5G Telecom Investments, Hype, Huawei & 5G replacement for cable broadband?

Wharton’s Kevin Werbach and Jeffrey Reed from Virginia Tech discuss whether 5G technology will live up to its promise.

Telecom companies and other providers will have to invest billions to make 5G a reality — not only to buy more spectrum, but also to build out the infrastructure. Because it’s yet uncertain how much revenue 5G will bring, for now the most prudent path for telecom firms is to upgrade the capacity of their 4G networks by reclaiming airwaves allocated for 2G and 3G, as well as buying more spectrum, according to a report by McKinsey. (The lower bands can be used for 5G as part of the carrier’s network management plan, even though data capacity won’t be as good.)

But there will come a time when these tactics won’t be enough. Historically, data traffic rises by 20% to 50% a year, and 5G could put the traffic increases at the higher end of that range, the McKinsey report said. That means most telecom companies will have to embark on a “significant new build out” between 2020 and 2025. Also, to handle higher traffic, carriers have to install fiber in their wired networks, where wireless connects to the internet. “It’s rather ironic that the projected performance goals of 5G wireless will depend on the availability of wireline fiber,” an executive at telecom equipment maker Ciena said.

Carriers can’t just label their service 5G, which is a lesson AT&T learned when it was sued by Sprint for putting “5GE” on its service despite not using true 5G. AT&T reportedly settled the lawsuit, explaining that “E” stands for “Evolution.” A Verizon spokesman tweeted that “5GE” stood for “5G Eventually.”

Regarding using millimeter wave spectrum for 5G:

“When you’re transmitting and receiving at very high frequencies, it is very efficient for carrying lots and lots of data,” said Gerald Faulhaber, Wharton professor emeritus of business economics and public policy and former FCC chief economist. “You can carry much, much more data than you ever could using our 4G phones.”

But a key drawback is that these signals travel only short distances. The wavelengths in this band range from 1 mm to 10 mm — the FCC’s December auction is called the millimeter wavelength auction — so these can’t reach very far and are easily degraded. “Very high frequency radio signals travel in direct, straight lines, and they attenuate very quickly,” Faulhaber said. In comparison, very low frequency 30 hertz signals can travel more than 10,000 km, or 6,200 miles. Lower frequencies also can better penetrate solid objects like buildings and walls.

Because millimeter wavelengths are short, they need more antennas to connect. “One of the things that 5G requires is a much denser network,” Werbach said. “You need many more nodes. That is partly how the capacity increases, which means either more towers or more cells in more places. You need equipment that is running on those cell sites, and then you need chips that go into people’s handsets and devices.” At least, the 5G antennas are small and can be installed easily on top of telephone poles and other locations, Faulhaber said.

Because it requires density, 5G mainly is feasible for more populated areas where many antennas can be placed close together. “The nature of the infrastructure is that it works in dense areas; it doesn’t work as well in other areas,” Faulhaber said. “Will there be 5G in [rural areas]? The answer is yes, but it won’t be over these high-frequency antennas. It will be basically where 4G is today, so you won’t get the high-capacity [service].”

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Telecom carriers have deployed limited 5G commercial service.

  • In April, AT&T said mobile 5G is live in parts of 19 cities, with more cities to come. In the same month,
  • Verizon said 5G service has launched in parts of Chicago and Minneapolis, where typical early adopters experience download speeds of 450 Mbps and peak speeds of 1 Gbps. That is six and 14 times faster than the median fixed broadband speed of 72 Mbps respectively, according to a December 2018 FCC report. Verizon expects to deploy limited 5G in more than 30 cities this year. Last fall, it launched a limited 5G home internet service in four cities.
  • Sprint is rolling out 5G in nine markets this year.  On May 31st Sprint announced the availability  for its first two 5G devices, LG V50 ThinQTM 5G and HTC 5G Hub. Both devices will initially be available to customers in the first four 5G markets – Atlanta, Dallas, Houston and Kansas City.
  • T-Mobile is calling out its rivals over their 5G hype. “I have the exact same 5G mmWave network equipment and software that AT&T and Verizon do, and there’s no way we would launch this for customers right now,” CTO Neville Ray wrote in a blog. The millimeter wave signal “doesn’t travel far from the cell site and doesn’t penetrate materials at all,” he said. Ray’s blog even embedded a moving image showing that millimeter waves can’t even go through a door. T-Mobile will bring 5G to market, he said, “when the technology is ready for everyday customer use.”

Telecom analyst Craig Moffett of MoffettNathanson echoed similar doubts on CNBC. “There’s zero chance that 5G is ubiquitous technology” by 2021, he said. “The promises around 5G being insanely fast are partly because the standards for 5G were set for insanely wide blocks of spectrum. But you can’t find insanely wide blocks of spectrum anywhere except in these kind of stratospherically high frequencies,” which has its own technical problems. He noted that China, which is surging ahead on 5G, doesn’t use millimeter wave but rather lower band spectrum below 6 GHz, while Europe is using a combination of the two.

Politics also influences U.S. carrier adoption of 5G. The government has security concerns about using 5G telecom equipment from China’s Huawei because of fears over spying. Huawei is the world’s largest maker of telecom equipment, including that needed for 5G. It became a colossus, and “a key reason for that is they produce very inexpensive equipment. It is much cheaper than [that of] their European competition,” Reed said. Huawei doesn’t have any U.S. competition, because infrastructure providers left the business about 20 years ago, he added.

Today, Europe and other parts of the world are customers of Huawei. Britain and Germany specifically are resisting pressure from the U.S. to stop using Huawei. Their carriers have used Huawei in their networks for years, so “for them, it is very difficult to say … ‘rip it all out and go find someone else,’” Werbach said. “They’re just not going to do it.” Added Reed: “Even though a security threat exists with Huawei, companies tend to look the other way to maximize profits, lower costs.” As for security, “that’s way down on their list,” Reed said.

Werbach explained that the U.S. can’t address these security concerns by merely saying it will not use this equipment. It has to be more proactive. “We need to invest in companies in the U.S. and bring trust around the world that, for example, the U.S. is not putting similar kinds of back doors into equipment made by U.S.-based service providers.”
Will 5G Replace Cable?

Even with 5G’s drawbacks, enthusiasm for it remains unabated. One big hope is that 5G could be a viable alternative to the wired broadband service provided by cable and telecom companies. “Could 5G … be the new single pipe into the home?” Faulhaber asked. But before one gets excited about competition bringing lower prices and better service, remember that the same companies currently providing wired broadband to the home are the ones launching 5G. “Guess who are the two dominant wireless operators that have … a big chunk of the spectrum in the service? AT&T and Verizon, who, of course, are also major wired broadband providers,” Werbach noted.

However, Werbach acknowledged that there potentially could be other players in 5G, such as T-Mobile, Sprint and Comcast. Indeed, T-Mobile and Sprint have been trying to convince regulators to let them merge because then they would have the heft to deploy 5G nationally. But The Wall Street Journal reported in April that the deal is unlikely to be approved as structured.

As for Comcast, Faulhaber pointed out that the cable giant already has installed plenty of Wi-Fi receivers, including in customers’ routers that other folks on its network can use to access the internet. “Xfinity Wi-Fi is all over the place and I would suspect we would see something like that with 5G,” he said. But Faulhaber also pointed out that Comcast has time to figure out a response to 5G since it won’t have to worry about competition from this new technology in the near future.

Comcast CFO Michael Cavanaugh put it this way at a recent conference: “The threat of 5G to our broadband business is not significant any time soon. That’s because [cable is] going to be the most economic way to deliver high-quality broadband, period.”

Any cable rival will need “high capacity, high speed and … high reliability,” he said. “Between the different ways, different levels of spectrum and approaches to 5G, it’s really hard to see how there’s a path to any one of those being a broadly addressable solution for residential [broadband] in the U.S.”

Reference:

http://gonzaloraffoinfonews.blogspot.com/2019/06/the-promise-and-pitfalls-of-5g-will-it.html

4 thoughts on “5G Telecom Investments, Hype, Huawei & 5G replacement for cable broadband?

  1. As I’ve stated so many times, FIXED RESIDENTIAL BROADBAND (CABLE REPLACEMENT) IS NOT A USE CASE FOR IMT 2020- THE ONLY REAL 5G STANDARD. 3GPP Release 16 will address the IMPORTANT 2nd use case: Ultra high reliability, low latency for mission critical applications. Two other use cases are Enhanced Mobile Broadband and Massive Machine to Machine Communications.

    Yet Verizon Home Service (fixed wireless broadband service) is dubbed “5G.” According to whose definition?

    Other carriers are planning to do likewise as per https://www.rcrwireless.com/20190208/carriers/5g-fixed-wireless-broadband

  2. Interview with Mic Locker of Deloitte:

    In 2019, fifth-generation (5G) wireless technologies are virtually certain to dominate the thinking of providers across the telecommunications industry. According to Mic Locker, managing director in Deloitte Consulting LLP’s Technology, Media & Telecommunications (TMT) industry practice, it’s critical that as telecommunications companies make technology investments, they also continue to focus on devising business models for monetizing 5G and other opportunities. In 2019, telecom providers should also look to take advantage of voice-assisted technologies and IoT, including the connected car and home.

    From the pdf:
    Once available, 5G is expected to create significant business opportunities for telecom companies, helping them gain revenue in the fixed broadband market and business-to-business (B2B) opportunities such as smart cities and Internet of Things (IoT). It will also provide the ideal environment for telecommunications providers to employ “network slicing” to customize their offerings.

    In the context of 5G, this will enable sharing of a given physical network to run IoT, mobile broadband, and very low-latency applications—including many connected-car and connected-home functions that have the potential to create entirely new revenue
    sources for providers in 2019.

    Two other key revenue-generating opportunities for telecom providers will be mHealth and mPayments. In the area of mHealth, operators can monetize services targeted to the growing number of subscribers who have adopted health care–centric wearables to, for example, help them ensure they’re taking the proper dosages of medications. In the world of mPayments, on the other hand, mobile operators can play a different role: as an integrator for devices, applications, methods of mobile payment, and customer identity management. One study estimated that this strategy could help telecommunications providers increase their mobile payments revenue at least fourfold by 2022.

    https://www2.deloitte.com/us/en/pages/technology-media-and-telecommunications/articles/telecommunications-industry-outlook.html

  3. After reading where the 5G investments are going among the various wireless telcos I found the drawback quoted by Professor Faulhaber emeritus of Wharton business. The big drawback is that 5G using mmWave frequencies works efficiently only for short distances. For 5G mmWave to work efficiently it will cost more as telcos will need more antennas and equipment nodes to carry the data. Therefore, 5G mmWave sounds like it’s still being hyped until it becomes cost effective. Moreover, the exact mmWave frequencies will not be determined till the closing of the WRC 19 conference this coming November. Please refer to: https://www.itu.int/en/ITU-R/conferences/wrc/2019/Pages/default.aspx

    Commendation to the author’s diligent research and definitive statements on 5G reality.

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