11 Sep 2018
EUR 100 million
Financial institutions and SMEs
The development of the fifth generation (5G) of cellular technology has been in the limelight in recent years. Estimated to create millions of jobs and produce trillions in economic benefits, 5G has developers around the world striving for its deployment. The Nordic-Baltic countries are no exception, aiming to become the frontrunners of this global transformation.
Since the introduction of mobile phone technology in the 1980’s, telecommunication services have been continuously reinventing by implementing new standards roughly every decade. However, while all of these were hotly anticipated, none of the previous generations reached the level of expectations that people have of the upcoming technological shift. 5G has been labelled as the technology of the future, a game-changer, or even the cornerstone of the Fourth Industrial Revolution - despite it not being available yet.
With expected commercial introduction in 2020 and wide urban coverage by 2025, the next generation telecommunication standards will offer more than just immense enhancements in connectivity or broadband speed.
The main difference compared to today’s 4G or 4.5G is the ability to ensure the conditions needed for better device-to-device and massive machine communication. Bringing self-driving cars, industrial automation and other advancements that were once seen in science fiction movies into everyday use, 5G is set to transform our lives completely.
Investments with high returns
This transition has become the focus of technology developers around the globe, including the leading industries in the region.
Last year, the Swedish ICT giant Ericsson raised USD 370 million (EUR 315 million) for 5G research and development activities during 2018 - 2020. More than half of the investment was financed by a loan from NIB, supporting the company’s strategy to secure technology leadership in 5G and mobile innovations.
Finland’s Nokia has also been active in its infrastructure developments, and their latest deal with T-Mobile, worth USD 3.5 billion, has been proclaimed ‘the largest 5G equipment deal worldwide’.
Such investments are expected to increase, and they seem natural when compared to its foreseen socio-economic impacts.
For instance, a study carried out for the European Commission in 2016 estimates that teh introduction of 5G could result in 2.3 million new jobs around the European Union. Furthermore, it states that benefits over the four industrial sectors (automotive, healthcare, transport and utilities) may reach EUR 113.1 billion per year in the member states alone.
Another study, performed by IHS Markit, finds that 5G developments will enable up to EUR 10.5 trillion of global economic output by 2035. The authors also suggest that the deployment of 5G will result in contributions to global real GDP equivalent to an economy the size of India during 2020-2035.
In 2017, the ministers in charge of digital development in the Nordic and Baltic regions signed a declaration where they set out the ambition of leading the digitalisation of Europe. This year, the Nordic prime ministers met again to build on their commitment, signing a Letter of Intent with the aim of ensuring that the Nordic region becomes the first and best-interconnected 5G region in the world.
As ambitious as it might sound, the Nordic-Baltic region has some arguments to back up these goals.
According to the newest European Innovation Scoreboard, Sweden remains the EU innovation leader, closely followed by Denmark and Finland, with Lithuania and Latvia being amongst the fastest growing innovators.
Iceland tops the Information and Communication Technology (ICT) Index, while Finland’s, Sweden’s and Norway’s technology readiness are ranked higher than any country but Singapore in the latest Global Technology Report. At the same time, Denmark leads the EU in the Digital Economy and Society Index, while Estonia has been continuously taking over the European digital scene with initiatives such as the e-Residency.
Yet the region’s proudest achievements revolve precisley around mobile technologies. Starting with the cooperation towards a common NMT (Nordic Mobile Telephone) standard in the 1980s, the Nordic countries established a platform to foster further developments. This soon led to the world’s first GSM deployment in Finland in 1991, and then followed with a more recent breakthrough, when in 2009, Stockholm and Oslo became the first cities in the world where 4G was introduced.
Now, as the Nordic-Baltic states are eager to pioneer the deployment of the next standards, history looks to repeat itself. In fact, it has already started with the world’s first 5G video call, when Estonian minister of economy Kadri Simson made a call from Tallinn to her Finnish counterpart Anne Berner in Tampere.
Given the strategic investments by the industries, the governments’ commitment and the digital maturity of the Nordic and Baltic countries, no one should be surprised if this region of 33 million people region becomes the hub of Europe’s next digital revolution.