Your browser is not supported. Please update it.

9 March 2017

You heard it here first – most benefits of 5G on the distant horizon

Just a reminder that you heard it here on Faultline first, when last year we wrote an article entitled, “Why 5G can never happen.” In that article, we didn’t actually say it couldn’t happen, but more that the use of millimeter wave spectrum would take much longer than all the talk about 5G suggested, and that most operators would never be able to afford to exploit it. The tone was that by the time we have widespread use of millimeter wave, there will be a lot less operators around.

Now a second grouping have come out with similar comments at Mobile World Congress, particularly SK Telecom of Korea, which has gone cold on the idea of millimeter wave 5G spectrum.

The thrust of its argument is that Millimeter wave spectrum may be all the rage among capacity-starved operators, but there are still many uncertainties and technical challenges before it will be readily deployable. It highlighted some of these after conducting a large number of tests in 28 GHz, which is being hailed as a potential globally harmonized band for 5G.

The company carried out lab and field tests in the high frequency band last year, but says it will be looking for sub-6 GHz airwaves for 5G, at least in the earlier years. You may remember that this is what Faultline Online Reporter forecast would happen with all but the richest operators.

A key issue is the short range, which makes mmWave bands good for dense zones of small cells, but requires huge numbers of base stations to achieve wide area coverage. And Changsoon Choi, a senior manager in the operator’s corporate R&D center, talking to LightReading said that device battery life is also a concern, as well as the risk that it may be hard to install chips without blocking the wireless signal.

We raised the issue of how long it would be before a full millimeter wave 5G handset could be built given that there would be very little millimeter waves around, and so scale would be an issue. Early smartphones which can cope with the interference between the signals may cost upwards of $1,000 to build until volume shipments.

According to a report from Barclays – cited at the show by Deutsche Telekom as a reason not to get carried away by mmWave – the cost of deploying a nationwide 28 GHz  5G network in the US could reach $300 billion and at roughly $60 billion of total capex per annual spent in the US, that would require ALL capex spend for 5 straight years to get anywhere, and that’s of course without anything spent on handsets, Opex costs or the Macro network.

Other voices at Mobile World Congress which echoed these sentiments, included both Orange and Liberty Global, who don’t think 5G economics add up yet

Some operators want to accelerate the deployment of 5G networks, and companies like AT&T are stealing a lot of the thunder. In reality, though, the majority of mobile operators do not see large-scale 5G roll-out on their agendas until after 2023, and many will require significant regulatory change before they make their move. Faultline Online Reporter said that from the first spade in the ground, until national coverage we were looking at between ten and 15 years.

According to a survey of over 60 tier one MNOs in Q416, conducted by Rethink Technology Research, more than 45% of respondents do not expect to deploy 5G at scale until after 2023, and less than 10% will do this before 2020, even if the bid for an accelerated standardization schedule is accepted at the forthcoming 3GPP plenary (which may not happen). And that may all happen without millimeter wave.

In a speech at Mobile World Congress last week, Mike Fries, CEO of cable group Liberty Global, said: “The commercial deployment of 5G by 2020 is too aggressive, and LTE still has significant headroom. There is also the question that 5G could come to a crossroad where the massive capex requirements are not forthcoming.”

He added: “There needs to be a levelling of the playing field with regard to OTT providers.” This sentiment was echoed by several operator CEOs at the conference, reviving a well-worn theme among European MNOs, that since the mobile carriers still make the heaviest investments in the infrastructure to carry those wireless OTT services, they should receive some special consideration in return.

One of those calling for a new regulatory approach was Stephane Richard – CEO of Orange, one of the skeptics about the AT&T-driven 5G NR acceleration initiative. He called for a lighter touch, saying: “Key to any deployment of 5G is the ability of operators to make the necessary capex investments. We need a favorable regulatory code and encouragement from the relevant bodies.”

Possibly at odds with the light-touch plea was another call, for longer licenses and a continuation of exclusive spectrum for MNOs – clinging to a model which will surely break under the needs for far greater spectrum capacity, and more flexible support for many service providers, under 5G.