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5G, the digital economy, and Canada’s global competitiveness

In “5G, the digital economy, and Canada’s global competitiveness”, PWC predicts that 5G will increase Canadian GDP by $94 Billion annually by 2035. As a core enabler of the digital economy, 5G deployment in Canada will result in transformative gains from a societal and environmental perspective.

5G will drive quality of life improvements in the delivery of social services such as healthcare, education and transportation. For example, a widely dispersed 5G network will improve systems efficiency for mass transit and reduce wait times.

Environmentally, 5G will reduce emissions and improve energy efficiency. For example, water conservation efforts in agriculture have seen improvements of 4% today because of sensors embedded in the soil in test cases. When expanded more broadly, these could result in 21% less water being used.

However, Canada’s 5G-enabled future is not guaranteed.

In its report, PWC states that the rollout of 5G will involve greater capital investments and operational costs, than previous generations. It estimates that 5G’s total cost of ownership (TCO) is between 23% and 71% higher than 4G networks. Overall, by 2025, capital expenditures for the service providers will go up between 7% to 217% from 2018 levels.

To deliver the 5G digital infrastructure that Canada needs to compete effectively in the global digital economy, we will need service providers with the scale to be able to invest billions of dollars in networks every single year.  

The report also highlights the important role spectrum will play in Canada’s 5G future. Canadian service providers rely mostly on low band spectrum to offer both 4G and 5G. 5G needs large quantities of mid-band and high band spectrum. Canada has been slow in auctioning off these blocks of spectrum and in large enough quantities. The lack of access to 5G spectrum directly impacts the quality of Canada’s 5G networks.

The report reaffirms that Canadians today enjoy world beating standards for 4G technology. It references an OpenSignal report which states that among 25 leading countries, Canada is ranked 1st for peak download 4G speeds, 2nd for download 4G speeds and 7th for upload 4G speeds¹.

However, when it comes to 5G, Canada ranks 14th for peak download 5G speeds, 16th for download 5G speeds and 14th for upload 5G speeds among the same 25 country peer group.

These slower speeds do not make a material difference to you and I using our phones. However, industrial 5G applications depend on much higher speeds and much less lag. For Canadian service providers to deliver the full benefits of 5G, Canada needs to speed up the release of more mid and higher band spectrum and in larger quantities.

These are significant challenges to overcome which requires a fair and predictable regulatory framework that encourages facilities-based providers to invest in Canada’s digital infrastructure. To achieve this, PWC outlines a few specific recommendations:

First, the report argues there needs to be an appropriate level of market incentives that drive both customer value and investment. We need to look beyond the singular focus on only lower pricing as a policy objective for the industry.

Second, predictability and fairness in regulations that promote competition, investment, and network security, with enough flexibility to adapt to a fast-changing environment, will be key to success. Quicker and sensibly priced access to passive infrastructure – poles, rooftops and street furniture etc. that will hold 5G antennas – is one example of the predictability and fairness principle in practice.

Finally, PWC outlines the importance of a general acknowledgment about the need for connectivity and its role in enabling the digital economy.

These are all timely recommendations. Globally, countries are moving quickly to deploy 5G networks and Canada can’t risk falling behind. We – industry, government, and regulators – need to prioritize the importance of investment in the technology to power Canada’s digital economy of the future.

Charit Katoch, Director, Public Policy