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10 May 2022

5G acceleration will diversify services, but will it break open supply chains? 

Special Report: The US 5G market evolves 

The US operators are ramping up their 5G roll-outs, each of the big three having secured the all-important midband spectrum that really makes 5G economics work with a balance of coverage and capacity. T-Mobile acquired its plentiful 2.5 GHz airwaves along with its Sprint acquisition, while Verizon and AT&T were big bidders in recent auctions, especially for C-band spectrum.  

 

The public pronouncements of the big three MNOs are often cast in terms of direct opposition to one another, especially TMO’s ‘Uncarrier’ briefings (it held the latest last week). But in reality, the US mobile landscape is far more diverse and interesting than these public comparisons suggest, and there is the potential for consumers and enterprises to have a bigger choice of operators and of services than they have enjoyed for two decades. 

 

The agendas of the big three are very different, for a start. TMO is chasing Verizon in fixed wireless access (FWA) and both its competitors in enterprise services, but remains primarily a very effective, marketing-driven consumer mobile player, with its Uncarrier price-cutting now boosted by a network whose quality has been much enhanced by 5G. Its early aggressive build-out of coverage gives it 5G Standalone choices that its rivals don’t have to the same extent, and it wins on several key 5G performance metrics, especially since it added capacity via the Sprint purchase.  

 

AT&T, fresh from dialling down on its media adventures, will focus heavily on convergence, B2B2C markets and differentiated consumer applications; while Verizon has a greater emphasis on FWA and industrial 5G, and the most advanced strategy, among the three, for edge compute. 

 

And of course, there are new players whose very presence will push the leaders to launch new services and be innovative. Gone are the days of ‘competing’ based on peak advertised mobile speeds or entry level prices, while actually having very limited overlap outside urban areas. Now Dish has activated its first 5G site and the largest cablecos, Comcast and Charter, are gradually becoming more independent of Verizon in their 5G plans, as we analyze this week. 

 

If Dish sticks to its ambitious plans to support network slicing and a wholesale-only model there will be new service providers riding on its 5G infrastructure, and new options for mobile enterprises. And the FCC will conduct a steady stream of spectrum sales, the latest being in the 3.45 GHz band, to enable new services and providers, as well as to boost the arsenals of the majors.  

 

If midband spectrum has taken the brakes off the USA’s 5G roll-out, the activities of Dish and the cablecos will help to drive the big three to innovate in their new airwaves, rather than just continuing the usual head-to-heads in data rates, prices and devices.  

 

There are two other sets of beneficiaries from the 5G acceleration.  

 

One is the towerco sector. According to tower industry analysts at Wells Fargo, in a recent report, T-Mobile has a long term goal of 85,000 5G macro sites, which AT&T and Verizon – currently with about 70,000 apiece – will need to match to achieve nationwide 5G coverage. Wells Fargo predicts more than 20,000 site overlays in 2022 and believes TMO “is well on track to upgrade about 55,000 sites by 2023, with more likely to come as it expands distribution of both mobile and fixed wireless offerings to rural America”.  

 

They think Dish will activate 15,000 sites by 2023 and then make a bigger push in 2024 and 2025 (Dish has its MVNO deal with AT&T, which replaced its TMO agreement, to fall back on, in terms of coverage). In the report, the analysts wrote: “While Dish has publicly talked about hitting a 70% coverage goal by 2023, the reality is that they only need to hit a 50% threshold by June 2023 (not 70%), with the 70% requirement extended out to June 2025 to cover full economic areas.” The USA’s third towerco, SBA, has reportedly won the largest share of the Dish business. 

 

The other beneficiaries are the 5G RAN and core vendors, especially as the operators roll out brand new sites and migrate to 5G Standalone, which will entail bigger spending than in the 5G Non-Standalone phase. The USA has been in the forefront of the Open RAN movement, partly because of government pressure to exclude Chinese suppliers while encouraging a more homegrown 5G industry. Dish’s inclusion of Samsung in its RAN adds another vendor to its roster, though one that is already well established in the US 5G market. The older operators, despite pledges to deploy Open RAN, have been cautious so far about diversifying their supply chains significantly outside of rural trials, but as they accelerate their roll-outs, and introduce small cells to the mix, there are likely to be more opportunities to work with a wider range of partners.