Spectrum is the First Step. How Will Operators Next Invest in 5G?

By Malla Poikela and Simo Isomäki

Consumers want faster internet. Operators want to offer it. And now, regulators in the United States say they want to give telcos the tools to deliver it.

This month, the Federal Communications Commission (FCC) announced it would open up a range of spectrum – 28 Gigahertz, 37 GHz and 39 GHz – for the creation of the next generation of wireless services. 5G connectivity will represent a “quantum leap” in wireless capabilities, said FCC Chairman Tom Wheeler, because it promises to deliver speeds at least 10 times and possibly 100 times faster than 4G LTE.

The U.S. will be the first country in the world to open up spectrum for 5G, and there are many positive takeaways from the FCC’s announcement. First off, releasing radio spectrum is an obvious and important first step toward innovation. It creates a great opportunity for first-movers to start testing and developing new wireless technologies.

Wheeler also points out that the high-frequency bands now available to telcos support much higher traffic throughput compared to existing licensed spectrum, which will give “fibre-like” traffic capacity to wireless users. That will allow operators to dream up intriguing new services and applications.

There’s a lot to like from the FCC announcement, but of course it’s just the first step in the ongoing development of 5G. There’s a lot of work left to do to make 5G a feasible and profitable option for operators.

A Complex Regulatory Environment

Communication services providers (CSP) and network equipment providers (NEP) will need to make substantial investments to roll out 5G across the world, and they’ll need to do it fast to meet consumer demand. How will they recoup the costs of their investments?

One strategy might be to sell premium 5G-enabled services at a premium cost, but of course, those operators would need to be careful not to defy net neutrality regulations and expectations. There’s friction between regulations and operators on this issue. While FCC has ruled in favour of net neutrality, major U.S. telcos have argued that an inability to create priority services limits the funds they’d use to invest in infrastructure.

This issue should only become more pronounced with 5G. How can regulators and operators meet in the middle? There are a number examples of differentiated service models that balance private and public interests while working in parallel, such as public libraries and private booksellers, or VIP services in the hospitality industry. Regulators and operators must create an environment that encourages equal access but also offers unique opportunities for differentiated service models.

A New Infrastructure for Better Latency, Connectivity

5G connectivity is supposed to offer the network speed needed to power next-generation applications, the types that can’t afford lags or gaps in connection. A connected car, for example, needs fast internet access all of the time, whether you’re driving in a crowded urban environment or a sleepy rural community.

But solving for network speed is ultimately more of an infrastructure problem more than it is about adding spectrum. User devices will need to be moved closer to the edge of the network, which means a massive deployment of unobstructed antennas – that’s where the biggest costs related 5G deployment will be found.

How will that impact the future development of cloud infrastructure? Will it push us even faster toward global urbanization, with fewer people living in rural communities? How will investment in 5G be balanced against investments in faster fixed connections, like fibre?

Interestingly, many of the most popular use cases for 5G seem to suggest that, in the future, we’ll mostly access the internet via mobile networks. But of course, that’s not nearly the case across the world. In the United States, only 20 percent of households access the internet exclusively through mobile networks – 75 percent get it from fixed connections, according to the NTIA.

Now, the numbers are in fact slightly trending toward more mobile-only connections and fewer fixed connections in the US market. Globally, mobile broadband connections are, on average, 1.7 times cheaper than fixed-broadband, according to the International Telecommunications Union. But will operators choose to invest in both areas evenly, or favour one connection over the other? The most realistic vision for 5G connectivity might be in heterogeneous networks, a combination of wireline and wireless, where operators will be able to exercise a variety of connectivity technologies, including 5G, to deliver maximum service and experiences to customers.

Spectrum is one important piece of the puzzle that is 5G, but it’s still early days. The telco industry needs to work with regulators to solve issues around differentiated service offerings, and operators need to determine how best to change network infrastructure to support futuristic bandwidth-hungry service and applications.

Video Making up the Majority of Mobile Network Traffic

By Samantha Tanner, Telecoms IQ at IQPC

It’s been widely reported that video is making up the majority of mobile network traffic. Most recently, research has revealed that more than two-thirds of consumers are watching video on the iOS platform compared to other smartphone operating systems. The report from Futuresource further confirms that the increased viewing of mobile video has been driven by the huge uptake of smartphones and tablets, such as the iPad. However, the consulting firm, like many others, is sending out a warning message to mobile operators—many of which are going to start (and are already) coming under increased pressure to better manage the data and resources like bandwidth as the mobile video explosion continues.

In a recent Telecoms IQ interview, Jim Morrish and Matt Hatton from Machina Research highlighted the choice that mobile operators have to make when deciding how they want to handle the data they receive from these devices:

“So with that growth in traffic from smartphones and these nebulous other devices, what are the implications for operators? Well, obviously, they’ve got a choice. Either they spend a lot of money upgrading the network in order to cope with that demand, which might not necessarily be profitable given the relative prices of mobile data compared to more traditional services. Or, they can leave money on the table, or they can provide a full user experience—none of these are particularly appealing propositions.”

Morrish and Hatton then went on to identify a number of ways in which mobile operators can manage this vast growth in mobile video usage and data traffic, but both were in agreement that it would be ideal to gain more spectrum:

“Getting hold of additional spectrum is obviously going to be a strong method of dealing with additional demand. Taking a European country as a typical example, 3G has around 150 MHz of spectrum in the 2.1 GHz band. There are two potential extra sets of spectrum available for use of data. The first is newly available spectrum, so that’s the 800 MHz digital dividend spectrum and the 2.6 GHz spectrum. Now that will add an additional 250-260 MHz of spectrum to the current 150 MHz.”

Of course, greater network capacity can only work to each operator’s advantage as better bandwidth and the ability to crunch through more data becomes more attractive to customers. For example, in the U.S., AT&T has been under attack for not being able to match the network capacity of rival Verizon, who won most of the bids for open spectrum in 2008. However, AT&T saw another route in gaining more spectrum this year, with the purchase of T-Mobile. But, it remains to be seen whether this will provide a fix to the capacity crunch.

Additionally, DNA has teamed up with Comptel in order to control traffic congestion on Radio Access Networks in real time and allow for maximum network utilisation—and remain competitive in Finland’s fierce mobile market.

To read the full interview with Jim Morrish and Matt Hatton and to find out more information on Telecoms IQ’s Spectrum Management & Network Optimisation conference in September, please visit www.spectrummanagementevent.com.