Why 5G will be disruptive

With more spectrum and friendlier small cell regulations, 5G will have the wind at its back.

Every next-generation mobile phone standard is greeted by some skepticism. Fifth-generation technology has certainly endured its share. Critics say it’s just a collection of incremental improvements, is being used as an excuse to restrict competition (for instance, by banning Chinese vendors from the US market), and will drive up prices.

However, in a report published by my company in collaboration with Rysavy Research, we conclude that 5G is uniquely positioned to enable new products, services, and business models. While no next-generation technology is a panacea, 5G’s flexible and scalable architecture comes with expansive new spectrum and rules easing the deployment of small cells. That’s a powerful combination.

Take a closer look at the new spectrum allocations being made in anticipation of 5G. Up until mid-2016, the total amount of spectrum available to US mobile phone operators was about 750 MHz. In July of 2016, the FCC allocated 3,850 MHz of new spectrum in the 20 and 30 GHz bands for 5G. That single action increased the amount of spectrum available to mobile operators by more than 500%. And we aren’t done yet: The FCC has begun proceedings to allocate additional licensed spectrum for 5G, and operators have been testing the use of unlicensed spectrum in the 57-71 GHz band.

Network densification is another way to dramatically increase the capacity of mobile phone networks. New laws and regulations have been enacted to make the deployment of small cells easier and less expensive. The FCC has adopted small cell rules that speed site approvals, simplify site preparation, and ensure local governments charge fair and reasonable site leasing fees. Plus, more than 20 states have enacted friendly regulations for small cells.

Providing high-speed backhaul for small cells was once thought to be a major challenge. However, many existing macro cell sites were converted to fiber backhaul as part of the upgrade to 4G, and that fiber can also be used to feed 5G small cells. Release 16 of the 3GPP specification will support integrated access and backhaul, enabling shared use of millimeter wave spectrum, ensuring there is a wireless alternative when a fiber connection either isn’t possible or is too expensive.

Think of 5G as not only a new air interface but a new architecture. Operators will have a choice of low-band, mid-band, and high-band spectrum (from 600 MHz to >100 GHz) for different environments and business strategies. Network slicing, a form of virtualization, will permit operators to allocate core network, radio network, and device resources for different use cases. Consequently, 5G networks will be able to efficiently serve applications with diverse speed, content, and QoS requirements.

Like most next-generation wireless standards, 5G promises faster throughput. But 5G also promises lower latency. In many applications, latency is just as important as data rate. Enhancements including core network upgrades, faster and more efficient backhaul, and edge computing will enable operators to guarantee high quality user experiences for applications such as multi-player gaming and virtual reality. Low latency and high reliability create opportunities for mobile operators in vertical industries such as manufacturing, transportation, healthcare, and energy monitoring/control.

Thanks to 5G’s flexibility and scalability, operators have a wide choice of 5G deployment strategies. Operators can make extensive use of existing infrastructure. Given the different possible gradations of fixed broadband and mobile broadband services, operators will be able to target specific applications and types of users. Tier 1 operators in the US have mapped out different deployment scenarios; each operator is leveraging its unique assets and placing bets on specific market opportunities.

Our research suggests a number of new business models will emerge. Verizon is already competing with cable and telco operators in select locations for fixed broadband service to the home. The business model is viable where the operator already has a high density of cell sites. It’s also viable for newly constructed low-density small cell networks, in areas with relatively high home densities, with the appropriate financing. As the cost to deploy small cells operating at millimeter wave frequencies declines, the range of locations in which mobile operators can compete for the fixed broadband market will expand. Consumers can be offered discounts for purchasing mobile and fixed broadband services from the same operator.

An interesting trend among younger consumers has been observed in developing countries. Millennials are purchasing smartphones and using them for phone, Internet, and TV. Mid-band spectrum (3.5 GHz) doesn’t have the capacity to compete head-on with cable operators, but it can double capacity, enabling lower-cost data plans. For busy and cost-conscious Millennials, a smartphone plus a higher data allowance plan (60-100 gigabytes) is an attractive alternative to multiple devices and services. There could be a market for smartphones that unfold to create a larger screen. A smartphone can also be used to drive a smart TV when a larger display is desired.

Other new products and services will depend on the creativity of manufacturers and operators. For instance, could the future of radio broadcasting be streaming over mobile networks? The migration of AM and FM broadcasting to digital broadcasting has so far had limited success. LTE (4G) supports multicasting and it’s likely that a 5G multicasting standard is coming. While terrestrial AM/FM broadcasts generally only reach a metropolitan area audience, mobile networks have the potential to reach an entire country. Perhaps the future of AM/FM broadcasting is mobile streaming with satellite networks providing coverage in rural and remote areas.

There is no guarantee that any next-generation mobile technology will be a success. And there will always be growing pains. But with a global market of several billion users, and a decade between technology generations, it’s not surprising that there is a backlog of technical advances that are best addressed through new standards. With more spectrum and friendlier small cell regulations, 5G will have the wind at its back. Operators will be hunting for new business opportunities, and enterprises are on the target list.

This post is based on commentary by Ira Brodsky that first appeared at Computerworld. Brodsky is a Senior Analyst with Datacomm Research and is the author of five books about technology. Brodsky focuses on mobile solutions for payments, retail automation, and health care.