High-band economics: Can mmWave spectrum make 5G networks more economical?

We’ve heard over the years about how mobile operators might utilize mmWave spectrum, but only recently have there been clear signs that mmWave spectrum is ready to go to market. How far and how far mobile operators go in research and development of new network models, including mmWave, will largely determine the range and quality of services the mobile industry can offer in the near future. Crucially, the choice of network model also plays a decisive role in the cost of 5G network deployment.

The year 2020 will be remembered forever in the hearts of the world as a year when a new virus spread rapidly around the world, causing a worldwide epidemic. In telecommunications, some of us will not forget: 2020 is the first year for 5G to become commercially available in most of the world’s major markets: by the end of 2020, 140 operators in nearly 60 markets had launched 5G services.

With the introduction of 5G networks, there has been a broader opportunity to rethink mobile networks. This includes some relatively new scenarios such as open networking, network virtualization or the cloud edge. All of these solutions will play a vital role in mobile networks over time. Other innovative solutions, such as the use of millimeter-wave (mmWave) spectrum, have been touted for a while, but only today are we seeing them come to the fore.

We’ve heard over the years about how mobile operators might utilize mmWave spectrum, but only recently have there been clear signs that mmWave spectrum is ready to go to market. How far and how far mobile operators go in research and development of new network models, including mmWave, will largely determine the range and quality of services the mobile industry can offer in the near future. Crucially, the choice of network model also plays a decisive role in the cost of 5G network deployment.

The cost of 5G deployment is a recent focus of the GSMA Think Tank study, through which we assess: from now until 2025, in six different scenarios (including dense urban, fixed wireless access (FWA) and indoor deployments ) cost-effectiveness of deploying mmWave 5G solutions. The goal of the study is fairly clear: to provide some insights into which common 5G use cases are more cost-effective with or without mmWave spectrum. The context of the research is a set of well-known realities of mmWave deployments (both good and not-so-good).

The industry generally believes that the application of mmWave in mobile networks still needs to overcome several difficult technical challenges: compared with low-band signals, mmWave signals have shorter transmission distances; they are easily attenuated by interference from trees and other obstacles; Difficulty penetrating concrete building walls (often necessary for covering the interior from the outside). Others argue (and this is equally true) that mmWave radio infrastructure is more expensive than existing low-band and mid-band solutions, however, mmWave attenuation can directly densify this through the network. Carrier strategies address it, and as of 2020, the cost gap between Sub-6 GHz and mmWave solutions has narrowed. This cost will continue to decline in 2021 and beyond. However, the rapid growth of 5G mobile data traffic also highlights the advantages of mmWave frequency bands, which offer more capacity and bandwidth than any other frequency band. In other words, the description of mmWave is complicated from a technical point of view.

Meanwhile, the mmWave ecosystem is now showing clear signs of market readiness. Now, mmWave spectrum is becoming more widely available, with countries such as the US, Italy, Finland, Japan, and South Korea already releasing mmWave spectrum suitable for 5G, and many others will follow soon. Another sign of market readiness is the wide enough range of consumer devices and devices to choose from. The recent growth in consumer devices has been particularly dramatic. Among them, the newly launched iPhone 12 series products at the end of 2020 support millimeter waves, which has effectively promoted the wide application of this technology. A year ago (2019), there were only a few mmWave handsets and FWA (Fixed Wireless Access) CPE (Customer Premises Equipment) ON the market, but in 2021 it is expected that there will be over 100 5G mmWave handsets and more than 50 FWA CPEs were launched one after another.

With 5G deployment and adoption rapidly progressing, and the mmWave ecosystem showing signs of readiness, the main question for the mobile industry today is whether and where mmWave solutions can be cost-effective .

In a recent study, we developed a very granular cost model that takes into account the main factors driving 5G network capex and opex. To demonstrate some of these factors, the model takes into account key supply and demand levers such as the distribution and density of users within an area, the proportion of users actively downloading data concurrently using a 5G network, the spectral efficiency of the network, or the required distance between base stations between cells . Such detailed cost modeling provides some unique insights:

• The study focuses on densely populated urban areas in Greater China and Europe and covers the period between now and 2025. We found that 3.5 GHz and mmWave hybrid networks are cost-effective compared to pure 3.5 GHz networks. These results are very sensitive to the degree of traffic demand and operator market share within a given area, as well as the amount of spectrum allocated to each operator in each frequency band.

• In addition, we also consider FWA deployments in urban China, suburban Europe, and representative townships in the US, and find that if 5G FWA captures a significant portion of the residential broadband market demand, then 5G FWA networks using mmWave spectrum can is a cost-effective strategy.

• Finally, we considered the indoor office scenario. Deploying a hybrid 3.5 Ghz and mmWave public network in large office spaces with limited outdoor coverage can save up to 54 percent in costs when the device’s high-volume data traffic needs to be powered by indoor 5G services.

Whether deploying mmWave in 5G networks is a cost-effective strategy for individual operators in 2021, 2024 and beyond will depend on different aspects of each mobile operator’s business environment, including data traffic , operator market share and/or spectrum mix. However, regardless of the specific modeling results for each scenario, the latest conclusions suggest that the high throughput capabilities of mmWave will enable targeted and cost-effective mmWave 5G deployments between now and 2025.

The diagram below illustrates this. Taking the densely populated urban areas of Greater China as an example, when operators have limited market share and face little traffic demand, using mmWave spectrum alongside 3.5 Ghz spectrum will not save costs. However, significant cost savings (around 30%) could be achieved if the operator had a larger local market share and a higher percentage of 5G subscribers connected during peak demand.

Cost Savings in China’s Dense Urban Scenarios – Download Speeds of at least 100 Mbps

High-band economics: Can mmWave spectrum make 5G networks more economical?
Source: GSMA Intelligence

Of course, this is not just an academic exercise. These analyses have significant implications for all players in the mobile ecosystem.

• If operators underestimate the role of mmWave today, they risk being at a competitive disadvantage when offering 5G services in the future.
• If the government wants to use 5G to drive economic growth, it needs to have a clear plan to allocate mmWave spectrum for mobile services.
• For suppliers, it is clear that as 5G mmWave solutions continue to scale and realize broader economic benefits, there will be a wider selection of consumer devices and devices in the future, further reducing deployment costs and bringing More affordable and high-quality equipment will drive 5G to become more popular.

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