5G Won't Send Capex Through the Roof, Say Euro Telcos

LONDON -- 5G World Summit 2018 -- European operators Swisscom and Three UK are moving aggressively to bring 5G services to market in the next couple of years, but they have played down expectations of a 5G-related boost in customer spending or a capital expenditure increase by their own companies.

In comments that will not be welcome to parts of the equipment industry, Bryn Jones, the Three UK chief technology officer, said he saw no reason for much increase in capital expenditure as his company starts to build a 5G network.

"Networks are like painting the Forth Bridge," Jones told an audience during a panel session at this week's 5G World Summit in London. "You roll out 2G and as soon as that is rolled out you start rolling out 3G. The capex is really substitutional and you manage within the envelopes."

The Forth Bridge is a cantilever bridge in Scotland that workers are constantly repainting to guard against rust. The analogy is apt in that operators start planning for the next generation of mobile technology as soon as they have finished investing in the current one.

Heinz Herren, the Swisscom AG (NYSE: SCM) chief technology officer, agreed with Jones that 5G investments could largely be managed within today's "capex envelope."

"With 5G there might be some incremental capex but if we are clever and add radios that can deal with 4G and 5G we will not see a big uplift in capex," he said on the same panel as Jones.

The remarks were broadly endorsed by Constantine Polychronopoulos, the chief technology officer of NFV at VMware, who said the growing use of software in telco networks would help to keep a lid on costs.

"We are moving toward software-defined radios and eventually upgrading a radio will just be a software exercise and a lot less costly," he said. "Virtualizing the network will address capex as well."

The operators' comments may trouble major equipment vendors such as Ericsson AB (Nasdaq: ERIC), Huawei Technologies Co. Ltd. and Nokia Corp. (NYSE: NOK), which sell radio gear to operators worldwide and are hoping for a sales boost from 5G technology after the recent squeeze on telco spending.

— Iain Morris, International Editor, Light Reading

This is an edited version of a story that was originally published on Telco Transformation's sister site, Light Reading. To see the full story, click here.