May 16, 2019
By Fanyu Lin, Michael Gallagher, FLUXUS LLC
“2019 will be a critical year in the evolution of 5G as global roll-out pilots will shape the landscape and specifications will start to be formalized. Intelligent connectivity, enabled by 5G, will be the catalyst for the social-economic growth that the 4IR (4th Industrial Revolution) could bring.”– World Economic Forum, Centre for the Fourth Industrial Revolution
Despite the current financial, operational and regulatory barriers for inclusive implementation of 5G at a global scale, we see affordable home delivery as one of the low-hanging fruit application areas to make an environmental and societal impact without taking on significant technical or business risk.
The multi-trillion-dollar underserved and underperforming affordable housing market can benefit directly or indirectly from 5G’s increasing adoptions in other related industries including manufacturing, financing, and smart homes throughout home delivery value chain.
Courtesy: Robotic Industries Association
Technologies of industrial automation and advanced manufacturing are proven effective to produce quality housing at scale without the challenges faced historically. 5G’s strong focus on machine-type communication and the Internet of Things connectivity could further advance the future smart factories with sensor-driven components and production lines, and help accelerate the implementation of productivity-improving technologies for construction industry.
A new type of prefabrication model is emerging with Industry 4.0 applications, including utilization of cyber-physical assistance systems, advanced Building Information Modeling and Design-to-Fabrication technologies. With such technologies, traditional architectural phases and data sharing among the parties (designers, engineers, contractors, sub-contractors, facility managers, and others) are made more efficient as all parties give and take information to and from the same source or system platform. Those are all data-rich building technologies that would require a large amount of processing power to precisely translate the physical structures into digital ones, to intelligently analyze and process the collected data for parametric adaptation based on inputs from even mobile devices or perhaps autonomously, in real-time.
5G could help speed up the standardization and optimization process of digitalizing construction industry, to enable the next generation rapid mass-production and mass-customization achieving economies of scale. From a business model perspective, this could further encourage a vertically integrated business infrastructure for industrialization of the construction industry, with seamless collaboration available between all stakeholders, to efficiently control the cost of raw materials and production, align market demand with product supply, and optimize profit margins, distribution and marketing in a sustainable fashion.
Harnessing the Digital Revolution for Sustainable Development. Courtesy: Barron’s
The demand side of the value chain for home delivering is fractionally defective. The purchasing power of households is a critical challenge. Affordable housing developers often face offtake problems due to poorly functioning or inaccessible mortgage market.
Today, more and more financial service corporations are transforming themselves with digitalization to reach unbanked sectors of society. By reducing latency and transaction times to ensure an effective network with capacity to process large scale transactions, 5G will better support mobile payments adoption in low-to-middle-income communities. The newly collected financial data of this population can effectively address the challenge in credit underwriting on the demand side of home delivery, to better judge the quality of the borrower and assess credit risk.
Connectivity will likely create new business model options for the finance community to make capital available for low income markets. In the business community such as airlines, a shift from ownership of capital-intensive assets, such as airplanes to a pay for access model was made possible by digitization. We see this same trend emerging in the consumer sector with automobiles. Similarly, households may shift from traditional home ownership or lease models to pay for access, system lock or other business models in a shared economy. Lenders having access to the digital footprint of the low-income household may find it more profitable and lower risk to access revenue streams as an alternative to fixing financing to hard assets.
Courtesy: Intel® Building Management Platform
5G will be critical to unlock the opportunity in the development of smart homes, which would lead to reduction of cost of ownership for affordable housing communities. Currently, fragmentation in the smart home industry and lack of common protocols to allow different smart devices to communicate with each other are among the biggest challenges to fully take advantage of the technology advancement. 5G has the potential to solve these interoperability issues and provide seamless integration of many devices for a fully compatible smart home delivery, so that homeowners can benefit from the holistic home solutions capable of energy-saving, improving safety and health among others.
Connectivity product and service providers may consider partnering with mass housing owners or providers to jointly develop a digital affordable housing market. The former can benefit from greater access to the housing domain knowledge and value chain insight with larger dataset to better understand, respond to and anticipate user’s needs and accordingly improve products and services, and come up with repeatable or even standardized solutions to drive scale. The latter can benefit from adding a new asset class – data collected by real-time monitoring of buildings through sensor networks and high-speed connectivity, and the resulting reduced cost of ownership, taking into account the life-cycle energy, operating, and maintenance cost savings, which will ultimately benefit households.
Internet of Things for Social Housing. Courtesy: River Clyde Homes.
In the digital economy, boundaries of industries are increasingly blurring. Implementing new technologies such as 5G can provide foundation to accelerate productivity and cooperation across core industries throughout home delivery value chain. Together with other inter-disciplinary efforts, an eco-systematic paradigm shift would be made possible to enable billions of the world’s population to participate in the housing market as full economic citizens.
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