Has Pandemic Really Slowed 5G?

There is a tendency to input causation whenever there is correlation, and permanent changes caused by big--yet transitory--phenomena.We never act as though any single volcanic eruption or hurricane will “forever” change business and life in the affected area. Rather, our assumption is that life will return to normal over a period of months to years.

And yet it is most common to hear arguments that global life and business will never be the same after the Covid-19 pandemic, even as life already is returning to normal levels and behavior in many countries that are further along the recovery curve. 

An analysis of the way 5G is being used to ameliorate pandemic problems might be interpreted as conventional wisdom suggests, namely that the pandemic has slowed down all economic activity and 5G roll outs. 

In fact, the report suggests slowdowns and accelerations both have happened, the World Economic Forum suggesting that fixed wireless efforts have accelerated. One might have made that case before the pandemic, though. 

source: Maximize Market Research

Likewise, some infer and believe that bandwidth consumption patterns are permanently altered by the pandemic. That might be the case, but not for the “because of the pandemic” reason often cited. Every next-generation mobile platform since 2G has resulted in higher mobile data consumption. 

So we should not be surprised to hear that per-user mobile data consumption has increased 300 percent since 5G was commercially launched in South Korea. That is what we should expect. It has almost nothing to do with permanent changes directly caused by the pandemic, though people forced to stay at home from work and school have boosted their video streaming hours. 

That will change as they go back to work and school. 

It is likely more accurate to say that the pandemic and forced stay-at-home rules accelerated some already-occurring changes, ranging from a shift to video streaming from linear TV, more gaming, more work from home and online shopping. Pushing volume “up and to the right” is a permanent change, to be sure, but not a new trend; simply an acceleration of what had already been happening. 

We might ultimately be surprised that many predicted permanent changes did not happen in a way we will be able to capture quantitatively. Though the Great Recession of 2008 caused a massive change in economic activity, it was not “permanent.” Activity more than rebounded. The internet bubble burst of 2001 caused massive asset value changes. But valuations of new and surviving firms rebounded. Smooth out the data by looking at a decade or two worth of data and one can detect no permanent change. 

Neither 5G or other ongoing trends will be immune from that reversion to mean.

CBRS is "Mobile Plus" Spectrum

As U.S. auctions of 3.5-GHz Citizens Broadband Radio Service have gone through 47 rounds of bidding, we now have a better idea of buyer estimation of the value of priority access licenses. To wit, those PAL licenses already are valued very close to 2-GHz mobile spectrum, and the auctions are not over yet..

At a high level, that suggests buyers see CBRS has having as much value as 2-GHz mobile spectrum. And, as was the case for the early 2-GHz spectrum awards, that is the ticket to market entry on a facilities basis for new competitors. Both Sprint and what became T-Mobile US were launched on the basis of new 2-GHz spectrum allotments. 

CBRS also will be supported by best effort spectrum access without a license, on the pattern of Wi-Fi. How big a revenue opportunity that activity might create is another question. Some internet service providers will undoubtedly explore the use of unlicensed CBRS to support rural internet access. That is something many wireless ISPs have done before.

But CBRS also is expected to support at least some private networks as well. Such private networks offer value to users and operators, but no often no direct revenue upside for the network operator.

Of course, there are many in the value chain who are not in the "connectivity as a service" role. All such private networks will create demand for infrastructure, maintenance, upgrades, design, perhaps connectivity and other services supporting other parts of the ecosystem. Consider radio instrastructure.

A 2019 report on the indoor market opportunity for CBRS, from Maravedis and EJL Research predicted that the CBRS radio node market will grow from revenues of about $3 million to $100 million by 2024, “driven primarily by private LTE deployments.” Keep in mind that is a prediction about mobile-type radio infrastructure used to support indoor market communications. 

Other estimates of CBRS radio capex illustrate the fact that--interesting as it is for some parts of the ecosystem--CBRS represents a very-small percentage of total mobile radio spending. According to Mobile Experts, CBRS CBRS radio infrastructure spending will not hit $1 billion in annual spending for five years or so. 

That makes CBRS an interesting and important market for some, not for all, on a global level. 

source: Dell'Oro Group

Other parts of the CBRS value chain represent various amounts of new sales activity as well, but it might be fair to note that many opportunities which are transformative or important for some suppliers (access system administrators, infrastructure, software, integration and consulting) might not prove especially large for connectivity service providers.

The value of CBRS obviously is a non-zero number, though, and the value often will come in the form of avoided cost, not direct incremental revenue. Cable TV operators are expected to benefit primarily from avoided mobile wholesale capacity costs.

Some internet service providers, though, may be able to use CBRS to support their internet access businesses, using CBRS for fixed wireless access. System integrators, network designers and consultants might in some cases see meaningful revenue upside as well. 

Of course, not all CBRS spectrum will likely be used using PAL. As with Wi-Fi, CBRS spectrum also includes “best effort” access without a license. For some use cases, best effort access might be sufficient, especially for many private networks. 

Also possible are many collaborative ventures where a PAL license holder might be willing to allow use of its license for a big private network, in some business arrangement. That might be interesting for large areas such as port facilities where a mobile operator can expect little financial return for providing direct service. 

In some cases, some apps or use cases might benefit from licensed access with less risk of signal interference and therefore unpredictable or less predictable performance. Collaborative networks (private on the premises but connected to the public network; private network but with rights to use PAL on the site; private network built and maintained by a public provider) might make sense in those cases. 

The point is that the new commercial value of CBRS networks will have a wider range of value drivers than has been typical for mobile spectrum.

Second Law of Motion, Second Law of Thermodynamics Provide Key Business Analogies

Newton's second law of motion explains that the acceleration of an object as produced by a net force is directly proportional to the magnitude of the net force, in the same direction as the net force, and inversely proportional to the mass of the object. 

A corollary of sorts is that “friction” is an uncorrelated or unbalanced force. In other words, friction always acts in the direction opposing motion. 

If friction is present, it counteracts and cancels some of the force causing the motion when any object is being accelerated. That means a reduced net force and a smaller acceleration. 

In this illustration Fa is the intended force, but faces uncorrelated forces including gravity and friction that essentially resist the applied force. 

source

And that is a similar concept to the idea of friction in business and life. No matter what resources are mobilized in pursuit of some objective, friction will reduce yield, effectiveness and impact. All organizational effort therefore must overcome friction. That is true for capital investment, competition, operating procedures, product development and production, distribution channels and customer support and service, plus marketing and legal or regulatory tasks. 

Virtually every business activity therefore involves some element of overcoming friction, which is the resistance to desired change or outcomes. 

As an energy conversion is somewhat inefficient, producing unwanted heat in addition to desired energy output, so friction prevents full and complete application of resources to any process. 

Friction is akin to the Second Law of Thermodynamics, which states that disorder (entropy) increases over time. In other words, order proceeds to disorder. So much organizational effort must be devoted to preventing entropy (decay). 

That is why all efforts to create a more frictionless business is an unstated objective of virtually all organizational activities.

Newtonian Technology Trends Post-Covid

Twenty years ago, futurist John Naisbitt wrote High Tech/High Touch, an examination of technology and a follow-on to his 1982 book Megatrends. It was Megatrends which predicted that people immersed in technology would be driven to seek human contact. 

High Tech/High Touch essentially concluded that the trend remains intact, shown in the prominence of both consumer technology markets and products, services and markets that offer escape from technology.

As the Covid-19 pandemic wears on, increasing our reliance on technology and restricting human contact, Naisbitt’s observations still hold. The more we are now forced to use technology, the more important will actual “high touch” matter. 

source: Megatrends

It is almost Newtonian: for every action there is an equal and opposite reaction. Kept indoors, demand for outdoor activities has grown significantly. Forced not to travel, people will want to travel. Required to interact virtually, people will want face-to-face encounters. 

The conventional wisdom that “everything has changed” suggests disruptive change in work and living habits that are permanent. That likely will prove to be a one-sided analysis. 

Post-pandemic behavior might be more unexpected than is commonly suspected, for several reasons. First, linear extrapolation from the present nearly always proves wrong. Non-linear change is more likely, an argument the “everything has changed” view also suggests.

But non-linearity cuts both ways. We might well see non-linear regression to the mean, as well as accelerated change of behavior. 

Many trends that already were underway before the pandemic  will be accelerated to an extent, though not nearly so much as many seem to believe. Naisbitt’s observations suggest why: to the extent we continue to work remotely, more often, we also are going to want and desire face-to-face contact. Unable to freely travel, humans will want to do so again. 

Zoom is not a perfect, or nearly perfect substitute for face-to-face interactions. People will want to get away from their screens, to the extent they are forced to rely on them. 

The Newtonian reaction to high tech will be high touch. 

Why the Broadband "Problem" Cannot be Permanently "Solved"

 So long as we keep changing the definition of “broadband,” we are likely “never” to see “improvement” in the number or percentage of homes or people able to buy the product, no matter how much investment is made in facilities. 

When we change definitions of minimum speed, for example, we automatically increase the number or percentage of locations or people that cannot buy the product. Colloquially, that is known as “moving the goalposts.” Put another way, our understanding of “broadband” changes over time. 

The classic definition of broadband was that it was any service running at speeds of 1.5 Mbps. In the U.S. market the official definition of “broadband” is 25 Mbps. But most consumers buy service at speeds an order of magnitude higher than the minimum definition. Yesterday’s power user is today’s light user. 

source: Openvault

And though new platforms might help, a continuing evolution of our definitions to support an increase in minimum speeds will continue to be a challenge for any market or country with lots of rural or thinly-populated areas. In the United States, six percent of the land mass is where most of the people live. 

How we define the market also affects our analysis of the amount of competition in the consumer broadband market. The common observation in the U.S. market, for example, is that minimum service at 25 Mbps is unavailable to “millions” of people. 

Of course, that finding requires a big assumption, namely that all satellite and mobile services are excluded from the analysis. Two U.S. satellite suppliers sell broadband access across virtually the entire continental land mass, while mobile speeds already exceeded the minimum threshold in 2019 and early 2020. 

If any and all services supplying 25 Mbps or faster speeds are considered, it might be very difficult to find any U.S. locations unserved by at least two providers. 

The point is that definitions and assumptions matter. By continually increasing the speed used as the definition of “broadband,” we will almost arbitrarily keep moving the goal line on who has it, where it is available and how many competitors can sell it. 

Ignore for the moment consumer choice, which has shown that most consumers buy services in the middle of the range: not the most costly or least costly; not the fastest or slowest offerings. 

Because “typical, average or median speeds” will keep getting higher, so will our definitions be adjusted. But at a time when satellite and mobile minimum and average speeds often already exceed the minimum definitions, and where most fixed network consumers buy services an order of magnitude above the “minimum” threshold, it is hard to “close the digital divide.”

There likely will always be some statistical gaps. Where there is a serious “problem” actually is--or will be--more debatable.

5G Is Not the Issue Anymore

 It increasingly is impossible to clearly delineate the value, strategic or revenue potential of 5G separately from the other companion developments that create value, strategic potential and incremental revenue. 

Consider edge computing and 5G for consumer mobile devices. Most observers now would agree that internet access, supplied by connectivity providers, is part of the broader internet ecosystem. Likewise, most of the growing use cases and revenue drivers depend on connectivity, but are not directly “owned” by connectivity providers. 

source: State of the Edge 202

That is the basic reason behind the interest, in some cases, in connectivity provider ownership and participation in adjacent parts of the ecosystem (applications, real estate, platform), beyond connectivity. 

By 2028, 4G and 5G mobile consumer and residential consumer applications will dominate the edge computing footprint, for example, says the State of the Edge 2020 report. A growing number of those apps would not be consumable without edge computing plus the latency performance and bandwidth made possible by 5G. 

source: State of the Edge 202

The edge computing power footprint for mobile and residential consumers will reach 16938 megawatts and 10843 MW, respectively by 2028, the report says. 

Edge computing power footprints for service providers and enterprise IT is expected to increase 7117 MW and 5800 MW, respectively. 

source: State of the Edge 2020

Mobile operators especially will be significant users of edge computing to support their own internal operations, including their virtualized 5G core and access network facilities. 

source: State of the Edge 2020

U.S. Gigabit Accounts Near 5%

 About five percent of U.S. fixed network internet access lines (also including business lines) in the second quarter of 2020 reached almost five percent, according to Openvault, up from 2.1 percent in the second quarter of 2019, and up from 3.75 percent in the first quarter of 2020. 

source: Openvault

6% of U.S. Land Mass is Where Most of the People Are

One oft-ignored facet of communication network economics is that the business model is helped when population density is high, and generally suffers when population density is low. Also, it is far easier to build a whole new network in a small area, compared to a continental land mass. 

About six percent of the U.S. land mass is “developed” and relatively highly populated. About 94 percent is unsettled or lightly populated, including mountains, rangeland, cropland and forests. 

source: USDA

Pastures are located largely east of the hundredth meridian. 

source: USDA

Croplands, at least at the moment, stretch a bit further west. 

source: USDA

Rangelands mostly are found in the West.

source: USDA

But even the higher-population areas east of the Mississippi River contain huge tracts of forest land. 

source: USDA

All those facts have implications for networks. Most of the population or potential users can be covered by a smaller amount of network infrastructure, at first. But network coverage is another matter, as 94 percent of the land surface is lightly populated, consisting of forests, mountains or range land. 

In just about any instance, in any market, though, 80 percent of the revenue might be generated by 20 percent of the accounts, locations or use cases. Ericsson studies show that just 30 percent of cell sites support 75 percent of all traffic on the network. 

So it should come as no surprise that the cost of rural infrastructure can be an order of magnitude higher than for denser urban infrastructure.

Does "Free Speech" Right Belong to the Speaker or the Public?

 Section 203 of the Telecommunications Act of 1996 makes clear that platforms are not responsible for the content posted by users of the platforms. That quite arguably has allowed platforms to build on third party expression without fear of legal action. If a user of a platform engages in “unprotected speech,” such as defamation, obscenity or speech in pursuit of a crime, the platform is not considered legally liable. 

On the other hand, potential users are not protected from decisions made by platform owners not to publish user content, either, and section 203 prevents legal action by users who feel aggrieved by the content moderation practices, whatever they happen to be. The issue in that case is a breach of acceptable community standards, platforms have argued. Others say it is censorship, a violation of free speech norms, and possibly rights. 

It’s a huge minefield, to be sure, but the protection of political free speech has--since the advent of electronic media--had to answer the question of “whose rights are protected?” In some ways it is a zero-sum game: every winner has to be compensated by a loser.

If it is the “speaker” who has the right, the “listener, viewer or reader” (the public at large) does not have the protected right. If it is the “listener, viewer or reader” (the public) who has the right, it is the speaker whose rights are circumscribed. 

The argument might be that if and when social media sites threaten the use of the medium for political speech, courts might approve of content-neutral regulations intended to solve those problems.”

As always, the issue also includes “what is political speech?” In the modern era, that is understood more broadly than it once was. The Supreme Court has extended the First Amendment’s protections to individual and collective speech “in pursuit of a wide variety of political, social, economic, educational, religious, and cultural ends.

There also are some narrow areas where First Amendment protections have been held not to hold. Obscenity, defamation, fraud, incitement, fighting words, true threats, child pornography and speech integral to criminal content are not protected. The problem is that people of good will can disagree about when those conditions exist. 

Courts also have upheld  “time, place and manner” restrictions that are content-neutral limitations imposed by the government on expressive activity. 

Such restrictions come in many forms, such as imposing limits on the noise level of speech, capping the number of protesters who may occupy a given forum, barring early-morning or late-evening demonstrations, and restricting the size or placement of signs on government property.

There are at least three possible frameworks for analyzing governmental restrictions on social media sites’ ability to moderate user content. First, social media sites could be treated as state actors who are themselves bound to follow the First Amendment when they regulate protected speech https://fas.org/sgp/crs/misc/R45650.pdf. 

If social media sites were treated as state actors under the First Amendment, then the Constitution itself would constrain their conduct, even in the absence of specific legislative action. In this framework, the public essentially has the protected right. 

The second possible framework would view social media sites as analogous to special industries like common carriers or broadcast media. Likewise, in this framework the public has the protected right. 

Past applications of political content fairness have sometimes been shaped by the concept of preserving freedom “for the listener or viewer,” even when shaping or restricting the freedom of the speaker. 

That has been most clear, in the United States, in television or radio  broadcasting, based on the idea that private firms are using public resources. The same idea was extended to cable TV operators, who use public rights of way. 

On the other hand, social media sites could be considered to function as do news editors. In that case, the publisher has the protected right. 

If social media sites were considered to be equivalent to newspaper editors when they make decisions about whether and how to present users’ content, then those editorial decisions would receive the broadest protections under the First Amendment. 

As a practical matter, speakers also can exercise prudence, manners, judgment or courtesy in their political speech. Speakers have the right to be rude, wrong, loud or boorish, but might choose not to do so. We call that civility. 

Does Facebook Shift on Regulation Also Lead to Change of Free Speech Rights?

For those of you not communications “regulatory geeks,” this headline from Facebook might not seem especially unusual: “Four Ideas to Regulate the Internet,” published under Mark Zuckerberg’s name. 

“I believe we need a more active role for governments and regulators,” Zuckerberg says. “By updating the rules for the internet, we can preserve what’s best about it--the freedom for people to express themselves and for entrepreneurs to build new things--while also protecting society from broader harms.”

For some of us who need to understand the role of regulation in shaping any industry’s profit potential, this position  is important.

For others who watch the development of U.S. regulatory models related to “freedom of speech,” it is perhaps shocking. We can debate the role of content platforms in shaping news and content with enormous political implications. But almost nobody would argue with the notion that Facebook, Google, Twitter and others now have more power or influence than traditional media.

And while most might agree that government censorship is not a good thing, platforms are private firms not traditionally covered by the First Amendment. Yet some might argue the danger of free speech suppression is not a political danger primarily or exclusively from “the federal government” but also “from the platforms.”

It is complicated, to be sure. Democracy is a means, not an end. Tyrannical behavior can be freely exercised by citizens using democratic means. Companies and mobs can restrict freedom of speech just as much as the federal government. 

Still, there is an important possible new shift here. Facebook has the right of free speech, “as a speaker.” But Zuckerberg also now says it is willing to live with regulations of various sorts that somewhat extend the right of free speech to “listeners, viewers and readers.”

Those two ways of looking at “who” has the right of free speech has changed over the centuries. Originally, the right was held only by speakers. In the era of electronic communications, a different attribution has happened.

The “right” was deemed to be possessed by “listeners or viewers.” That is the logic behind “equal time rules” for political speech on TV or radio broadcasts, for example. Over the last couple of decades, such rules have been peeled away, returning to the original sense of rights belonging to speakers.

What Facebook now proposes, at least in principle, is that some amount of rights now shift back to protecting the political speech rights of listeners, viewers and readers. 

It is possibly the sign of an important key philosophical shift. Almost all arguments about “fairness” for political speech on platforms are based on the idea that it is the audience which must be protected, not the platform as “speaker.”

It is possible we could see the beginnings of a long-term shift back to the concept that it is the listener, viewer or reader whose political rights are to be protected, a notion that arose only with the advent of electronic content. 

First, let us be clear, the U.S. constitution bars censorship or fettering of clearly political speech by the federal government. 

What has never been clear is whether regulation can be, or ought to be, applied to private actors in the economy, especially giant platform companies in the content business. In the past, that has been reason enough for the federal government to impose some restrictions on private actor content freedom.

In the past, the justification has been “use of public spectrum.” Something like that was applied to cable TV companies, which were held to have public interest obligations because they used public rights of way.

Irrespective of the logic and soundness of such reasoning, the matter of ”who has the free speech right” was changed. 

“Lawmakers often tell me we have too much power over speech, and frankly I agree,” says Zuckerberg. Right now the issues are privacy, harmful content, election integrity and data portability. Those are, some might argue, relatively peripheral to the matter of protecting free political speech. 

The biggest potential shift, though, is the longer term balancing of the rights of speakers and audiences. In principle, the First Amendment to the U.S. constitution protects citizens from suppression of free speech only by the government. 

When TV and radio broadcasting and cable TV developed, some amount of shift occurred. The rights were partially seen as being held by viewers and listeners. With the advent of huge and dominant content platforms, that might expand to include readers. 

Such changes take time, but have happened before. And that is why Facebook’s position matters. Perhaps it is the first of many changes that could affect and change platform roles in protecting free speech. 

Virtually all moves in the direction of platform regulation would be based on the rights of audiences, not speakers. It has happened before. And it always is quite tricky.

Advanced Technology Takes Longer Than You Think to Become Mainstream

Advanced technology often does not get adopted as rapidly as the hype would have you believe. In fact, most useful advanced technologies tend not to go mainstream until adoption reaches about 10 percent. That is where the inflection point tends to occur. That essentially represents adoption by innovators and early adopters. 

source: LikeFolio

One often sees charts that suggest popular and important technology innovations are adopted quite quickly. That is almost always an exaggeration. The issue is where to start the clock running: at the point of invention or at the point of commercial introduction? Starting from invention, adoption takes quite some time to reach 10 percent adoption, even if it later seems as though it happened faster. 

source: Researchgate

Consider mobile phone use. On a global basis, it took more than 20 years for usage to reach close to 10 percent of people. 

source: Quora

That is worth keeping in mind when thinking about, or trying to predict, advanced technology adoption. It usually takes longer than one believes for any important and useful innovation to reach 10-percent adoption. 

source: MIT Technology Review

That is why some might argue 5G will hit an inflection point when about 10 percent of customers in any market have adopted it.

U.S. Business Advanced Technology Adoption Still Very Low

No matter how sexy industry observers might find advanced information technology to be, most businesses, and most business managers and owners, rarely report, at least at the moment, actually using advanced technologies, with the exception of personnel at very-large firms, a study sponsored by the U.S. Census Bureau finds. 

“We find that adoption of advanced technologies is relatively low and skewed, with heavy concentration among older and larger firms,” the study finds.

At least one reason for muted current adoption seems to be that applying advanced technology requires significant investments in other technologies and the ability to change business processes to take advantage of those technologies. “

We also find that technology adoption displays features of a hierarchical pattern, with stages of technology adoption of increased sophistication that appear to build on one another,” study authors say. In other words, most advanced technology is not “rip and replace.” To take advantage of new technologies, lots of other things must also change. 

In fact, the percentage of firm respondents--from a sample of about 850,000 firms--suggests adoption of most advanced technologies, ranging from touchscreens to machine learning; voice recognition to machine vision; natural language processing to automated vehicles, is quite low, mostly in the low single digits. 

source: U.S. Census Bureau, Wired