Guest post by Iain Gillott, iGR Research
We in the mobile love to discuss ‘the next big thing’ – we are never happy living in the present and always want the next new shiny thing. Perhaps this is because of the way the industry developed in the mid-1980s, from humble analog networks (really, they were not that good!) to digital networks and then to 3G and beyond. Of course, along the way we never agree on a single network technology (2G was covered by at least four standards) and so even as the latest-and-greatest technology was always been promoted.
Now that we have got to LTE (which most of the world agrees on for ‘4G’), it is time for the next shiny thing: 5G. The problem with 5G at present is that if you talk to five people about 5G and what it is, and you will get at least seven answers! What stands out more than any new 5G technology, air interface or spectrum is the general level of confusion and lack of definition.
So when iGR came to trying to size the 5G infrastructure opportunity, we had a problem: how do you size something that is not firmly defined? With LTE, we know which piece of infrastructure will be deployed in which part of the network, so determining costs is (relatively) easy. But with 5G, it is far harder.
Our first step was to listen to the technologists, which will tell you that real 5G is IMT-2020, just as the ‘real’ 4G systems were defined by the IMT-2000 standards. Follow the standards and it is unlikely that 5G IMT-2020 will be deployed before (you guessed it) 2020.
The next step is to consider what will be needed to deploy IMT-2020. 5G will be about high speeds, lower latencies and more dense networks. The first 5G networks are likely to include some or all of the following: a virtualized mobile core over which a preponderance of traffic flows, some type of “evolved” IoT (Internet of Things) use case, and LTE-Advanced deployed along with new spectrum. In order to deliver the required functionality, iGR believes that spending will be required for RAN upgrades, cell site densification, and data centers / Central Offices / Mobile Edge Computing.
Look at this description and it is clear that 5G deployment will depend on the continued evolution of the current LTE networks, including support for upcoming releases. In the U.S., iGR forecasts that $48 billion will be spent to upgrade LTE between 2015 and 2019 in preparation for 5G. Note that no IMT-2020 radios or cells have been deployed at this point!
For 5G itself, costs were modeled for densification (obviously a lot more cells, specifically small cells), RAN upgrades (putting IMT-2020 into existing cells) and data center/CO/MEC infrastructure to push processing closer to the edge. The cost of this infrastructure between 2017 and 2015 is estimated at $56 billion (again, just for the U.S.).
So properly deploying 5G, the next great, new, mobile shiny thing, is expected to cost $104 billion for the U.S. alone. While this is a big number and many in the industry get very excited about the opportunity, there is cause for some caution here: the industry needs the business models and revenues to support this level of investment. Expecting consumers to pay more for faster video delivery, for example, to their smartphone and tablets is unrealistic – look at the current competitive pricing between the largest operators and it clear that increasing prices for 5G is not on.
Instead, the industry needs to move toward innovative shiny new business and revenue models to go with the shiny new LTE and 5G networks.