Philip Hammond says he wants the UK to become a “world leader” in 5G, the next-generation mobile technology that proponents say is the key to an internet-connected world of driverless cars, smart home appliances, delivery drones and lightning-fast video on the go.

The government, which has published a 70-page tome on its future 5G strategy, said in the budget it would invest up to £16m to run trials and support the technology’s development, to make sure the UK is at the crest of the “next wave of mobile technology services”.

However, 5G, which is set to be rolled out in the UK next decade, also has its critics. They argue consumers don’t need the superfast speeds the upgrade from current 4G technology promises, and many in the industry believe that logistical issues mean that 5G may not be properly rolled out in the UK for decades. In the meantime, there are still basic infrastructure issues – including rural areas with little or no broadband coverage at all – that need sorting out.

Last month, the telecoms and media regulator Ofcom published an update on 5G which highlighted a plethora of supposed benefits the technology will provide. The list includes superfast speeds for mobile broadband – downloading a high-definition movie will take just 1 second compared with almost 10 minutes using the older 3G network and up to a minute on 4G.

The mass connectivity it allows will also help expand the so-called internet of things (IoT), in which everyday appliances and devices wirelessly connect to the internet and each other. “IoT technology is being used in everything from smart homes to wearables,” says Ofcom. “5G should help the evolution of IoT. Possible future applications could include real-time health monitoring of patients, street lighting to suit the weather or traffic, environmental monitoring and smart agriculture.”

Analysts Gartner estimate that by 2020 there will be 20 billion IoT-connected devices.

In addition, 5G could be used to enable driverless cars to communicate with each other and other road users, as well as develop “smart manufacturing” – connecting all the various machines involved in a production chain – and the drone delivery networks that companies such as Amazon would like to develop.

“We believe delivery drones and droids could replace drivers for takeaway delivery,” says Bob Liao, an analyst at Macquarie. He points out that Just Eat has partnered with Starship Technologies, started by two of Skype’s co-founders, which already has “six-wheeled robots that navigate using cameras and ultrasonic sensors” that travel at 4mph and hold 10kg of cargo.

A delivery drone performs a test flight with a pizza box in Auckland, New Zealand last year. Photograph: Reuters

“Starship already has dozens of droids delivering packages, groceries and takeaway food to customers in several European cities, Washington DC and parts of Silicon Valley,” he says.

Macquarie says 5G could also enable the widespread adoption of virtual reality (VR), with applications including virtual tours of properties for homebuyers.

The theory runs that increased data speeds and capacity provided by 5G will be necessary for plans like these to become a mainstream reality. However, despite the enthusiasm, there are a number of health warnings. In December, a report on 5G from government-appointed experts said that while it provided a technology leadership opportunity, its introduction must not be bungled, as the rollout of 4G arguably was.

The report by Lord Adonis, who heads the National Infrastructure Commission, found that the UK’s 4G network ranked only 54th in terms of coverage, behind countries such as Albania, Panama and Peru.

The report said that there were too many “digital deserts” across the UK where there was no coverage, while mobile signal on trains and motorways was “frankly appalling” – all issues that should be addressed.

Ofcom, which later this year is set to auction off valuable spectrum for use in mobile broadband and future 5G services, says “virtually all” UK premises will get a 4G signal by the end of the year.

The regulator is confident that the first wave of commercial products taking full advantage of 5G will be available by 2020. Not everyone agrees.

Professor William Webb, an academic and former Ofcom director, has been outspoken in warning that 5G could be a case of the “emperor and his supposed new clothes”.

Webb is not convinced that the industry obsession with faster speeds is matched by consumer demand. He also believes mobile operators may be in danger of investing billions in 5G networks that they may struggle to recoup their costs from. Telecoms companies forked out £2.3bn in Ofcom’s auction of 4G spectrum just a few years ago in 2013.

However, Ofcom argues that the evidence backing the case for 5G expansion now is clear.

A Starship Technologies robot makes a delivery in Greenwich. Photograph: Christian Sinibaldi/The Guardian

“We cannot forget the elephant in the room: video,” says Giasone Salati, an analyst at Macquarie. “It is already the biggest beneficiary of 4G deployment.”

The proportion of mobile-phone owners that own smartphones – which has driven the data and video explosion – has surged from a little over 20% in 2011 to 75% last year. Data usage per phone user rocketed from an average of 0.11Gb to 1.26Gb between 2011 and 2016, as gaming and video streaming services such as Netflix took off on mobiles.

“5G has the potential to revolutionize the way we see the mobile industry,” says Tony Maroulis at Ampere Analysis. “Before all of that happens though, infrastructure vendors, chipset makers, and operators will have to come to an agreement on industry standards: and that is unlikely to happen before 2020.”