High-frequency 5G promises cost-saving opportunities for operators
In recent times, 5G services based on millimetre-wave spectrum have been the subject of a lot of discussion in the mobile industry. But two critical questions appear to have been largely overlooked: what is the economic benefit for network operators, and can the technology finally offer a path to stronger financial performance?
Last week, a report from GSMA Intelligence — The economics of mmWave 5G: An assessment of total cost of ownership in the period to 2025 — focussed on the critical question of the cost of deployment.
Unlike low- and mid-band spectrum, which underpins the vast majority of the more than 100 commercial 5G launches so far, millimetre wavebands operate at much higher frequencies, like 28 GHz or 39 GHz. These offer far greater throughput, thereby enabling many of the applications and services often linked to the long-term vision of 5G technology, including smart factories, industrial Internet of things and fixed wireless access.
Millimetre wavebands will also play a crucial role in dense urban environments, such as transport hubs, sport venues, campuses, shopping malls and other popular indoor and outdoor venues, because they’re better able to accommodate far more capacity than other bands. So, if operators can quickly deploy 5G in millimetre wavebands they could gain an important competitive edge over rivals.
Still, millimetre-wave frequencies also herald a new set of challenges. Their main drawback is that signals travel only relatively short distances and are therefore susceptible to attenuation by trees and other obstacles. Penetration through walls can be particularly tricky, making indoor coverage difficult to achieve.
CCS Insight has long argued that, to meet their full potential, 5G networks will ultimately require a range of spectrum that stretches between low, mid- and high bands. Only this way can the industry deliver widespread coverage and sufficient capacity to support many of the applications and services it often talks about.
Global deployment of 5G networks based on millimetre-wave spectrum has been limited compared with that using sub-6 GHz, but momentum is building. Commercial services have already launched in the US, Japan, Italy and Singapore, and more than 100 enabled devices have been announced, according to the Global mobile Suppliers Association. Supporting spectrum has also been awarded in Germany, Denmark, South Korea, Finland, Greece, Russia, Hong Kong, Taiwan, Vietnam and Thailand, with the allocation process ongoing or about to start in Brazil, Australia and Chile. The UK is also planning the sale of millimetre-wave spectrum and is expected to consult on the award of 26 GHz frequencies later in 2021.
This is impressive progress considering that millimetre wave was only allocated for mobile services at the latest World Radiocommunication Conference, in November 2019. In comparison, the 3.5 GHz band had already been identified in some regions as early as 2007.
The research by GSMA Intelligence evaluates the cost effectiveness of deploying millimetre-wave 5G solutions in six different scenarios over the period to 2025. It identifies attractive cost-saving opportunities for network operators able and prepared to deploy millimetre-wave spectrum alongside or instead of their 3.5 GHz frequencies. This is because of the huge increase in bandwidth of millimetre-wave spectrum, which brings a massive rise in uplink and downlink capacity, vital for fixed wireless access and enterprise applications. So far, the 3.5 GHz band has emerged as the most common in which to deploy 5G services.
The first two scenarios cover dense urban environments; one in China and the other in Europe. The research found that a mix of 3.5 GHz and millimetre-wave spectrum can be more cost-effective to deliver download speeds of 100 Mbps for 5G services than a network using only 3.5 GHz spectrum. The findings assume that in the China scenario, the proportion of connected users is above 5%; in Europe the assumption is above 10%.
The next three scenarios consider the deployment of fixed wireless access in a hypothetical urban environment: one in Greater China, another in a suburban area in Europe, and the third in a rural town in the US. The research found that using millimetre-wave spectrum for a fixed wireless access network can be cost-effective compared with 3.5 GHz, working on the assumption that 5G fixed wireless access can grab a “good percentage” of the demand for residential broadband. An alternative scenario, in which millimetre-wave spectrum is used as a capacity layer alongside a 3.5 GHz coverage layer for 5G fixed wireless access, showed cost savings of 16% in urban China, 15% in suburban Europe and 27% in a rural US town compared with a network using 3.5 GHz only.
The sixth and final scenario examines the deployment of millimetre-wave spectrum in a hypothetical indoor office space. It shows that operators could make cost savings of between 5% and 20% by rolling out a mix of millimetre-wave and 3.5 GHz spectrum, compared with 3.5 GHz spectrum only. The research also found that when a “significant share” of data traffic from devices is supported by indoor 5G services, a millimetre-wave network could generate cost savings of up to 54%.
Although the analysis only considers the period to 2025, its authors believe that accelerating millimetre-wave 5G deployments in the second half of the decade will increasingly contribute to GSMA Intelligence’s own estimate that 5G will generate an annual boost to global GDP of 0.6% by 2025.
Of course, this is predicated on the arrival of higher-performance, millimetre-wave equipment at lower cost. Like so much in telecommunications, scale will be critical to the success of millimetre wave and its long-term adoption. This means the creation of a supporting ecosystem, built on widespread availability of millimetre-wave spectrum and including an abundant supply of network infrastructure and enabled devices at low prices.
In an important step along this journey, earlier in January 2021 Qualcomm announced its Snapdragon 480 mobile platform, which includes support for 5G millimetre wave. This is a significant announcement as it brings fresh capabilities to lower-priced smartphones (see Enabling 5G for the Masses). When the platform was first unveiled at the IFA trade show in Berlin in September 2020, Qualcomm president — and soon-to-be CEO — Cristiano Amon predicted the platform would power 5G devices in the $125 to $250 range.
The first commercial devices based on the Snapdragon 480 platform are due in “early 2021” and manufacturers HMD Global, OnePlus, Oppo and Vivo have already given their backing.
The platform includes the Snapdragon X51 5G modem, which is compatible with millimetre-wave and sub-6 GHz spectrum, in standalone and non-standalone modes. Qualcomm touted peak download speeds of 2.5 Gbps. This is a significant step in enabling devices that can support millimetre-wave technology at prices within the reach of a wider audience.
Qualcomm’s announcement, alongside the encouraging economic analysis showcased in the GSMA Intelligence report, is a welcome boost for the business case of millimetre wave. With more flagship smartphones offering millimetre-wave support set to be announced, 2021 could be a pivotal year for the spectrum band.
Subscribe to our blogMake sure you don't miss out on our fresh insights on topical news in the connected world
"*" indicates required fields