Could a shift towards 5G boost the GCC’s Covid-19 recovery?

GCCICT

Economic News

27 Oct 2021
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– The UAE is the most recent GCC country to announce 5G expansion

– 5G is set to drive economic reconstruction and the uptake of 4IR technology

– Question marks exist regarding infrastructure and customer interest

With connectivity being widely recognised as a key driver of the post-coronavirus economic recovery, GCC countries are poised to benefit from the expansion of their 5G networks.

Earlier this month the UAE unveiled its “Industry 4.0” initiative, which aims to increase innovation and productivity, lower the industrial sector’s carbon footprint and add some $6.8bn to the economy by 2031.

Industry 4.0 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 internet of things (IoT).

In the UAE, as elsewhere, such technologies often depend on 5G connectivity to generate optimum value. For this reason, a significant aspect of Industry 4.0 is a plan for Abu Dhabi-based ICT giant Etisalat to expand 5G coverage in the country, in partnership with Swedish multinational, Ericsson, which has been working in the UAE since the 1970s.

In fact, the 5G rollout in the UAE is already under way, thanks in part to Etisalat’s efforts to develop ICT infrastructure: the country boasts the world’s fastest mobile network and the GCC’s fastest fixed network. In addition, for three years it has had the highest fibre-to-the-home (FTTH) penetration rate in the world.

Ericsson has highlighted that one area in which 5G could add significant value is in smart agriculture in Al Ain, where industrial farmers are keen to bolster digitalisation, for example by expanding the use of remote sensors and robotics.

This is just one of the ways in which 5G can potentially 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, acting CEO at real estate development company Aqalat, told OBG.

5G elsewhere in the GCC

The UAE is not the only member of the GCC to have turned its attention to 5G.

Several GCC countries – among them Saudi Arabia – began expanding 5G coverage in 2019, while in a recent report Ericsson anticipated that 5G will account for 73% of all mobile subscriptions in the GCC by 2026. This will represent the world’s second-highest 5G market penetration.

Saudi Arabia’s Salam – known as the Integrated Telecom Company until June this year – is engaged in expanding 5G and FTTH in the Kingdom, in line with Vision 2030 digital transformation plans.

“As increasing numbers of devices are plugged into 5G networks, enhanced connectivity and higher speeds will generate an enormous wealth of data. This will lead to new insights and functionalities through AI-powered analytics and cloud services,” Essam Alshiha, CEO of Saudi Business Machines, told OBG.

Despite this momentum, there are certain question marks associated with 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 telecom 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.”

A cautionary tale in this regard comes from China, where, after years of investment, many major 5G operators have recently begun to dial back and focus on commercial apps that can be replicated at scale.

A further challenge is the perennial question of ICT infrastructure and access.

“While many cloud services only require 4G connectivity, the merging of cloud computing and the IoT can be a driver of growth. However, this depends on telecoms companies managing to provide large-scale 5G connectivity in a financially sustainable way, which remains a challenge in Oman and elsewhere,” Maqbool Al Wahaibi, CEO of Oman Data Park, told OBG.

Lastly, there are some doubts as to whether customers themselves appreciate the benefits of 5G.

For example, a recent survey found that US consumers were largely ambivalent about 5G, with some 67% saying they are not likely to change from 4G, and a further 19% saying that they simply 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: by the end of 2020, it had the highest average monthly data traffic per smartphone in the world.

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