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Monday, September 23, 2019

Is there a potential market for 5G or other connectivity insurance policies?

[Reposted & slightly extended from my LinkedIn post here - see that page for some really good discussion in the comments]

This is a completely speculative post, on an area I’ll happily admit I know little about. It might be complete nonsense, or it could be a billion-dollar idea. Or it could be trivial & exist already with a different name. 

So: What happens if you blend radio spectrum policy & licenses, and 5G or WiFi networks, with the insurance industry? 

Is there a potential market for insuring radio networks against failures (interference, coverage gaps, latency etc), especially in enterprise environments? 

Or insurance against interfering with others' networks in shared spectrum like CBRS? (Sort of like radio liability insurance)

At the moment there is huge wariness by conventional operators or vendors in offering full SLAs, especially in mission-critical environments. Understandably, on the other hand very few users or developers will want to risk their mission critical (or possibly safety-critical) applications on networks that could fail. They're certainly not likely to pay much extra for a "slice" or QoS guarantee that has no penalties for failure.

Few existing incumbent spectrum-holders will be willing to share their bands, without governments forcing them to, either. Could a C-Band satellite operate be satisfied that their links would be interference-free, if mobile networks were allowed partial access to the band?

Insurance could offset some of these risks - although it would likely need more data and better measurement in order to calculate premiums.

Regulators typically focus on worst-case scenarios, rather than probabalistic ones. Insurance could put a price on problems, and enable more efficient use of spectrum resources. 

The insurance industry is good at modelling risks, and costs of various types of failure or problem. As well as familiar forms of insurance that pay for a replacement car or house if damage is incurred, some pay out based on specific measurable parameters, such as wind-speeds of a certain strength in a given place. This is called "parametric insurance" -
well-explained here by Swiss Re ("The key criteria for an insurable trigger is that it is fortuitous and it can be modelled”) or in this article.

This could be a huge & beneficial area, if my gut feeling is correct. It's not easy - and various of the LinkedIn comments highlight complexities and problems. But it seems to me that there could be something here, at least in situations where network coverage/performance can be both modelled and measured. There are various other intersections & use-cases I can think of too. 

Comments welcome! 

(Also: a hat-tip to Richard Womersley of LSTelcom, who I discussed this with briefly about 18 months ago).

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