Why 5G Will Have to Be Different

There are 5G skeptics who argue ISPs cannot afford it, or that other elements of the business model are questionable, mostly built around economies of scope and scale that might not develop, and certainly not by the 2020 time frame touted by backers in Korea, Japan and the United States. And some simply question whether most consumers actually will want to pay for it, much less need it.

Reliance on new millimeter wave spectrum also causes some concern, as signal propagation will be an issue. Use of small cells will require significantly-new backhaul infrastructure as well, while frequency-agile handsets might be pricey.

But there is one area where supporters and skeptics do agree, and that is that if and when 5G emerges as a sustainable platform, it will be because big new revenue streams and applications have emerged, as well. Virtually all agree that will, or could happen, because of the internet of things and machine-to-machine applications.

In other words, should 5G prove sustainable, it will be because new and vital enterprise apps have developed, although new fixed wireless services in the consumer segment might prove to be quite helpful, for the business case.

There are clear signs that such new thinking already is driving capital investment decisions. Consider the way Verizon is deploying new optical fiber in Boston. In the past, FiOS has either an “either, or” proposition: either full residential deployment or not.

Now, Verizon architects seem to have shifted to a network that uses dense fiber trunks suitable for supporting macro and small cells, and then extends the distribution network from there. In some ways, that One Fiber network is a mirror image of the network cable operators want to deploy to support their eventual W--Fi-first mobile networks.

Some leading cable operators, with a heritage serving the consumer segment, are building dense public Wi-Fi networks on the back of their consumer internet access services, essentially trying to create an enterprise service on the backs of a consumer service.

Verizon is taking the other tack, essentially building an enterprise network (macro and small cell backhaul) that helps create a new IoT capability, and that in turn lowers the cost of creating a  consumer capability (fiber to the home). It already is clear that tier-one service provider fixed network revenues are driven by the enterprise segment, not consumers.

Many would argue that the XO Communications acquisition is part of that overall direction, as XO contributes a fiber-rich enterprise customer network. And, as always is the case, having direct fiber access to any anchor tenant lowers the cost of reaching the next set of customers.

Somewhat ironically, “lots more fiber” to support enterprise apps and IoT makes high-bandwidth services for consumers more feasible. But the new framework is “bandwidth to the customer,” not always “fiber to the customer.” One Fiber definitely is “fiber to the tower” or “fiber to the cell site.” I

In many cases One Fiber might also mean “fiber to the business.” Once that is done, the economics of supplying gigabit to the small business or residential customer are a lot easier. In some cases that might mean full fiber-to-home deployment. In other cases, fixed wireless might be the solution.

The point is that the legitimate concerns about the 5G business model are related to enterprise services, enterprise networks and fiber deployment strategy in a way that has not been true for earlier mobile network generations. In that sense, and others, 5G is different.
Post a Comment

Popular posts from this blog

Voice Usage and Texting Trends Headed in Opposite Directions

Korea Telecom Sees New Value from Fixed Network

Someday 100 Mbps Will Not Qualify as "Broadband"