5G hype pressures telcos to deploy new networks immediately

Lukasz Nowicki/Delta Partners/5G Insights

From the moment Ericsson showcased the potential of 5G networks in a Swedish lab in 2014, operators, equipment vendors, and device manufacturers joined the chorus of 5G enthusiasts. They praise the near-zero-latency and above 1Gbps speeds enabling the emergence of futuristic and aspirational use-cases like augmented reality, virtual reality, and low latency ultra-reliable IoT.

Asia is an attractive market for 5G, with the estimated number of users reaching 670 million by 2025, accounting for 60% of the global 5G market.

Asia-Pacific ahead of the pack

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5G Insights October 2017

The first set of 3GPP standards for 5G is expected to be released in the second half of 2017-however, 23 operators around the world have already conducted 5G tests, including several APAC players:

  • In 2016, Singtel, along with Ericsson, successfully completed a live trial of pre-standard License Assisted Access (LAA) using 1800-MHz spectrum augmented with unlicensed 5GHz. The test not only showed the throughput speed of 275-Mbps, but also proved that LAA can co-exist with-or even enhance-Wi-Fi signals.
  • Also in 2016, SoftBank successfully completed trials using 4.5-GHz and 15-GHz in Tokyo. The Japanese operator recently announced more advanced tests using 27-GHz in urban areas of Japan. The first end-to-end pilot will include two 5G New Radios, virtual RAN, virtual EPC, beamforming, massive multiple input multiple output (MIMO) functionalities, and test support services.
  • South Korea plans to launch 5G technology in early 2018, during the Olympic Winter Games in PyeongChang. KT, the country’s second largest mobile operator, claims it will complete the construction of a trial 5G network in certain areas of the country by September 2017, and that they achieved data transmission speeds of up to 2.3-Gbps during previous tests in Seoul. Although some commentators doubt the 2018 5G introduction, Heo Won-seok, director at South Korea’s Ministry of Science, ICT and Future Planning, has already announced the government’s aim of offering autonomous buses, high resolution services and virtual reality experience during the Olympic Winter Games.

5G promises

The push from market players to launch 5G early is easily understood when reviewing the technology offering:

  • 1Gbps+ peak throughput by 2020 and 5Gbps+ by 2025

 Below 1 ms latency

  • <1 out of 100m packets lost
  • Lower power consumption   

Additionally 5G will see the evolution of technical solutions already used in 4G and 4G advanced networks. For example, further developing massive MIMO as well as the ability to combine licensed and unlicensed spectrum in heterogenous networks and Self-Organizing Networks (SON). 

To achieve these projected improvements in network performance, operators will need to devote significant capex and opex budgets to acquire new spectrum, and deploy small cells along with fiber backhaul. Telecom executives must specify 5G’s uses outside of what cannot be addressed using LTE or LTE-Advanced.

In our view, these cases fall into three categories:

  1. Fixed wireless broadband: Leveraging vast amounts of available high-frequency spectrum (counted in hundreds or thousands of MHz), will not only enable higher speeds, but also significantly decrease bandwidth cost.
  2. Enhanced mobility: extreme low latency and improved spectral efficiency will enable new types of mobile devices and experiences enabling Augmented Reality or Virtual Reality to enter the mass market.
  3. Massive IoT connectivity: Above-mentioned low latency and low power consumption-along with ultra-high speed and mobility-open a new chapter for IoT devices. Development of 5G technology and devices such as wearables, commercial beacons, and autonomous vehicles (AVs) will disrupt whole industries such as defense, medical technology, and smart cities.  

Asian countries: early beneficiaries of 5G  

5G-enabled market disruption has already begun. As Google and Uber test autonomous vehicles and Amazon introduces its IoT-enhanced Amazon Go physical store, Singapore has taken one critical step forward.

A research consortium called the Singapore-MIT Alliance for Research and Technology (SMART) has applied for permission to run a pilot on driverless taxis on public roads. AVs are just a part of Singapore’s “Smart Nation” government project, which includes over two thousand IoT initiatives, including smart electricity and water usage, and city waste management.

The revenue upside opportunity drives operators to participate in the 5G development race, but cost efficiency is also a significant contributing factor. In countries where fiber deployment is challenging due to distances or terrain (e.g. Australia and Indonesia), introducing Fiber Wireless Broadband Access (FWBA) can significantly decrease deployment costs without sacrificing service quality. Offloading mobile traffic to small cells and replacement of FTTH with FWBA will create additional value for players using 5G technology.

On top of technology development, operators need to transform their networks, establish new data revenue models and value chain partnerships to fully benefit from 5G.

Infrastructure requirements

  • Re-farming of low bands still requires regulatory approval
  • Deployment of small cells-approximately 10x larger than the number of currently existing macro sites
  • Fiber backhaul deployed to all sites/small cells
  • Move away from inflexible and dedicated hardware to 'white boxes’ and software based network functions
  • Network slicing to allow differentiated quality of service     

Networks operations and partnerships

  • MNOs need to cooperate with existing fiber players across their whole footprint
  • Network infrastructure must evolve to enable edge computing
  • New partnerships with tower-stakeholders for deploying small cells must be established   

Operational requirements

  • Next-generation OSS/BSS systems are required to support end-to-end orchestration of new functions
  • New partnerships and operational policies to manage small cells and IoT modules

New revenue models

  • Value proposition based on traffic or bandwidth will become obsolete; new pricing models should be based on QoS or derived KPIs
  • MNOs must partner outside of their traditional ecosystems: vehicle manufacturers, robotics, home builders, healthcare equipment vendors, etc.

Lukasz Nowicki is a principal at Delta Partners

This article first appeared in Telecom Asia 5G Insights October 2017 Edition

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