Bottom Line: Could high frequencies let AT&T or Verizon out do cable broadband service? Wireless carriers could one day boast data-transfer speeds up to a gigabit per second with 5G — about 50 times faster than cellular networks around the U.S. have now. That opens up new markets for competition.
Federal regulators and Verizon Communications have zeroed in on airwaves that could make the U.S. the global leader in rolling out 5G wireless services. One market opportunity for 5G may be as challenger to the cable TV industry’s broadband dominance. Think Verizon Wireless, not Verizon’s VZ FiOS-branded landline service, vs. the likes of Comcast or Charter Communications.
First, though, airwaves need to be freed up for 5G. That’s where highfrequency radio spectrum, also called millimeter wave or mm-Wave, comes in. In particular, U.S. regulators are focused on the 28 gigahertz frequency band, analysts say. Most wireless phone services use radio frequency below 3 GHz.
If 28 GHz or millimeter wave rings a bell, that’s because several fixed wireless startups (WinStar, Teligent TLGT , NextLink, Terabeam) tried and failed to commercialize products relying on high-frequency airwaves during the dot-com boom of the late 1990s. Business models were suspect, and their LMDS (local multipoint distribution services) were susceptible to interference from rain and other environmental conditions.
When the tech bubble burst in 2000-01, the LMDS startups perished. Technology advances, however, could now make the high-frequency airwaves prime candidates for 5G.
“In the 1990s, with LMDS, mobile data wasn’t mature, and neither was the Internet, and neither was the electronics industry — it couldn’t make low-cost, mmWave devices,” said Ted Rappaport, founding director of NYU Wireless, New York University’s research center on millimeter-wave technologies.
“Wi-Fi was really brand new then, and broadband backhaul (long-distance) was not even built out. LMDS was originally conceived to be like fiber, to serve as backhaul or point-to-multipoint, and was not for mobile services, he said.
“Fast forward to today: backhaul is in place to accommodate demand, and electronics at mmWave frequencies are being mass-produced in cars,” Rappaport continued. “Demand for data is increasing more than 50% a year, and the only way to continue to supply capacity to users is to move up to (millimeter wave).”
The Federal Communications Commission in October opened a study looking at 28, 37, 39, and 60 GHz as the primary bands for 5G. While the FCC says that 28 GHz airwaves show promise, some countries have been focused on higher frequencies. FCC Chairman Tom Wheeler, speaking at a U.S. Senate committee hearing on March 2, said: “While international coordination is preferable, I believe we should move forward with exploration of the 28 GHz band.”
Wheeler said that the U.S. will lead the world in 5G and allocate spectrum “faster than any nation on the planet.”
Verizon Makes Deals
Verizon, meanwhile, on Feb. 22 agreed to buy privately held XO Communications’ fiber-optic network business for about $1.8 billion. In a side deal, Verizon will also lease XO’s wireless spectrum in the 28 GHz to 31 GHz bands, with an option to buy for $200 million by the end of 2018. XO’s spectrum covers some of the largest U.S. metro areas, including New York, Boston, Chicago, Minneapolis, Atlanta, Miami, Dallas, Denver, Phoenix, San Francisco and Los Angeles, as well as Tampa, Fla., and Austin, Texas. Verizon CFO Fran Shammo commented on the XO deal at a Morgan Stanley conference on March 1st.
“Right now we have licenses issued to us from the FCC for trial purposes at 28 GHz. The XO deal gave us additional 28 GHz,” he said. “The rental agreement enables us to include that (XO spectrum) in some of our R&D development with 28 GHz. So that just continues the path that we’re on in launching 5G as soon as the FCC clears spectrum.” He noted that Japan and South Korea plan to test 5G services using 28 GHz and 39 GHz airwaves.
Some analysts doubt that 28 GHz airwaves will be on a fast track. “We are skeptical not only on the timing of the availability of 28 GHz but also its ultimate viability in a mobile wireless network,” Walter Piecyk, analyst at BTIG Research, said in a report. Boosting signal strength at higher frequencies is a challenge for wireless firms. Low-frequency airwaves travel over long distances and also through walls, improving in-building services.
One approach to increase propagation in millimeter wave bands, analysts say, is using more “smallcell” radio antennas, which increase network capacity. Wireless firms generally use large cell towers to connect mobile phone calls and whisk video and email to mobile phone users. They also install radio antennas on building rooftops, church steeples and billboards. Suitcase-sized antennas used in small-cell technology often go on lamp posts or utility poles. Verizon has been testing small cell technology in Boston, MA.
When Will 5G Happen?
Verizon says that it will begin rolling out 5G commercially in 2017, though its plans are still vague. While many wireless service providers touted 5G plans and tests at the Mobile World Congress (MWC) in February, makers of telecom network equipment are being cautious.
“General consensus (at MWC) seemed to indicate that the 2020 time-frame will mark full-scale 5G deployments,” Barclays analyst Mark Moskowitz said in a report. Verizon has said that it doesn’t expect 5G networks to replace existing 4G ones.
While 5G is expected to provide much faster data speeds, wireless firms also expect applications that require always-on, low-data-rate connections. The apps involve datagathering from industrial sensors, home appliances and other devices often referred to as part of the Internet of Things (IoT).
Both Verizon and AT&T T have recently touted 5G speeds up to one gigabit per second. That’s roughly 50 times faster than the average speeds of 4G wireless networks in good conditions. AT&T CEO Randall Stephenson recently said that 5G speeds could match fiber-optic broadband connections to homes.
5G Vs. Broadband
At the Morgan Stanley conference, Verizon’s Shammo also said that 5G could be a “substitute product for broadband.” Regulators would like to create new competition for cable TV companies. But, Verizon says, it’s still early days.
“With trials, we’ll figure out exactly what we can deliver, what the base cases are,” said Shammo. “5G has the capability to be a substitute for broadband into the home with a fixed wireless solution. The question is, can you deploy that technology and actually make money at a price that the consumer would pay?”
Sanyogita Shamsunder, Verizon’s director of network infrastructure planning, says that high frequencies can support 5G. “Radio frequency components today are able to support much wider bandwidth (think wide lanes on the highway) when compared to even 10 years ago. What it means is we are able to pump more bits at the same time,” Shamsunder said in an email to IBD. “Due to improvements in antenna and RF technology,” she added, “we are able to support 100s of small, tiny antennas on a small die the size of a quarter.”
Another point of view from Alan Gatherer of IEEE ComSoc:
Fresh from Mobile World Congress, my favourite “tell it like it is” curmudgeon-cum-analyst Richard Kramer has kindly agreed to share his thoughts on the state of the industry and on 5G in particular. While reading his article, I had two thoughts that align with his position:
1) How long will it take to really do VoLTE well?
2) 3G’s lifespan was quite short and we should probably expect a lot more runway for 4G.
Like Alice in Wonderland, the mobile world has been turned topsy-turvy with an accelerated push to 5G. One would think the lessons on 3G, 3.5G (HSPA), 4G, and its many variants, were never (painfully) learned: that the ideal approach for operators and vendors is to leave time to “harvest” profits from investments, not race to the next node. This was true in the earliest discussions of LTE (stretching back, if one recalls, to 2006/7), and in the interim fending off the noisy interventions of WiMax (remember those embarrassing forecasts from some analysts, which we fondly recall dubbing “technical pornography” for the 802.xxx variants garnering oohs and aahs from radio engineers). Bear in mind that 3G was commercially launched in UK on 03.03.03, and LTE was demo’ed at the 2008 Beijing Olympics. Isn’t there a lesson here about leaving the cake in the oven long enough to bake?
That 5G is theoretically using the same, or at least similar, air interfaces, is hardly a saving grace. For now, the thought of deploying a heap of non-standard equipment is highly unappealing to telco customers. Neither is sufficient attention paid to the lack of spectrum, or the potential perils of relying on unlicensed spectrum for commercial services. There seems to be a blind, marketing-led rush to be the first to announce milestones that are effectively rigged lab trials, and that convince few of the sceptical buyers to shift long-standing vendor allegiances. So what do we have to hang our hats on? A series of relatively disjointed and often proprietary innovations building on LTE, specifically many bands of carrier aggregation and millimetre wave, including unlicensed bands, to get support for (and make a smash and grab raid on) much wider blocks of spectrum and therefore better throughout and capacity; a further extension of decades of work on MIMO to further boost capacity; and a similar pendulum swing towards edge caching to reduce latency (while at the same time trying to centralise resource in baseband-in-the-cloud, to reduce processing overheads in networks). The astonishing leap of faith is that by providing gigabit wireless speed at low latency, one will enable “new business models,” for now largely unimagined.
This leaves us with the farcical purported “business cases” for 5G. First, we have the Ghost of 2G Past, in the form of telematics, rebranded M2M, and now rebranded once more as “IoT”. To be sure, there are many industries that have long had the aim of wirelessly connecting all sorts of devices without voice or high-speed data connectivity. Yet these applications tend to work just fine at 2G or even 3G speeds. The notion that we need vast infrastructure upgrades to send tiny amounts of data with lower latency smells of desperation. Then there are all the low-latency video-related services – which again can be made more than workable with a combination of cellular plus WiFi. Meanwhile, just to muddy the waters and prevent any smooth sailing towards the mythical 5G world, we have a slew of new variants: LTE-A, LTE-U, low-energy LTE, MulteFire, LTE-QED (sorry, I made that one up), etc. And the aims of gigabit wireless have to be to supplant wireline, though that is hardly acting in isolation, as cablecos adopt DOCSIS 3.1 and traditional telcos bring on G.fast and other next-generation copper or fibre technology. As always, these advances are not being made in isolation, even if the plans of individual vendors seem to have done so.
Desperation is not confined to equipment vendors; chipmakers such as Qualcomm, Mediatek and others are facing the first year of a declining TAM for smartphone silicon, partly due to weak demand from emerging markets, and also due a rising influence of second hand smartphones being sold after refurbishment. We also see a trend of leading smartphone vendors internalising their silicon requirements, be it with apps processors (Apple’s A-series, Samsung Exynos), or modems (HiSilicon). Our view is that smartphone unit demand will be flattish overall this year, with most of the growth coming from low-end vendors desperate to ramp volumes to stay relevant. This should drive Qualcomm and MediaTek to continue addressing more and more “adjacent” segments within smartphones, to prevent chip sales from shrinking. Qualcomm is looking to make LTE much more robust to overtake WiFi and get traction in end-markets it does not address today.
Thus we have another of the “inter-regnum” MWCs, in which we are mired in a chaotic economic climate where investment commitments will be slow in coming, while vendors pre-position themselves for the real action in two or three years when the technologies are actually closer to being standardised and then working. We have like Alice, dropped into the Rabbit Hole, to wander amidst the psychedelic lab experiments of multiple hues of 5G, before reality sets in and everything fades to grey, or at least the black and white of firm roadmaps and real technical solutions.
Editor-in-Chief: Alan Gatherer (firstname.lastname@example.org)
Comments are welcome!
Reference to presentation & slides: 5G and the Future of Wireless by Jonathan Wells, PhD