Why 5G, Why Now?

There is a very simple reason why 5G networks must be built, and the numbers from the U.S. market illustrate the concept nicely. By design, 5G will increase capacity and speed a minimum of 10 times. That has been the case for every mobile platform since 2G. 

Since observers expect a 10-fold increase in mobile data consumption over the next decade (perhaps even sooner), 5G simply represents a way to supply customer demand for mobile data. Everything else--new use cases to drive revenue--is a bonus. 

The same argument explains why 5G is needed: cost per bit really has to fall at least 10 times over the next decade.

The issue is how high mobile data consumption might go. Ericsson believes it is possible U.S. mobile customers could be consuming 39 GB each, per month, by about 2024. In a “typical” household of 2.5 people, that implies potential “household” mobile data consumption of nearly 98 GB per month. 

source: Ericsson

Here is one way of looking at the required increases in mobile capability. By the end of 2018 average (“mean,” I believe) U.S. household data consumption on fixed networks was 268.7 gigabytes (I believe the figure is “per month”), according to Openvault, up about 19 percent from mid-year and up 33 percent from 2017 levels. So it seems likely that consumption will have grown at least 33 percent in 2019, and most likely higher. 

So one "high end" scenario is that mobile networks theoretically might have to carry the same amount of data as delivered by a fixed network, where 5G fixed wireless competes for home broadband accounts directly with fixed networks.

The "typical" expectation might be that mobile networks must satisfy mobile data demand for about 2.5 users per household (about the U.S. average household size).

Assume an average of 2.5 persons per household, each using the average amount of data. That suggests a mobile data consumption per household around 27 GB per month. But spreading use of “unlimited usage” plans likely will push consumption higher. 

Customers on unlimited plans consume 67 percent more mobile data than consumers on usage-based plans in 2017, according to NPD.

Average monthly mobile data usage is around nine gigabytes per month. In a “typical” U.S. household of perhaps 2.5 people, that works out to about 27 GB per month of mobile data consumption, “per household,” on the mobile networks. 

Others believe consumption is lower, at perhaps six gigabytes per user, per month, according to Strategy Analytics.

The implication is that mobile networks will have to be designed to carry between a quarter and a third of the data now expected in a typical U.S. household. That is a big jump from present levels. If the typical mobile user consumes 9 GB, and a household 268 GB, then mobile traffic is about three percent of fixed network levels.

That, in turn, implies an increase of mobile data capability by about an order of magnitude by 2024.

Hence 5G, which will increase capacity by a minimum of 10 times over 4G networks.