The UK’s mobile operators are starting to emulate their counterparts across the pond and engage in 5G one-upmanship, although on a far smaller scale in reach and investment. BT/EE is expected to launch its first services, probably for fixed wireless, in 16 cities around the third quarter of 2019, and Three UK and Vodafone could go live in a similar timeframe.
EE says it will be the first MNO to launch 5G in all four UK capital cities – London, Edinburgh, Cardiff and Belfast – plus 12 others (Birmingham, Manchester, Glasgow, Newcastle, Liverpool, Leeds, Hull, Sheffield, Nottingham, Leicester, Coventry and Bristol).
In September, Vodafone said it also aimed to launch commercial services next year, switching its trial cities to full operation, and also covering some rural communities in Cornwall and the Lake District. Vodafone expects to have about 1,000 5G sites in service by 2020.
But, like MNOs in most regions, the pressure to move early means that operators risk building high risk new networks to support services that could equally well have been deployed on the existing 4G networks.
One of the sad aspects of the marketing-driven race to 5G in some competitive markets is that many of the new capabilities contained in the 3GPP Release 13 and 14 standards (LTE-Advanced Pro) have scarcely been deployed yet, let alone been used in earnest. Yes, 5G should, eventually, deliver a wider range of network functionalities and support far lower total cost of ownership (TCO) than LTE, but that is not the case now – not until other developments like virtualization and automation are fully available and mature.
In the UK, as the largest and smallest MNOs, BT/EE and Hutchison’s Three UK, were talking up their 5G plans, they were also focusing on ways to extend rural reach, a perennial problem in most countries, even geographically small ones like the UK, and one that will not be readily solved by 5G in the short term.
Three said last week that it would invest £2bn ($3bn) in rolling out 5G across the country. Although the company was disadvantaged in spectrum terms in 4G, its acquisition of UK Broadband from PCCW – which netted it a haul of 3.5 GHz airwaves – has reversed the situation in 5G.
“We have always led on mobile data and 5G is going to be another game changer,” said CEO Dave Dyson. He argued that the shift of focus from ubiquitous coverage – best and most economically supported by low frequency spectrum – towards targeted capacity and higher bands, would open many opportunities for an MNO which has always been heavily focused on data.
That was originally because Three entered the market at the 3G stage, when then-MNOs Vodafone, T-Mobile and Orange had carved up the voice-driven 2G market. Three leveraged the cost efficiencies of being 3G-only to focus heavily on data (such as it was in the early 2000s) and in 4G, traded heavily on affordable, unlimited data plans.
In 5G, this approach could take it beyond the increasingly low-margin, low-growth consumer space and into home broadband and multiplay services enabled by 5G “wireless fiber”, as Dyson put it; and also “opens up new possibilities in industrial applications, as well as being able to support the rapid growth in mobile data usage.”
“We have been planning our approach to 5G for many years and we are well positioned to lead on this next generation technology. These investments are the latest in a series of important building blocks to deliver the best end-to-end data experience for our customers,” Dyson concluded, without naming a date to switch on 5G.
Three UK has been re-architecting its network to support better economics in 5G than it enjoyed in 4G. It has signed a deal with SSE Enterprise Telecoms, a UK provider of fibe networks and data center services. SSE will connect Three’s 20 advanced new data centers (expanded from just three) and will provide fronthaul links between mobile towers and unbundled fiber exchanges owned by BT. SSE’s initial contract covers 177 of these exchanges, but Three’s ultimate target is about 440.
This will greatly improve Three’s coverage; its TCO; and the services it can offer across its expanded footprint, including telco cloud and home broadband offerings to expand its business model. Three has also been investing in Huawei’s Massive MIMO technology, to reduce the need to seek additional cell sites for densification.
Dyson said: “When we launch we’ll have spare capacity for which the incremental cost is low, and that is an opportunity to start to roll out home broadband on a much bigger footprint than Relish [the UK Broadband fixed LTE service] has today.”
However, Dyson was realistic about the prospects of a revenue boost from a 5G service targeting conventional smartphone users, especially if it does not have first mover advantage. Three did not charge a premium for its 4G services when they were first launched, he recalled, and claimed in an analyst briefing: “We’ll do what we think is the right thing and have trial sites and experience opportunities in flagship stores, but it is not about being first. It is about doing things that will set us up for longer term leadership in the 5G environment.”
Meanwhile, market leader EE extended its 5G trials to nine additional sites in London, following its switch-on of its first live trial site in the Canary Wharf business district in east London a few weeks ago. The operator said initial assessments had covered “every element of building a new 5G network”, from securing planning permission and access agreements, to managing power outlets.
Now it also needs to evaluate customer experience in different 5G spectrum bands for consumers and businesses, while another practical challenge is the need to mount additional equipment, such as large antenna arrays, on each 5G site.
BT CTIO Howard Watson said deploying “this brand new layer of our EE mobile network is far from straightforward”, and the trials were essential, for instance to “learn about the coverage we can achieve with 5G New Radio on our new 3.4 GHz spectrum, both indoors and in densely cluttered streets”.
Fotis Karonis, a BT/EE executive advisor for 5G, said at a recent event: “5G is a reality for us. We have built a few sites in Canary Wharf. That’s a complicated area with super-big buildings. There are a lot of people coming in and out, not just people working there, but shopping. It is incredible, like an ecosystem by itself with 200,000 people every day, in and out. It can model what sort of things you can do with 5G. We now have sites that we can use to carry out tests using our real spectrum because the auction is now done in the UK, and we have a great part of the 3.4 GHz and 3.5 GHz spectrum. We are already live.”
But as in so many operator conversations about 5G, the nearer commercial launch comes, the more conservative the MNOs sound. Gone are the high-flying promises of billions of IoT devices and millions of robots and self-driving cars. Instead, most operators are desperate to squeeze a little bit more ARPU from traditional customers, by getting them to use their cellular connection for fixed in-home applications as well as mobile services outdoors, or just by loading capacity into congested areas.
Karonis continued: “We see a golden opportunity for our consumers in terms of capacity, for enhanced mobile broadband initially. There are many, many hotspots in urban areas around the UK that require a massive amount of capacity, especially in areas of commuting, where is a high potential for congestion. So 5G is going to make an abundance of capacity and connectivity available at these locations.”
However, the UK government, despite backing a series of 5G testbeds and trials, is immediately concerned with poor connectivity in rural areas. Proposals to impose compulsory roaming or sharing between the MNOs, to improve coverage, met with fierce resistance last year, and all the MNOs have made some efforts to work with new types of networks which can improve the profitability of sparsely-populated networks. EE, for instance, has worked with a virtualized small cell architecture from Parallel Wireless, while Vodafone has also adopted a small cell approach in some villages.
Telefonica’s O2 last week pledged to improve 4G coverage for 330 rural towns and villages across the UK, as part of a £45m network expansion project. The project should improve connectivity for up to 250,000 people, said the operator, citing a report it commissioned, which says better 4G connectivity could boost collective revenues for rural businesses by up to £141m.
“4G coverage is improving all the time, but there’s more to do, particularly in rural areas. We’ve already reformed planning laws to make it easier and cheaper to install and upgrade digital infrastructure,” said Margot James, the UK’s digital minister.