New report calculates up to 8% incremental revenue growth potential
With more than 130 live commercial networks around the globe, 5G continues to build momentum. But so far, most launches have been based on sub-6 GHz frequencies. These are well suited to wide area coverage, but lack the capacity and throughput of bands in higher ranges, like 28 GHz or 39 GHz.
Millimetre wavebands enable many applications that form the long-term vision for 5G, including the industrial Internet of things, smart factories and private networks. They can also play a crucial role in achieving consistent and reliable coverage in locations where demand for connectivity is at its highest.
A recent report from Bell Labs Consulting, titled The Business Imperatives of 5G mmWave highlighted how mobile operators in Europe can achieve incremental revenue growth of up to 8% by deploying millimetre-wave networks in carefully identified locations, with payback on investment in as little as four years.
For European operators this is a welcome opportunity. Many are struggling to grow their top line as average spending falls in fiercely competitive markets. At the same time, they face billions of euros in spending to deploy next-generation mobile infrastructure and obtain supporting spectrum.
The report is candid about some of the challenges of millimetre wavebands. It stresses that network operators should focus deployment at optimal locations to get the most out of their investment. Although higher frequencies support far greater data volumes, signal propagation can be affected by buildings, foliage and even the weather.
The research highlighted ways in which telecom operators can earn revenue from millimetre-wave technology. One is to push customers to higher-priced packages with more generous or unlimited data allocations. They can do this by demonstrating the greater quality of service that higher-range frequencies enable, particularly at busy locations.
Calculations in the report showed that a typical UK operator could more than double the amount of data traffic it can monetize annually by deploying millimetre-wave spectrum over a mesh of localized places. These include underserved homes and small businesses, office spaces for more than 50 employees, outdoor hot spots, indoor malls, train stations and sports stadiums. Based on calculations for a UK operator, this could support incremental growth of 8% on full-year revenue, equivalent to about €300 million.
A move away from metered plans is gaining steady momentum in the industry. Almost nine in every 10 new subscribers at US carrier Verizon now take an unlimited data plan, and Vodafone is seeing a rise of €2 to €5 in average monthly spending among customers migrating to unlimited tariffs in Spain, the UK and Italy.
Bell Labs Consulting showcased the benefit of using millimetre wavebands at busy train station Gare du Nord in Paris, where crowd-sourced data analysis identified priority “hot spots” that offer telecom operators a payback on investment in less than three years. It also outlined a return on investment for millimetre-wave 5G of 3.6 years in busy outdoor locations such as along the Champs-Elysees in Paris and 3.8 years at indoor shopping malls.
In addition to serving consumer uses such as video calling, social media and online gaming, millimetre-wave spectrum can unlock a host of enterprise applications for rail companies, such as high-definition video analytics for crowd management, augmented reality for training and operations, and security services.
The study emphasizes the value of millimetre-wave 5G in supporting growing volumes of uplink traffic. Mobile networks are generally configured for the majority of data usage emanating from downlink applications. But the pandemic has increased usage of applications with a higher ratio of uplink traffic, such as video conferencing, cloud-based computing and tools for remote working, education and entertainment.
Another application is fixed wireless access in targeted hot spots at offices and flexible workspaces. This is a largely untapped opportunity for telecom operators; they can deploy high-capacity millimetre wavebands to complement 4G, mid-band 5G and Wi-Fi technologies, offering a secure connection for laptops and enterprise devices beyond smartphones. Office usage of connected devices is weighted toward laptops, which account for 96% of downlink traffic and 98% of uplink traffic, according to Bell Labs Consulting.
Millimetre-wave 5G can also be used with fixed wireless access to connect households. The report highlighted a typical 71% reduction in investment by deploying fixed wireless compared with fibre-to-the-home (FttH) technology. This correlates to a shorter payback time of 5.3 years, compared with 7.9 years for FttH. But these metrics are only achievable at certain household densities: in areas with more than 5,000 homes the economics of FttH become far more attractive than those with fewer than 500 homes, where demand struggles to justify investment.
It’s still early days for millimetre-wave 5G; spectrum has been awarded in just a handful of European markets, so device support remains limited. But higher frequency bands offer tremendous potential. Not only could they finally unlock the long-term vision of 5G technology, but also the opportunities for revenue that operators have been searching for. Operators that are prepared to invest early and assertively could stand to gain swift reward.
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