3.3. 5G and the telecom industry The telecom industry has been going through a challenging period over the past two decades. After a very successful 2G (GSM) cycle, which made telecoms the star performing industry in the stock markets in the 1990s, but which ended with a major crash in the year 2000, telecoms have never really recovered, financially or strategically. The reasons for the initial success include the facts that 2G wireless operators benefited from nominally priced spectrum, light regulation, low number of competitors (usually 2-3 per country), pre-set technology with limited disruptive threat, and full control over their consumer platforms and products, which were mainly voice and messaging. Some of this can be seen simply as luck, the rest, for example spectrum allocations, as privilege. In 1995, the wireless operators founded their international industry body, GSMA, which subsequently became one of the most influential industrial associations globally. Unfortunately, such concerted global effort to keep spectrum and other privileges within one specific industry ultimately failed to work. Governments started extracting value of the spectrum privileges from telecoms back to the state budgets via spectrum auctions (the UK’s 3G auction alone generated £23bn in the year 2000, while inconsistencies in how different governments approached spectrum auctions, often without underlying visionary policies, made telecoms less predictable and appealing for global investors). Governments also often used ad hoc mechanisms and awards of privileges to new entrants into local wireless markets. Such ongoing focus on awarding and subsequently attacking privileges, combined with the disruption of telecoms services by the global internet companies, which practically replaced telecom product platforms by their own, have very often practically spoiled opportunities for the telecoms to generate satisfactory returns and growth from their 3G and 4G investments. This in some cases led to in-market consolidation (merging between operators). Such mergers were however often accompanied with remedies, i.e. awards of privileges to smaller players, which partially diluted their purpose. Today, ahead of the 5G investment cycle, telecoms still face significant number of challenges, as also shown in Fig. 6. These are linked to the following: Based on the currently known or reasonably predictable commercial service revenues from new 5G services, there are understandable doubts about profitability of significant frontloaded investments required for nationwide 5G rollouts. 22