Telecom market entry barriers are expected to be torn down in the era of 5G as various services such as self-driving and smart city emerge as a new business model. Automakers are interested in building their own 5G networks for autonomous driving based on frequency allocation just like mobile carriers providing smartphone-based services.
According to industry sources, German automakers such as BMW, Volkswagen and Daimler are planning to set up their own 5G mobile networks by 2021 for their self-driving cars.
The German carmakers are aiming to produce self-driving vehicles from 2021. Hyper-speed, low-delay and ultra-broadband 5G networks are essential to that end. With German mobile carriers unlikely to build complete 5G networks by 2021, the carmakers are planning to set up such networks on their own.
BMW recently said that it is interested in building and managing its own 5G network and Volkswagen and Mercedes Benz said they shared the same interest. This has to do with their belief that their own networks would be less vulnerable to security risks and can facilitate response in the event of malfunction.
According to industry experts, the automakers’ plan is not highly feasible for now in that network configuration and management entail huge costs. In South Korea, for instance, three major mobile carriers invested no less than 20 trillion won for as long as eight years in order to set up 4G LTE networks. “With profit models based on self-driving vehicles still unclear, automakers lacking experience in the field of mobile communications are likely to find it difficult to set up their own networks,” one of them mentioned.
In South Korea, any third party other than the three major mobile carriers has to be designated as a telecom service provider in order to be able to set up its own network through frequency allocation. The telecom service provider is defined as a business providing wired and wireless communications services based on lines installed by itself and it has to make some payment to use a frequency band for a certain period of time. Although the Ministry of Science and ICT is considering changing its telecom service provider designation method from permission to registration, only entry barriers can be lowered to some extent while network operation costs remain unchanged even in that case. Under the circumstances, experts predict that initial self-driving services will be provided based on networks borrowed from existing mobile carriers.
Still, this is highly meaningful in that a new ecosystem can be formed in the era of 5G. This is because the main business models of mobile virtual network operators (MVNOs) in the industry are mobile phone-based services as in the case of the three major mobile carriers. In the 5G era, services promoting new types of communications like self-driving and smart city are expected to create a new mobile telecom market ecosystem beyond personal communications.