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Timely clearance of mid-band spectrum is essential for U.S. to remain at forefront of global 5G race

TBR perspective

Significant progress has been made on 5G ecosystem development since the 2018 5G Americas Analyst Forum held last October, as commercial mobile 5G services have been launched by the four U.S. Tier 1 operators, as well as in Uruguay by state-run operator ANTEL, over the past year. However, the infancy of the 5G era in the Americas has been somewhat underwhelming due to tepid smartphone adoption, the limited range of service on millimeter wave spectrum, and lack of coverage outside major metro areas.

The U.S. is at risk of falling behind other countries, especially South Korea and China, in the global 5G race. 5G adoption is growing at a more accelerated rate in South Korea, as the country gained 2 million 5G subscribers within the first four months of commercial services being offered and reached 3 million 5G subscribers as of September. South Korea’s rapid growth is being driven by its widespread 5G coverage, which is expected to reach 80% of the population by the end of 2019, as well as operators heavily subsidizing 5G devices to offset high smartphone prices. Conversely, China will make a strong entrance into the 5G market by launching commercial services in 50 major cities in the beginning of October, with plans to deploy 100,000 5G sites by the end of 2019.

The greatest barrier to the U.S. competing at the forefront of the global 5G race is its current lack of mid-band spectrum as global operators across all major regions have already been allocated a significant amount of mid-band licenses to support initial deployments. Offering 5G services across a mix of low-band, mid-band and high-band spectrum is critical to provide optimal coverage. Though deploying services on millimeter wave spectrum is necessary for U.S. operators to realize the fastest 5G speeds, the licenses are limited by the short range of coverage they provide.

Conversely, low-band spectrum will provide the coverage range necessary for operators including AT&T (NYSE: T) and T-Mobile (Nasdaq: TMUS) to deploy nationwide 5G services in 2020, but the spectrum will not yield significantly faster speeds compared to LTE. Mid-band spectrum provides the best of both worlds, speed and range of coverage, and the acquisition of mid-band licenses will play a pivotal role in the Americas’ position in the global 5G market as well as how individual operators compete for 5G market share in their respective countries.

Nearly 200 industry analysts and representatives from well-known telecom operators and vendors convened at the 2019 5G Americas Analyst Forum to discuss the state of the developing 5G market in North America and Latin America. The event featured an opening presentation from T-Mobile CTO Neville Ray regarding 5G leadership in the Americas, a fireside chat with Federal Communications Commission (FCC) Commissioner Michael O’Rielly, and a choice of 26 roundtable discussions focused on key 5G topics including IoT, edge computing, 5G network infrastructure and technologies, regulatory considerations, and private cellular networks. 

2018 5G Americas Analyst Forum

5G will provide network efficiencies for telcos as they anticipate next-generation use cases

Given the introduction of Verizon’s (NYSE: VZ) 5G Home fixed wireless service in October, as well as the upcoming launch of AT&T’s and T-Mobile’s mobile 5G networks by the end of 2018, the 5G era is edging closer to reality after years of industry speculation regarding the technology’s capabilities. Similar to prior network eras, such as the transition from 3G to LTE, the 5G era will be a gradual evolution of existing network capabilities and will not immediately yield its full benefits or dramatically alter the global wireless market during its inception.

A resounding theme at the 2018 5G Americas Analyst Forum was that the 5G era will essentially be “more of the same” initially. LTE will remain the predominant source of connectivity for most wireless subscribers in the Americas over the next several years until 5G coverage becomes nationwide and customers transition to 5G-capable devices. The accelerated speeds offered by LTE-Advanced services, as well as the cost savings offered by IoT network technologies such as Narrowband IoT (NB-IoT) and LTE-M, are currently more than sufficient to support the demands of most consumers and enterprises.

The wireless industry is anticipating 5G will foster IoT innovations in areas including connected car, healthcare, smart cities and augmented reality (AR)/virtual reality (VR). Though advanced IoT use cases that require the precision promised by 5G, such as remote surgery, are being explored, many of these services will not become commercially available until the mid-2020s at the earliest. Additionally, solutions like remote surgery and V2X automotive services will be burdened by significant regulatory challenges as ensuring 100% network reliability and ultra-low latency will be essential to prevent hazardous outcomes.

Although the end-user benefits of 5G will initially be limited, investments in 5G will ultimately be viable due to the network efficiencies operators will gain from the technology. 5G, which is expected to provide between four- and 10-times greater efficiency on a cost-per-gigabyte basis compared to LTE, will enable operators to more cost-effectively add network capacity to support the prevalence of unlimited data plans as well as continued connected device additions. Offering 5G services will also be essential for operators to remain competitive against their rivals as the marketing of accelerated 5G speeds will help to attract subscribers. Lastly, the deployment of 5G networks will prepare operators to support 5G-dependent use cases when they do come to fruition and spur customer demand.

 

 

Around 70 representatives from well-known operators and vendors attended the annual 5G Americas event to talk with more than 70 industry analysts about the state of wireless communications in North America and Latin America as well as discuss challenges and opportunities presented by the rapid development of the mobile ecosystem.

The event kicked off with a presentation from T-Mobile (Nasdaq: TMUS) CTO Neville Ray regarding 5G leadership in the Americas. He discussed topics including projected use cases, the importance of 5G to the U.S. economy, the Americas’ position in the global 5G market, and the different initial approaches U.S. operators are taking to 5G. A panel of network and technology executives from operators including AT&T (NYSE: T), Sprint (NYSE: S), T-Mobile, Telefonica (NYSE: TEF), Cable & Wireless and Shaw (NYSE: SJR) provided additional insights into 5G evolution and activity around 5G by each respective operator.

Day 2 began with panel sessions featuring leaders from top telecom vendors, including Ericsson (Nasdaq: ERIC), Cisco (Nasdaq: CSCO), Nokia (NYSE: NOK), Samsung, Intel (Nasdaq: INTC), Qualcomm (Nasdaq: QCOM) and Commscope (Nasdaq: COMM), to discuss areas such as 5G regulatory challenges, 5G network and technology deployments, and potential 5G go-to-market strategies and use cases. Following these panel sessions, the reminder of the event offered analysts the opportunity to participate in a choice of 34 roundtable discussions focused on key 5G topics, including Internet of Things (IoT), edge computing, artificial intelligence (AI), 5G network infrastructure and technologies, regulatory considerations, and 5G in the automotive industry.