With connectivity widely recognised as a key driver of the post-Covid-19 economic recovery, GCC countries are poised to expand their 5G networks.
5G in the GCC
The UAE unveiled its Industry 4.0 initiative in October 2021 to increase innovation and productivity, lower the industrial sector’s carbon footprint and add some $6.8bn to the economy by 2031. The programme is a cornerstone of the government’s roadmap to ensure that the economy remains dynamic over the next half century. The plan will leverage Fourth Industrial Revolution technologies such as automation, additive manufacturing, blockchain, artificial intelligence (AI) and the internet of things (IoT).
These technologies depend on 5G connectivity to generate optimum value, and plans to expand coverage are under way through a partnership between Abu Dhabi-based Etisalat and Sweden-based Ericsson. The country already boasts the world’s fastest mobile network and the GCC’s fastest fixed network. In addition, it had the highest worldwide fibre-to-the-home (FTTH) penetration rate between 2019 and 2021.
One area in which 5G could add significant value is smart agriculture. For example, in the city of Al Ain, located in Abu Dhabi, industrial farmers are keen to bolster digitalisation by expanding the use of remote sensors and robotics, among other methods. This is just one way 5G can make industry more sustainable and productive in the region. “Increasingly clients want to feel they are part of sustainability efforts, and that these efforts lead to tangible realities. In this regard, 5G can be a key enabler, thanks to the decentralised control and monitoring it can provide across facilities and systems,” Feras Albanyan, CEO at real estate development company AQALAT, told OBG.
Other GCC members have also turned their attention to expanding 5G coverage. In a recent report, Ericsson anticipated that 5G will account for 73% of all mobile subscriptions in the GCC by 2026. This would represent the second-highest 5G market penetration in the world.
In January 2021 Bahrain became one of the world’s first countries to achieve nationwide 5G roll out, supporting the expansion of the digital economy. Elsewhere, Saudi Arabia’s Salam – known as the Integrated Telecom Company until June 2021 – is engaged in expanding 5G and FTTH in the Kingdom, in line with Vision 2030.
Cautious Optimism
Despite the momentum, there are unknowns regarding the wholesale 5G rollout. “5G is far superior to 4G, but operators are often trapped by a purely marketing-driven approach to investments in 5G,” Osama Al Dosary, CEO of Salam, told OBG. “The fear of telecoms services being perceived as utilities generates enormous pressure on operators to seek ways to differentiate themselves. Yet it is important to prevent a disconnect between marketing discourse over what 5G means in terms of added functionalities and the real return on investment,” Al Dosary added.
A cautionary tale comes from China, where, after years of investment, many major 5G operators have recently begun to dial back rollouts and focus on commercial applications that can be replicated at scale. A further challenge is the expense and scale of building ICT infrastructure and supplying global coverage. Lastly, there are doubts about whether customers appreciate the benefits of 5G. In a recent survey, US consumers were largely ambivalent about 5G, with roughly 67% saying they are not likely to change from 4G, and another 19% saying that they did not care. It remains to be seen whether 5G will face similar issues in the GCC, although it should be highlighted that the region is already a world leader in terms of internet usage. At the end of 2020 it had the highest average monthly data traffic per smartphone globally.
