store in Seoul’s funky Gangnam district. That simple act will inscribe his or her name into mobile telecommunications history as the first consumer on Earth to enjoy access to nationwide 5G services.

The PR stunt, arranged by telco KT and including a special early-morning store opening, is expected to seal South Korea’s victory in the race to be the first country with fifth-generation mobile networks. While US telco Verizon had been set to steal a march on South Korean service providers by launching services in two cities on Wednesday, US time, Korea announced late Wednesday – two hours before Verizon – that it would release 5G-enabled smartphones that evening.

In fact, a handful of celebrities had already been given early versions of the Samsung Galaxy S10, 5G-enabled smartphones as part of glitzy launch events held by South Korean telcos earlier this week. But more significantly, various companies in South Korea quietly launched corporate, non-public 5G networks in December.

So will that “official” sale at 7 am on Friday, April 5, 2019, be a world-changing moment? Probably not.

Many have hailed 5G, which offers data transmission speeds 20 times faster than current mobile services, as a central plank in the “fourth industrial revolution.” Some expect it to impact sectors as wide-ranging as media content, manufacturing, medical services and automotives.

But pundits also say the effects could take months or years to manifest themselves, and even market players say they are unsure how they will navigate this “blue ocean” market.

Test lab of tomorrow

As it did with broadband internet and Code Division Multiple Access mobile telecoms, South Korea is well positioned to lead the way in the 5G space. “Korea is a small market in terms of subscriber base, but is always in a good position to implement tech due to the eco-system surrounding devices, the small land mass, an internet-savvy population with adequate income and strong handset makers,” Ro Seung-joo, an internet analyst covering Seoul and Tokyo at CLSA, a  securities house, told Asia Times.

“The government once used being a leader in IT as a national brand, so they have high interest in achieving this status, and did it with this comical story,” he added, referring to the late Wednesday announcement that South Korea would be the first to market with 5G.

While Verizon will be up there with the Korean telcos, its coverage is tiny. SKT and KT, South Korea’s top two service providers, are offering coverage in all majors cities, universities, highways and subways.

Ro expects China and Japan to follow South Korea late in the year, while Europe and other developed markets will follow in the second half of this year and next year. All this means launches will aim at tech-centric early adopters. “The majority of consumers will not rush to upgrade to 5G,” Ro predicted.

Further limiting immediate take up is a lack of devices – only Samsung has a 5G-ready smartphone in Korea.

On the surface, the possibilities of ultra-high speed, low-latency, highly secure wireless services look enticing. Service provider KT noted that 5G is about 20 times faster than existing services. For example, downloading a movie that takes 30 seconds using current high-speed services will take less than one second in 5G.

Much hangs on the amount and quality of content. “Whether it is enough for consumers to get wildly excited depends on how much platform and content players offer in terms of new services,” Ro said.

The technology is expected to be a starting point for ultra-high-definition 3D content such as virtual reality (VR) and augmented reality (VR). This means users could, with the appropriate hardware, experience live concerts and sporting events, vividly, 360-degrees, without actually being there.

SKT and KT have already showcased some of the apps they will be running in the consumer space. The focus is heavily on VR, AR and gaming. Provider SKT, which anticipates having 1,000 forms of 5G content online by the year’s end, hopes to have one million 5G subscribers by December. Monthly services are priced from 55,000 won ($48) to 125,000 won ($100).

Nationwide, SKT has installed 34,000 base stations, KT 30,000 and LG Uplus 18,000.  Although the carriers have not released the amounts invested, they do not come cheap.

New investment in 5G this year by all three carriers is expected to about 3 trillion won ($2.6 billion), a South Korean government source told Asia Times on condition of anonymity.

But 5G networks are not exclusive from existing networks. “The capex we are talking about for this year is going to be north of 7-8 trillion won ($6.1-7 billion),” said Ro Seun-joo, an internet analyst who covers Seoul and Tokyo at securities firm CLSA. “This includes existing maintenance capex.”

Over the longer term, this will rise as networks are upgraded. “When [Korean telcos] invested in the 4G network, they invested around 22 trillion won ($19.3 billion),” Park Jong-sun, a sector analyst at Seoul’s Eugene Investment told Asia Times. “And there should be more base stations for the 5G network, so 5G investment is estimated to amount to 25 trillion won ($21.8 billion).”

When it comes to hardware, China’s controversial Huawei, under sustained attack in the United States and elsewhere for the security risks it allegedly represents, is widely seen as a leading player in 5G equipment. In South Korea, however, it is barely to be seen. Huawei gear is not being used by either of the leading Korean telcos, SKT or KT.

SKT is using Ericsson, Nokia and Samsung gear for 5G, in an upgrade of its existing service network, a senior executive told Asia Times, although he added that there is no governmental or legal reason why Korean companies should not use Huawei.

This raises the possibility of Huawei entering bids for future contracts. Only the number three carrier, LG Uplus, is using Huawei technologies.

Winning sectors

SKT reckons 5G will usher in “hyper-innovation,” while KT says it means “super-powered” services. But vagueness hangs over where the technology will lead.

The 5G data speeds, and the services enabled by it, suggest that wireless devices could overtake wired, said Ro. That could mean a further boon for mobile device manufacturers at the expense of PCs.

When it comes to mobile manufacturers, South Korea leads the pack with Samsung being the only firm offering 5G phones. LG’s offering is due in June, while Apple’s 5G phone is not expected to land until next year. In the US market, Motorola is supplying Verizon customers with 5G handsets

Asked which sector will emerge as the winner, SKT Executive Vice-President Yoon Yong-chul responded: “Media,” before adding: “AR, VR and hardware.”

Ro agreed – but with provisos. “From the consumer perspective, faster speeds and higher bandwidths allow better user experiences in terms of content in VR and AR, so if content providers can capture and provide these new levels of experience, they will be the beneficiaries,” he said. “But we don’t know who will make those hit contents – be it in gaming, drama or film.”

Looking more broadly, Ro was upbeat on hardware. “Our take is that the industry IOT [internet of things] side is a lot more exciting, and those who provide equipment for 5G technologies will benefit, but it is elusive how telcos can capture revenue now.”

Ro also pointed to smart factory automation-related companies, cloud companies and data storage companies as likely beneficiaries.

With a range of South Korean companies having quietly installed corporate, in-house 5G networks in December, manufacturing applications are already in play. “We have been living in a world where you had to put on human hands,” said an SKT official. “But now smart factories can deliver more convenient services.”

One example is Myungwha, an automotive parts company and an SKT customer, that has been using a 5G network since December for its quality-control system. In this, multiple robotic cameras take 24 pictures per second and transmit footage of products under examination via 5G. The images are then analyzed, real-time, with zero latency, by AI.

SKT is also planning smart factory solutions with fellow SK affiliate Hynix, a semiconductor firm.

The 5G networks, with their minimal latency, high security and VR applications, are expected to enable highly sensitive and high-risk remote surgery. The low-latency, high-security aspects of 5G also make autonomous cars, and their backup data networks, a reality. A partnership is already underway involving BTW, Hyundai Motor, Seoul City and SKT.

According to a press release from Seoul City in January, a 5G convergence autonomous driving test bed will go operational in June in Sangam Digital Media City, a high-tech, media and residential hub in western Seoul. It will be the world’s first self-driving car test bed set on regular roads, the city said.

A CCTV control platform will monitor and control all self-driving situations, real time. All equipment, including 5G, high-definition mapping, car maintenance and parking facilties, electric vehicle charging station and rest and working areas will be incorporated. The test bed will enable companies to test and verify related technologies, free of charge, the city revealed.

 What impact?

In terms of the overall economic impact of 5G technology, some refuse to speculate. “That is too big picture to ask!” said Ro. Other researchers are less reticent.

According to KT Economic Research Institute, 5G will realize economic value of at least 47.8 trillion won ($41 billion) by 2030 in South Korea, creating about 960,000 jobs by 2035. Also, 5G is predicted to add value to the automobile sector to the tune of 7.3 trillion ($6.4 billion), manufacturing ex-autos 15.6 trillion won ($13 billion), health care 2.9 trillion won ($2.5 billion) and media 3.6 trillion ($3.1 billion).

But while jobs may be added, nobody is talking about how many jobs will also be subtracted, particularly with 5G enabling higher-than-ever levels of automation in driving, delivery and manufacturing.

And nobody expects a massive economic impact immediately. “I think in the long term, I am genuinely excited,’ said CLSA’s Ro. “It is a matter of time.”

But even expert players are unsure where 5G will lead. “5G is a blue ocean area,” Executive Vice-President Ryu Young-san of SKT’s Mobile Network Operator said to reporters on Wednesday. “We are going to explore as we go along.”

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