Economics of mmWave 5G
An assessment of total cost of ownership in the period to 2025
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5G is now a commercial reality. Despite the Covid-19 pandemic, adoption of 5G will reach 200 million connections by the end of 2020; this is forecast to grow to more than 1 billion connections by the end of 2023 and nearly 2 billion globally by the end of 2025. 5G can deliver 10× faster data rates and 100× more capacity, at latencies up to 10× shorter, compared to 4G networks, allowing it to handle growing mobile data traffic. The 5G opportunity for enterprise digital transformation is massive and includes industrial applications, automotive, robotics and healthcare, to cite a few examples. But 5G will also have a profound impact on consumers. It will enable higher-quality services, such as in video streaming and video conferencing, the possibility of fast home broadband services through fixed wireless access (FWA), and new consumer and business services such as edge computing and augmented and virtual reality (AR/VR).
In this study, we evaluate the cost effectiveness of deploying millimetre wave (mmWave) 5G solutions in six different scenarios, including dense urban areas, FWA and indoor deployments. The results have clear implications for all actors in the mobile ecosystem. Operators that underestimate the role of mmWave in the short term run the risk of finding themselves at a disadvantage to competitors when offering 5G services. Governments looking to capitalise on 5G as a catalyst of economic growth need to make clear plans for the assignment of mmWave bands to mobile services. As broader economic benefits are realised and mmWave 5G solutions achieve greater scale, a wider choice of consumer devices and equipment is poised to further reduce deployment costs, increase the choice of affordable devices available and facilitate greater adoption.
Most 5G launches globally so far have relied on mid-band spectrum, with very few exceptions. But as adoption increases and more consumers and diverse services migrate to 5G networks, these will need spectrum across low (e.g. 700 MHz), mid (e.g. 3.5 GHz) and high (e.g. mmWave) bands in order to deliver enough capacity to support the full 5G experience. In particular, due to the massive spectral bandwidth available, mmWave bands are key to meeting high traffic demand and at the same time maintaining the performance and quality requirements of 5G services. So far, mobile operator bids in auctions for mmWave bands have not been as high as for lower frequency bands. This means that mmWave bands are at present generally cheaper in $/MHz/pop terms.
Despite its potential, the utilisation of mmWave in mobile has had to overcome major technical challenges: mmWave signals travel relatively short distances compared to signals of lower-frequency bands; can be susceptible to attenuation from trees and other obstacles; and have difficulties in penetrating concrete building walls (often necessary to reach indoors). However, the continued growth of mobile data traffic plays to the strengths of mmWave bands, as mmWave can accommodate more capacity and bandwidth than any other band.
Economics of mmWave 5G