T-Mobile Preparing to Use Millimeter Wave for High-Traffic Urban Areas

T-Mobile, in a test, aggregated eight channels of millimeter-wave spectrum to reach download speeds topping 4.3 Gbps without relying on low-band or mid-band spectrum to anchor the connection, the company says.  T-Mobile also aggregated four channels of mmWave spectrum on the uplink, reaching speeds above 420 Mbps.

Though T-Mobile has not relied on mmWave spectrum to support 5G, it is testing 5G mmWave for use in crowded areas such as stadiums. T-Mobile also suggests mmWave might--and likely will--support its fixed wireless home broadband services.

Verizon’s use of millimeter wave has been to support usage in dense urban areas and high-traffic locations such as stadiums, airports, business districts. In large part, Verizon has been more aggressive about using millimeter wave assets because it has had the smallest allotment of crucial mid-band spectrum. 

AT&T has the same strategy--supporting usage in dense urban areas and select business locations--but AT&T has been more cautious in deploying its mmWave assets, compared to Verizon.

Competitors criticize the sustainability of fixed wireless as a platform that will eventually be unable to keep pace with capacity demands of its users. 

At the moment, Verizon and T-Mobile are careful to offer fixed wireless home broadband in areas where they have lots of capacity on the 5G network, allowing them to devote spectrum to fixed wireless without impairing mobile experience. 

Average monthly data consumption for 5G fixed wireless ranges from about 300 gigabytes on Verizon’s network to 450 GB on T-Mobile’s fixed wireless network. 

Compared to that, average monthly data consumption in North America is about 8.6 GB. Basically, fixed wireless, when used as a home broadband platform, consumes two orders of magnitude more bandwidth than does a typical mobile phone customers.

C-Band is a Huge Deal for Verizon: Extends Home Broadband Addressable Market from 25% to Virtually 100%

One iron rule for internet access services is that if one has enough bandwidth, access speeds can be very high. For mobile operators, bandwidth expansion can come in a few ways: adding more spectrum, building smaller cells or deploying better modulation techniques or radios.

In that regard, for 5G, mid-band spectrum has been key for firms such as Verizon, which have had less mid-band spectrum than others. The difference is striking. 

After deploying C-band spectrum, Verizon mobile peak speeds “go from 9 Mbps to an amazing 2.4 gigabits per second,” said Hans Vestberg, Verizon CEO.

That has implications for home broadband as well, as, in principle, peak speeds might reach gigabit per second levels. And that, in turn, is important because it dramatically extends the addressable market for fixed wireless from perhaps 25 percent of buyers to perhaps 99 percent of buyers (those who buy home broadband at speeds up to about 2 Gbps, and do not require symmetrical access)

True, Verizon has millimeter wave assets to deploy in urban areas, but C-band means fixed wireless has higher bandwidth in suburban and rural areas as well. 

For Verizon, which has a smaller fixed network footprint than many of its leading competitors, that really does matter, as it means Verizon can compete for home broadband customers who want higher speeds in most U.S. geographic areas. 

Of a total of 140 million U.S.  homes, AT&T’s landline network passes 62 million. Comcast has (can actually sell service to) about 57 million homes passed.

The Charter Communications network passes about 50 million homes, the number of potential customer locations it can sell to.

The number of Verizon homes passed might be 27 million. Lumen Technologies never reports its homes-passed figures, but likely has 20-million or so consumer locations.

The point is that Verizon cannot easily expand its fiber to home footprint outside its historic service areas, for reasons of investment magnitude. So fixed wireless makes eminent sense for a firm that can presently reach only about 19 percent of U.S. homes using its fixed network. 

The same sort of logic holds for T-Mobile, which historically has had zero access network fixed network footprint. There is neither time nor money for T-Mobile to wire the entire country, or even a substantial part of it, using FTTH. 

So C-band is a really big deal. It extends Verizon’s home broadband addressable market from about 25 percent of homes to up to 100-percent of homes.

How Feasible is a Software-Only 6G Upgrade to 5G?

If telco executives get their way, 6G will be a software upgrade that does not require replacement of 5G network elements such as radios. In some ways, that will be challenging. 

"We believe that a software-only upgrade to 6G is the best way to meet the increasing demands of mobile users and businesses,” said Niklas Heuveldop, Vodafone CTO. 

"A software-only upgrade to 6G is essential for us,” said Hannes Ametsreiter, Deutsche Telekom CTO.

Perhaps surprisingly, even Rajeev Suri, Nokia CEO, has said "a software-only upgrade to 6G is the only way to meet the ambitious goals of the 6G roadmap.” It will be challenging. 

It is not clear whether the in-place radios are frequency-agile enough to handle huge new blocks of millimeter wave or teraHertz frequencies. So it is not clear whether virtualized or software-defined radios can be used with the existing 5G infrastructure to allow the 6G upgrades without major upgrades or replacement of existing radio infrastructure. 

Then there is the issue of whether the existing 5G network radio sites are compatible with the signal propagation characteristics of new millimeter or teraHertz spectrum that might be added, or how much new radios or new small cell sites will be required. 

Easier to implement are new modulation techniques, for which there are a number of possible alternatives to the 5G orthogonal frequency-division multiplexing standard. 

What might make adaptive modulation possible--the ability to use different modulation methods depending on local conditions, is the 5G ability to support 5G networks can also use adaptive modulation, which allows the modulation scheme to be changed dynamically, depending on the channel conditions. 

That feature should support dynamic modulation that is more robust in areas where signal propagation is more challenging (though supporting less bandwidth); but supporting maximum throughput in other areas with favorable signal propagation characteristics.

6G is expected to use higher-order modulation schemes than 5G, such as 256QAM and 1024QAM. This will allow for more bits to be transmitted per symbol, increasing the spectral efficiency of the network. 

But there also are a number of potential modulation approaches. 

Index modulation: Index modulation is a technique that uses the indices of active transmit antennas, subcarriers, or time slots to transmit additional information. This can be used to further increase the spectral efficiency of the network.

Non-orthogonal multiple access (NOMA): NOMA is a technique that allows multiple users to share the same spectrum resources at the same time, without causing interference. This can be used to improve the network capacity and support more connected devices.

Machine learning (ML)-based modulation: ML can be used to develop new modulation schemes that are more efficient and robust to interference.

Hybrid modulation schemes: Hybrid modulation schemes combine elements of different modulation schemes to achieve the best possible performance in different operating conditions.

Polar modulation: Polar modulation is a new type of modulation that is more efficient and robust than conventional modulation schemes. Polar modulation is expected to be used in 6G to achieve higher data rates and improve reliability.

MIMO modulation: MIMO modulation uses multiple antennas to transmit and receive data simultaneously. This can significantly increase data rates and improve reliability. 6G is expected to use MIMO modulation with a larger number of antennas than previous generations of cellular technology.

MIMO-OFDM: MIMO-OFDM is a multiplexing technique that uses multiple antennas at the transmitter and receiver to transmit and receive multiple data streams simultaneously. MIMO-OFDM is already used in 5G networks. 

In addition to OFDM, 5G networks can also use other modulation techniques, such as filter bank multicarrier (FBMC) and universal filtered multicarrier (UFMC). However, OFDM is the most widely used modulation technique in 5G networks today.

It is the existing 5G network’s ability to use adaptive modulation, supporting modulation schemes that can be changed dynamically depending on the channel conditions, which will support 6G. 

It remains to be seen how much such approaches can support a software-only upgrade of 5G to support 6G. Many will guess that hardware upgrades will still be necessary, though on a perhaps-reduced level compared to earlier mobile network upgrades. 

That there is growing buyer resistance to the traditional hardware-based platform updates is obvious. Just as obviously, there are possible new opportunities for non-traditional suppliers, such as the hyperscale cloud computing providers.

Non-Linear Development and Even Near-Zero Pricing are Normal for Chip-Based Products

It is clear enough that Moore’s Law played a foundational role in the founding of Netflix, indirectly led to Microsoft and underpins the development of all things related to use of the internet and its lead applications. 

All consumer electronics, including smartphones, automotive features, GPS, location services; all leading apps, including  social media, search, shopping, video and audio entertainment; cloud computing, artificial intelligence and the internet of things are built on the foundation of ever-more-capable and cheaper computing, communications and storage costs. 

For connectivity service providers, the implications are similar to the questions others have asked. Reed Hastings asked whether enough home broadband speed would exist, and when, to allow Netflix to build a video streaming business. 

Microsoft essentially asked itself whether dramatically-lower hardware costs would create a new software business that did not formerly exist. 

In each case, the question is what business is possible if a key constraint is removed. For software, assume hardware is nearly free, or so affordable it poses no barrier to software use. For applications or computing instances, remove the cost of wide area network connections. For artificial intelligence, remove the cost of computing cycles.

In almost every case, Moore’s Law removes barriers to commercial use of technology and different business models. The fact that we now use millimeter wave radio spectrum to support 5G is precisely because cheap signal processing allows us to do so. We could not previously make use of radio signals that dropped to almost nothing after traveling less than a hundred feet. 

Reed Hastings, Netflix founder, based the viability of video streaming on Moore’s Law. At a time when dial-up modems were running at 56 kbps, Hastings extrapolated from Moore's Law to understand where bandwidth would be in the future, not where it was “right now.”

“We took out our spreadsheets and we figured we’d get 14 megabits per second to the home by 2012, which turns out is about what we will get,” says Reed Hastings, Netflix CEO. “If you drag it out to 2021, we will all have a gigabit to the home." So far, internet access speeds have increased at just about those rates.

The point is that Moore’s Law enabled a product and a business model  that was not possible earlier, simply because computation and communications capabilities had not developed. 

Likewise, Microsoft was founded with an indirect reliance on what Moore’s Law meant for computing power. 

“As early as 1971, Paul (Allen) and I had talked about the microprocessor,” Bill Gates said in a 1993 interview for the Smithsonian Institution, in terms of what it would mean for the cost of computing. "Oh, exponential phenomena are pretty rare, pretty dramatic,” Gates recalls saying. 

“Are you serious about this? Because this means, in effect, we can think of computing as free," Gates recalled. 

That would have been an otherwise ludicrous assumption upon which to build a business. Back in 1970 a “computer” would have cost millions of dollars. 

source: AEI 

The original insight for Microsoft was essentially the answer to the question "What if computing were free?". Recall that Micro-Soft (later changed to MicroSoft before becoming today’s Microsoft) was founded in 1975, not long after Gates apparently began to ponder the question. 

Whether that was a formal acknowledgement about Moore’s Law or not is a question I’ve never been able to firmly pin down, but the salient point is that the microprocessor meant “personal” computing and computers were possible. 

A computer “in every house” meant appliances costing not millions of dollars but only thousands. So three orders of magnitude price improvements were required, in less than half a decade to a decade. 

“Paul had talked about the microprocessor and where that would go and so we had formulated this idea that everybody would have kind of a computer as a tool somehow,” said Gates.

Exponential change dramatically extends the possible pace of development of any technology trend. 

Each deployed use case, capability or function creates a greater surface for additional innovations. Futurist Ray Kurzweil called this the law of accelerating returns. Rates of change are not linear because positive feedback loops exist.

source: Ray Kurzweil  

Each innovation leads to further innovations and the cumulative effect is exponential. 

Think about ecosystems and network effects. Each new applied innovation becomes a new participant in an ecosystem. And as the number of participants grows, so do the possible interconnections between the discrete nodes.  

source: Linked Stars Blog 

 

So network effects underpin the difference in growth rates or cost reduction we tend to see in technology products over time, and make linear projections unreliable.

No 5G New Revenue Source Matches Fixed Wireless

It is virtually impossible to argue with the proposition that the first new revenue stream of any significance enabled by 5G is fixed wireless internet access. Revenue from fixed wireless far exceeds revenues from other potential new revenue sources. 

Revenues from 5G fixed wireless, in the near term, will dwarf internet of things, private networks, network slicing  and edge computing, for example. 5G fixed wireless might, in some markets, represent as much as eight percent of home broadband revenues, for example. 

None of the other potential revenue sources--network slicing, edge computing, internet of things, private networks--is likely to hit as much as one percent of total service provider or mobile service provider revenues in the near term. 

As important as edge computing might be, as a revenue growth driver for mobile operators, revenue contributions might be relatively slight for some time. The same might be said for the revenue contributions made by internet of things services as well.

In 2024, it is conceivable that IoT connectivity revenues for mobile operators globally could  be in the low millions to tens of millions of dollars, according to Machina Research. Millions, not billions. 

In 2026 the global multi-access edge computing market might generate $1.72 billion. Even if one assumes all that revenue is connectivity revenue booked by mobile operators, it still is a far smaller new revenue stream than fixed wireless represents. 

If the home broadband market If the home broadband market generates $134 billion in service provider revenue in 2026, then 5G fixed wireless would represent perhaps eight percent of home broadband revenue. 

Do you believe U.S. mobile operators will make more than $14 billion to $24 billion in revenues from edge computing, IoT or private networks?

Nor might private networks or edge computing revenues be especially important as components of total revenue. It is almost certain that global service provider revenues from multi-access edge computing, for example, will be in the single-digit billions ($ billion) range over the next few years. 

Though a growing number of home broadband subscribers should have access to gigabit speed fixed wireless service eventually, present coverage is relatively nil. 

T-Mobile and Verizon are expected to have 11 to 13 million total fixed wireless customers by the end of 2025. If total U.S. internet  accounts are somewhere on the order of 111 milliion accounts, and if small business users account for 11 million of those accounts, then home users might amount to about 100 million accounts. 

source: Ooma, Independence Research 

If Verizon and T-Mobile hit those targets, their share of the home broadband market--counting only fixed wireless accounts-- would be about 10 percent. Significantly, most of those accounts will be gained “outside of region” for Verizon. That is significant as Verizon’s fixed network only reaches about 20 percent of U.S. households. Fixed wireless allows Verizon to grow its account base among the 80 percent of U.S. home locations that cannot buy Verizon fixed network service. 

For T-Mobile, which in the past has had zero percent market share in home broadband, all of the growth is incremental new revenue. If those accounts add $600 per year in added revenue, then the 11 percent share of home broadband supplied by fixed wireless represents perhaps $6.6 billion in new revenue for the two firms. 

That is a big deal, considering how hard it is for either firm to create a brand-new line of business that generates at least $1 billion in new revenue. 

The other apparent takeaway is the size of the market segment that cares more about price than performance. 

Segments exist in the home broadband business, as they do in many parts of the digital infrastructure and digital services businesses. In other words, even if some customers want faster speeds at the higher end of commercial availability, up to 20 percent of the market cares more about affordable service that is “good enough.”

The center of gravity of demand for 5G fixed wireless is households In the U.S. market who will not buy speeds above 300 Mbps, or pay much more than $50 a month, at least in the early going. T-Mobile targets speeds up to 200 Mbps. 

During the third quarter, about 22 percent of U.S. customers bought service at speeds of 200 Mbps or below. In other words, perhaps a fifth of the home broadband market is willing to buy service at speeds supported by fixed wireless. 

source: Openvault  

The other takeaway is that home broadband net account additions over the past year have disproportionately come on the fixed wireless platform, representing about 78 percent of all net new accounts. 

source: T-Mobile 

To hang on to those accounts, Verizon and T-Mobile will have to scale speeds upwards, as the whole market moves to gigabit and multi-gigabit speeds. Some percentage of those upgraded accounts could come on some fiber-to-home platform. Even out of region, both firms could strike deals for use of wholesale assets. 

But the bigger part of the retention battle is going to center on ways of increasing fixed wireless speeds to keep pace with the ever-faster “average” speed purchased in the home broadband market. 

And that almost certainly means using millimeter wave spectrum to a greater degree. In the end, even using small cell architectures, there is only so much capacity one can wring out of low-band or mid-band spectrum. 

As a practical matter, almost all the future bandwidth to support mobility services or fixed wireless is to be found in the millimeter wave regions. 

Fixed Wireless is the Clear Early Example of New 5G Revenue

At the moment, 5G fixed wireless is the clear contributor to new revenue sources earned by 5G networks. No other use case has produced the volume of new revenue. 

Revenues from 5G fixed wireless, in the near term, will dwarf internet of things, private networks, network slicing  and edge computing, for example. 5G fixed wireless might, in some markets, represent as much as eight percent of home broadband revenues, for example. None of the other sources is likely to hit as much as one percent of total revenues in the near term. 

The center of gravity of demand for 5G fixed wireless is households In the U.S. market who will not buy speeds above 300 Mbps, or pay much more than $50 a month, at least in the early going. T-Mobile targets speeds up to 200 Mbps. 

Verizon fixed wireless service plans also suggest that existing Verizon mobile customers are key targets. In the meantime, there is 4G fixed wireless, which will have to be aimed at a lower-speed portion of the market, albeit at about the same price points as 5G fixed wireless. 

Up to this point, Verizon 4G fixed wireless, available in some rural areas, offers speeds between 25 Mbps and 50 Mbps. That might appeal to consumers unable to buy a comparable fixed network service. 

By some estimates, U.S. home broadband generates $60 billion to more than $130 billion in annual revenues. 

If 5G fixed wireless accounts and revenue grow as fast as some envision, $14 billion to $24 billion in fixed wireless home broadband revenue would be created in 2025. 

5G Fixed Wireless Forecast
	2019	2020	2021	2022	2023	2024	2025
Revenue $ M @99% growth rate	389	774	1540	3066	6100	12,140	24,158
Revenue $ M @ 16% growth rate	1.16	451	898	1787	3556	7077	14,082
source: IP Carrier estimate

If the market is valued at $60 billion in 2021 and grows at four percent annually, then home broadband revenue could reach $73 billion by 2026.

		2022	2023	2024	2025	2026
Home Broadband Revenue $B	60	62	65	67	70	73
Growth Rate 4%
Higher Revenue $B	110	114	119	124	129	134
source: IP Carrier estimate

If we use the higher revenue base and the lower growth rate, then 5G fixed wireless might represent about 10 percent of the installed base, which will seem more reasonable to many observers. 

Assuming $50 per month in revenue, with no price increases at all by 2026, 5G fixed wireless still would amount to about $10.6 billion in annual revenue by 2026 or so. That would have 5G fixed wireless representing about 14 percent of home broadband revenue, assuming a total 2026 market of $73 billion.

If the home broadband market were $134 billion in 2026, then 5G fixed wireless would represent about eight percent of home broadband revenue. 

Fixed wireless might be even more important elsewhere in global markets.  

Critics are correct that 5G fixed wireless--at least in the medium term--has capacity limitations compared either to fiber-to-home or advanced hybrid fiber networks. But it also is true that the home broadband market has a value segment for whom fixed wireless seems to be in demand. 

According to the latest data from Leichtman Research Group, during the third quarter of 2022, some 825,000 net new home broadband accounts were added in the U.S. market. But the two major fixed wireless service providers--T-Mobile and Verizon--added 920,000 net accounts during the quarter. 

Fixed Wireless Services, Third Quarter 2022
Fixed Wireless Supplier	Total Accounts	Net Additions
T-Mobile	2,122,000	578,000
Verizon	1,063,000	342,000

source: Leichtman Research Group

Total cable industry net adds were about 39,000, while telcos collectively lost about 136,000 fixed network accounts. 

During the third quarter, about 22 percent of U.S. customers bought service at speeds of 200 Mbps or below. In other words, perhaps a fifth of the home broadband market is willing to buy service at speeds supported by fixed wireless. 

source: Openvault  

Predictably, supporters and detractors offer the expected defense of advantages and weaknesses. Cable operators note the bandwidth limitations. Verizon and T-Mobile point to the ease of installing and price advantages. In some cases fixed wireless might actually be faster than the other alternatives available from other local home broadband providers. 

Critics do correctly note that fixed wireless home broadband is carefully marketed in areas where new 5G networks have spare capacity. That capacity will disappear as 5G adoption increases, the critics say.

But Verizon and T-Mobile might argue they have ways to boost capacity over time, as 5G networks are used more heavily and as bandwidth demand keeps increasing. Higher-capacity millimeter wave spectrum is the obvious early answer. 

Longer term, Verizon and T-Mobile are likely to explore ways to add fiber to home coverage as well. For Verizon, that means finding new says to secure FTTH capacity outside its historic fixed network footprint. For T-Mobile, that means getting into FTTH for the first time. 

Up to this point, T-Mobile has been focused on areas where there is less competition, such as rural markets. 

Verizon’s geography is the roughly 80 percent of U.S. homes outside Verizon’s fixed network service territory, as well as its own mobile customer base, who are encouraged to bundle fixed wireless with existing mobile service. 

The point is that the near-term market is substantial for both T-Mobile and Verizon in “out of region” geographies. For T-Mobile that is 100 percent of U.S. homes. For Verizon that is about 80 percent of U.S. homes.