Digitalization is advancing in leaps and bounds, and municipal utilities are facing the challenge of repositioning themselves in this environment. Volker Rieger and Jörg Borowski, Managing Partners at the management consultancy Detecon, explain how municipal utilities can make strategic use of 5G.
The significance of 5G has secured an undisputed position among German energy providers. A market survey reveals that 90 percent of them regard the new mobile communications standard as important or very important. Their assessment is closely linked to the search for new business areas ranging from smart homes and charging stations to digital services. Moreover, the coronavirus pandemic further highlighted the need for digital public services. This is forcing municipal utilities to do more than just provide electricity, natural gas and water; they have no choice but to diversify into the realm of digital connectivity.
5G is of eminent importance here because, as a universal transport medium for data, it offers almost unlimited application possibilities. Its features reveal the potential for a plethora of promising innovation and transformation opportunities for municipal utilities, from the digitalization of their own core added value to the creation of new business models.
The role of municipal utilities using 5G
Municipal utilities can employ 5G in various roles:
- User role: For Internet-of-Things applications such as smart grids, traffic light control, or autonomous streetcars.
- Infrastructure providers: Municipal utilities can provide existing infrastructure features such as antenna sites, electricity, and fiber optic connections.
- Providers of 5G services: Especially for provision of services to commercial areas or the support of smart city initiatives.
Campus networks in the frequency range from 3.7 to 3.8 gigahertz that can be used for geographically limited applications, i.e. for so-called campus networks, are currently topics of discussion in this respect. Although these frequencies are at this time primarily intended for industrial facilities within narrowly defined areas, they could also be of interest to municipal utilities in the long term.
Infrastructure challenges and opportunities
5G requires a large number of base stations that are connected by fiber optics. Despite Germany lagging behind the rest of the world when it comes to fiber optic expansion, 5G could trigger a boom in this sector by increasing the demand for fiber optic connections for 5G small cells. Another challenge: although 5G is an impressive network technology with high data bandwidths and minimal latency times, it suffers from low penetration depth in buildings. A combination of diverse technologies will initially be required to guarantee ideal reception for the energy applications of municipal utilities. In the long term, however, everything can be migrated to 5G.
Investment considerations
Investments in 5G are substantial and must be carefully considered. The aim is to justify the investment by combining multiple use cases. Municipal utilities should first identify two to three use cases that justify 90 percent of the investment and add further applications once this foundation has been laid. What is more, the move towards 5G involves important strategic considerations. Municipal utilities must decide whether they want to continue leasing their existing infrastructure or whether they see 5G as a strategic topic for the future — for the transformation to a smart city, for example. In many cases, they have the technical operational expertise essential for playing a leading role in smart city development.
Climate change mitigation and energy efficiency
Attitudes towards 5G in some municipalities are critical; skepticism about the energy efficiency of the new mobile communications standard is by no means without justification. To be sure, 5G requires less energy per data volume than previous mobile communications technologies, yet the higher data volumes lead to higher energy requirements overall. However, critics are often happy to overlook the contributions that 5G applications such as intelligent traffic control or parking space management can make to energy conservation. Furthermore, municipal utilities can also use renewable power for the operation of their data centers and base stations, thereby heightening the sustainability of their energy requirements. It is important that discussions about energy efficiency always consider the big picture. Such a perspective clearly demonstrates the key role that 5G can play for municipal utilities in the provision of digital public services in the 21st century. The strategic utilization of 5G will enable municipal utilities not only to expand their services and develop new business areas, but also to make a decisive contribution to the development of smart cities.
