5G tech upgrade: Focus on value extraction
State-owned Teletalk would like to be the lead deployer of 5G gears to stimulate competition for upgrading the country's mobile technology infrastructure, according to the media report. But depleting foreign currency reserve has postponed 5G technology adoption in Bangladesh-as more than 70 per cent of the project cost would go for import. Does it mean that if there were adequate reserves, Bangladesh would have opted for being an early user of this latest mobile communication technology? Through such an austerity constraint decision, is Bangladesh at risk of depriving itself from economic benefit of the latest technology development?
Let's draw a lesson from South Korea. Upon incurring a cost of $20 billion in setting up 215,000 5G base stations for offering low-end services to 45 per cent population, South Korea figured out the need for $370 billion to roll out the fastest 5G services for all citizens. But unlike 4G, there has not been adequate additional traffics to justify the cost. As Bangladesh's geography and population are far larger than South Korea, Bangladesh would likely require far more than $370 billion to deploy a nationwide high-end 5G network. Does it mean that Bangladesh's economy would gain far more than this cost of deployment? Common sense tells that it would not likely happen. Instead, no estimate suggests that Bangladesh's foreign currency earning capability will support such import-based costly deployment. Hence, it's time to look for economic value creation prospects before we propose for technology upgrade. Otherwise, the decision to pursue 5G gear deployment alone runs the risk of keeping Bangladesh's foreign currency reserve crippled over the next decade.
In the life cycle of wireless communication, 5G is the latest. Of course, it has superior features than the previous 4G in terms of bandwidth, latency, energy, and capacity. There is no denying that cellular voice communication has been an excellent help for deriving socio-economic benefits-by increasing tele-density. The upgrading of mobile infrastructure with 3G and 4G having data handling capacity has also been a contributing factor. But that does not necessarily mean a natural correlation between advanced technology deployment and economic benefit-giving us endless prosperity from importing and deploying the latest technologies? Profitable economic value extraction demands appropriate applications-which do not naturally exist. As the financial benefit from technology progression shows an S-curve-like pattern, there is a need for cost-benefit analysis.
NO NATURAL CORRELATION BETWEEN TECHNOLOGY UPGRADE AND ECONOMIC VALUE CREATION: Of course, technology upgrade helps us in getting our jobs done better. But there is no natural correlation between the adoption of high-end technology and economic return. For example, automobiles offering increasing speed has little value to add to commuters of Dhaka city. Similarly, what is the value of adaptive cruise control and many other advanced features of the latest automobiles in driving highways of Bangladesh? But those features are highly useful for safe high-speed driving on the expressways of developed countries. Similarly, although refrigeration is immensely useful in food storage, what is the additional value we derive by turning our office buildings into centrally air-conditioned glass towers? Hence, before we proceed to technology upgrade, we should pay attention to the relevance of advanced features in creating added value in the context we will deploy them.
USAGES OF MOBILE INTERNET IN BANGLADESH: According to a media report, the average monthly data usage in 2008 was 208 megabytes (MB) per customer in Bangladesh, which has grown by 23 times by 2022. Furthermore, there has been accelerated growth in mobile internet subscribers reaching 115 million by June 2022. As a result, international bandwidth consumption has grown from 7.5 gigabytes per second (Gbps) in 2008 to 3,850 Gbps by 2022. Of course, it has been a phenomenal growth. But what are the purposes of driving such growth? According to different reports, social media has been the underlying cause. According to a study (reported by the media), in January 2021, Bangladesh had 41 million Facebook users. Another dominant source of data usage has been YouTube. Due to the technology upgrade from 3G to 4G, data usage almost doubled over just one year (from 2017 to 2018). There is no denying that there have been many productive usages, but the economic benefit from the growing consumption of data through smartphone-centric social media and YouTube raises questions.
PURPOSES OF DEVELOPING 5G TECHNOLOGY UPGRADE: In terms of speed, 5G is 100 times faster-very encouraging indeed. The most important differentiating feature of 5G is the latency, as low as 1m sec, while 4G incurs 100 ms. But what does it take to derive economic benefit from the higher speed and extremely low latency? Are conventional usages of mobile internet like sending e-mail, downloading educational content, having video conferencing in delivering remote services, or consuming social media and entertainment content over Facebook, YouTube, and others good enough? Unfortunately, NO. Those features have been targeted to benefit from machine-to-machine real-time communications, like connected automobiles for high-speed synchronised driving. Where is such scope in Bangladesh? Another superiority of 5G over 4G is the capacity, a metric of how many devices could be simultaneously connected per sq km area.
Contrary to 4G's capability of connecting 4,000 devices, 5G can support 1 million devices per sq km. Yes, in some cities like Tokyo or New York, there may be a demand for connecting far more than 4,000 smartphones, cars, security cameras, smoke detectors, washing machines, and many other Internet of things per sq km area, creating the demand of replacing 4G network with 5G. But will such demand show up, over the next 5 to 10 years, in cities like Dhaka?
5G TECHNOLOGY LEADS USERS FOR UPLIFTING LOCAL TECHNOLOGY VALUE ADDITION: Countries the USA, Japan, South Korea, and China have been after adopting the latest technologies to increase value addition capacity of the local technology industry. For example, China looks upon 5G as a stepping stone for establishing a footprint in the global technology industry. Hence, in addition to supporting 5G R&D, these countries have been at the forefront of adopting it as lead users. In addition to developing exportable 5G technology gears, these countries have also been leveraging it for developing other technology export items. For example, China has been desperate to create an edge in connected and autonomous vehicles by leveraging 5G. South Korea, the USA, Japan, and several other countries have similar agenda. Unfortunately, technology-importing developing countries like Bangladesh do not have such value extraction windows. Hence, the return on investment of being lead users of 5G and many other latest technologies varies widely across countries.
As purposes widely vary across the countries, the mindset of following others, even if adequate foreign currency reserves were available, is not justifiable. In retrospect, Bangladesh suffered from significant wasteful investment in the telecom sector due to inadequate analysis and a lack of foresightedness. For example, imported WiMax and wireless local loop-based PSTN network equipment became obsolete far before their productive life. Hence, as opposed to adopting 5G and any other technology upgrade, the focus should be on productive usage and the value we derive from justifying the return on investment. That does not necessarily mean that Bangladesh and other less developed countries should be laggards. Instead, the focus should be on improving economic capacity for deriving profitable returns from the latest technologies-leading to the journey of leveraging unfolding technology possibilities through locally produced knowledge and ideas.
M. Rokonuzzaman, Ph.D is academic and researcher on technology, innovation and policy.