5G – mmWave Details
2020 might not have been a great year for many, at least from the perspective of the political arena, but it was a good year for 5G. While 2019 say 5G as a buzz word and a topic for discussion in tech circles, 2020 saw 5G becoming established and recognized by consumers, and regardless of whether they understood what 5G really was or what it offered, they bought in. Over 200m 5G smartphones were sold in 2020 (213m according to Gartner) vs. only 16.7m in 2019, so the uptrend was quite obvious despite a weak year for smartphone sales in general and a year that saw phone owners holding on to older models for longer than in the previous year by a noticeable amount.
By the end of 3Q last year there were 107 carriers in 47 markets providing 5G services, either mobile or FWA, and 135m 5G connections, so 4Q saw a jump of ~77m 5G users if the Gartner data is accurate (others expect up to 235m for last year’s final). Predictions for this year are for over 500m units sold and by 2025 between 1.5b and 2b connections are predicted, with 90% of 2025 5G connections coming from either North America (218m of which 200m are in the US), Asia-Pacific (1.2b of which China is 800m) and Europe (233m). In order to meet these goals, carriers are expected to spend ~$8.8t to build out 5G services.
Most 5G carriers have focused their attention on the mid-band spectrum (3.3Ghz – 3.8Ghz) as it offers a reasonable balance of coverage and speed, but both low bands and high bands will become essential to building out real 5G networks over the next few years. MmWave (high band) can offer vast amounts of spectrum, high speed and low latency in locations where coverage is not an issue, while the low bands, with wide coverage, would be most effective for areas where populations are sparse, so we expect carriers to work toward diversifying their networks according to need, but to fully exploit the benefits of 5G, mmWave would provide the best possible performance experience.
That said, mmWave does have some issues that have not been faced by carriers previously. mmWave signals travel relatively short distances and are easily blocked by simple physical structures, trees, and even glass and wood. This makes mmWave less than ideal for carriers looking to cover as many new users as possible, but there are also a number of positive that make mmWave a longer-term solution for 5G. As 5G traffic increases, low-band and mid-band spectrum will become crowded, and those looking for high speed applications will find that they might not be getting the performance originally intended for those frequency bands.
Because mmWave has such a broad spectrum, it will become the place where such applications will migrate over time if they need the peak speed, lowest latency, and more efficient network usage, but from the carrier perspective, building out mmWave must be cost effective or there is no reason to focus on that band. In the US, Verizon (VZ) has been a mmWave champion, looking to attract commercial customers to the service rather than the more typical mobile customers, but in order to maintain coverage, has also expanded its mid-band offerings, while most other US carriers have gone in the opposite direction, starting with low or mid-band, and moving slowly into mmWave.
On a global basis, according to GSM, as of 3Q 2020, new 5G spectrum had been assigned in 35 markets between 121 operators, with 27.6% in the low band, 52.3% in the mid-band, and 20.1% in the high band (mmWave),, with the US leading the global market in the use of mmWave. The US FCC made that spectrum available to carriers earlier than most countries (1/1/2019) and has promoted its use, while China, with its vast area and user base, has been focused on mid-band. That said, China is currently conducting trials for mmWave so it will be able to demonstrate it high band capabilities by the February 2022 start of the Winter Olympics to be held in Beijing.
Europe however has seen only two countries that have assigned mmWave spectrum with neither offering commercial mmWave service yet, but at least EU members are working toward developing a common set of technical conditions for mmWave to make it easily compatible across the region. Among ideas for consideration are exempting small cell antennas from planning permission requirements in order to speed up deployment. While Europe lags in mmWave commercial deployment, there are seven carriers that have launched commercial mmWave networks.
Most 5G carriers have focused their attention on the mid-band spectrum (3.3Ghz – 3.8Ghz) as it offers a reasonable balance of coverage and speed, but both low bands and high bands will become essential to building out real 5G networks over the next few years. MmWave (high band) can offer vast amounts of spectrum, high speed and low latency in locations where coverage is not an issue, while the low bands, with wide coverage, would be most effective for areas where populations are sparse, so we expect carriers to work toward diversifying their networks according to need, but to fully exploit the benefits of 5G, mmWave would provide the best possible performance experience.
That said, mmWave does have some issues that have not been faced by carriers previously. mmWave signals travel relatively short distances and are easily blocked by simple physical structures, trees, and even glass and wood. This makes mmWave less than ideal for carriers looking to cover as many new users as possible, but there are also a number of positive that make mmWave a longer-term solution for 5G. As 5G traffic increases, low-band and mid-band spectrum will become crowded, and those looking for high speed applications will find that they might not be getting the performance originally intended for those frequency bands.
Because mmWave has such a broad spectrum, it will become the place where such applications will migrate over time if they need the peak speed, lowest latency, and more efficient network usage, but from the carrier perspective, building out mmWave must be cost effective or there is no reason to focus on that band. In the US, Verizon (VZ) has been a mmWave champion, looking to attract commercial customers to the service rather than the more typical mobile customers, but in order to maintain coverage, has also expanded its mid-band offerings, while most other US carriers have gone in the opposite direction, starting with low or mid-band, and moving slowly into mmWave.
On a global basis, according to GSM, as of 3Q 2020, new 5G spectrum had been assigned in 35 markets between 121 operators, with 27.6% in the low band, 52.3% in the mid-band, and 20.1% in the high band (mmWave),, with the US leading the global market in the use of mmWave. The US FCC made that spectrum available to carriers earlier than most countries (1/1/2019) and has promoted its use, while China, with its vast area and user base, has been focused on mid-band. That said, China is currently conducting trials for mmWave so it will be able to demonstrate it high band capabilities by the February 2022 start of the Winter Olympics to be held in Beijing.
Europe however has seen only two countries that have assigned mmWave spectrum with neither offering commercial mmWave service yet, but at least EU members are working toward developing a common set of technical conditions for mmWave to make it easily compatible across the region. Among ideas for consideration are exempting small cell antennas from planning permission requirements in order to speed up deployment. While Europe lags in mmWave commercial deployment, there are seven carriers that have launched commercial mmWave networks.
While the cost of mmWave propagation equipment is higher than that of mid and low band 5G, we expect that differential to decrease as mmWave deployments increase over the next few years. That coupled with BOM improvements should make mmWave distribution a more lucrative proposition for carriers globally. That said, the GSM Association, an industry organization that represents over 1,100 carriers and companies has run a series of scenarios under which they have calculated the TCO of deploying mmWave 5G services between 2020 and 2025. Much of the data is in chart form so we summarized as much as possible in the table below.
According to the GSMA, in a dense urban environment, with mmWave overlaid on a mid-band 5G network, mmWave becomes profitable in China when the 5G user share exceeds 10% and the carriers 5G share also exceeds 10%, while in Europe user share must exceed 25% for the network to be profitable. The difference between the two locations is in China estimated traffic density is higher as is the population density, along with expectations of higher bandwidth in China. This would indicate that using mmWave in conjunction with mid-band 5G in China would become profitable as soon as the mmWave band is made available to carriers, while in Europe profitability would be more dependent on maintaining high outdoor mobile traffic rates.
In the category of FWA (Fixed Wireless Access), where businesses or residences have an antenna that receives the mmWave 5G signal and brings it indoors to avoid signal blockage issues, much of the cost analysis of mmWave is based on data rates, and while 5G penetration rates needed in such a rural scenario would have to be at least 18% by 2025 under the low data rate scenario, even higher relative cost savings (~70%) could be calculated if penetration rates reached 50%, according to the data.
Understandably, the data provided by GSMA might be a bit biased toward the positive given the organization is an advocate for the industry, however the increasing level of data traffic forecasted over the next 5 years (3.6x the 2020 rate on a monthly basis) could push carriers to look for ways to keep from facing network bottlenecks during periods of peak demand, with mmWave as a viable overlay on a mid-band network. We are less sure as to using mmWave in a rural environment because of the higher cost and lower coverage density required, but if the world really becomes as interconnected as some predict, mmWave would be a viable alternative in almost any situation eventually.
According to the GSMA, in a dense urban environment, with mmWave overlaid on a mid-band 5G network, mmWave becomes profitable in China when the 5G user share exceeds 10% and the carriers 5G share also exceeds 10%, while in Europe user share must exceed 25% for the network to be profitable. The difference between the two locations is in China estimated traffic density is higher as is the population density, along with expectations of higher bandwidth in China. This would indicate that using mmWave in conjunction with mid-band 5G in China would become profitable as soon as the mmWave band is made available to carriers, while in Europe profitability would be more dependent on maintaining high outdoor mobile traffic rates.
In the category of FWA (Fixed Wireless Access), where businesses or residences have an antenna that receives the mmWave 5G signal and brings it indoors to avoid signal blockage issues, much of the cost analysis of mmWave is based on data rates, and while 5G penetration rates needed in such a rural scenario would have to be at least 18% by 2025 under the low data rate scenario, even higher relative cost savings (~70%) could be calculated if penetration rates reached 50%, according to the data.
Understandably, the data provided by GSMA might be a bit biased toward the positive given the organization is an advocate for the industry, however the increasing level of data traffic forecasted over the next 5 years (3.6x the 2020 rate on a monthly basis) could push carriers to look for ways to keep from facing network bottlenecks during periods of peak demand, with mmWave as a viable overlay on a mid-band network. We are less sure as to using mmWave in a rural environment because of the higher cost and lower coverage density required, but if the world really becomes as interconnected as some predict, mmWave would be a viable alternative in almost any situation eventually.
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