24 5G : What Are the Real Status and the Real Economics


Market Studies

5G: What Are the Real Status and
the Real Economics?

Published: September, 2019

Overview | TOC | TOF

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Overview:

What is the real status of 5G, and what are the real associated economics? How will the various related areas of infrastructure support 5G? While the conversion to 5G offers some uniquely exciting possibilities, the hype associated with it has overshadowed the reality of the situation. The marketing claims of some carriers are already confusing the introduction of 5G. The base purpose of 5G, to add vast amounts of mobile phone capacity, is being overshadowed. Each of the three principal varieties of 5G - mmWave, mid-band, and low-band has different qualities and capabilities. These are being continually confused by present marketing hype. This report strives to provide a clear statement as to the real, current status of 5G deployment and likely future deployment, including an objective review of the economics associated with 5G.

5G refers to a set of international standards for a new (5th) generation of mobile communications service. It is intended to ultimately replace the service currently available in most of the US - 4G LTE. It is designed to be much faster (maybe up to 100 times as fast as 4G LTE) in terms of download or upload speeds. Data reception is anticipated to have much lower latency (time spent in transmission) so that the data is in very near real-time - close to zero lag.

This added speed is excellent, and it is often a discussion topic, but it is not the real objective of 5G. The aim is to provide higher capacity on our mobile networks. Higher capacity for data, for voice, but mostly for video. Why the need for added traffic capacity? Simple: Cisco is now estimating that the compound annual growth rate of mobile traffic through 2022 is 36%! Our 4G-LTE networks are already nearing capacity in large cities, and yet are facing this impossible growth curve. The 5G is the answer to provide a vast new ability to meet this growing demand. All the other rationales for 5G are dreams; this is the driving reason.

The first question mostly ignored is the cost. There are many estimates available for 5G full deployment (small cells, mmWave) in the US. Early (2017) estimates fell in the $28B to $36B range for five years. Newer estimates now suggest that the cost over seven years would be as much as $275B and that the fiber alone needed for deploying the small cells would be as much as $130B-$150B. For a reference point, $275B would be well over ten times the total AT&T 2019 Capital Budget! A current study takes a different approach to the cost question and estimates that the total cost of ownership (TOC - includes maintenance, capital, and all fees) could increase for the mobile networks by as much as 300%!

These are big numbers - yes, the B’s above are billions of dollars. These numbers suggest that we may be letting the technical hype run away with reality. A sudden conversion to a fully developed 5G large metro island, as is depicted in the many beautiful drawings, would be prohibitively expensive without some new services that would help, substantially, pay the bills. The question is, what new services pay for this? Alternatively, where are the added customers who pick up this big tab?

This comprehensive report is going to consider these issues and ultimately suggest the likely scenario for 5G deployment and associated five-year expenditures in this country. It moves into a discussion of 5G from many viewpoints, including objectives, frequency plans, architecture, and a listing and analysis of the vendors involved in the various parts of 5G infrastructure - phones, radios, and chipsets.

The report includes a discussion of the recent purchase by Apple of Intel 5G assets, and the recent Department of Justice approval of the T-Mobile/Sprint merger. Included is the analysis of the implications of 5G deployment of each of these current legal events.

The report presents, in detail, IoT, and Autonomous Vehicles as two possible use cases often mentioned for 5G. This report also examines the possibility of much higher levels of competition for high-speed Internet (and other fixed services) enabled thru 5G fixed wireless. The final main section of the report deals with specific forecasts for 5G in the US and the impact of those forecasts on overall network requirements. Those forecasts include:

The forecast deployment scenario and associated timeline and estimated capital expenditures as well as:

  • US Traffic – Total and Mobile
  • US Mobile Carriers Forecast Growth
  • 5G Phones Availability and Sources
  • IoT 5G Impact
  • Autonomous Vehicles 5G Impact
  • Over Build/ Cross Boundary Forecast
  • US 5G Penetration Forecast by Major Service
  • 5G Overall likely implementation plan and timeline

Appendixes provide details of the possible use cases and discuss the history of cellular development in the US. They also describe how we have moved along the path from one generation to the next. For reference, they also include various data and traffic issues.

Table of Contents

5G: What Are the Real Status and the Real Economics? 1
Table of Contents 2
Table of Figures 7
THE LIGHTWAVE NETWORK SERIES OF REPORTS 9
THE LIGHTWAVE NETWORK SERIES OF REPORTS 9
   The Lightwave Network 9
   The Lightwave Series of Reports 10
     General Reports on the Network 11
     General Market Reports 11
     Specific Systems Reports 14
Introduction 17
Economics 18
WHAT IS 5G? 19
   Higher Data Rate – 20
   Lower Latency – 21
   2nd Generation 23
   Massive Device Connectivity – 24
   Reduced Costs - 25
   Consistent Quality of Experience Provisioning - 26
STATUS OF THE PRIMARY US CARRIERS INVOLVED IN 5G? – 26
Verizon Wireless 27
   Verizon 5G Deployment Status 28
AT&T Mobility 32
  T-Mobile US 5G Deployment Status 33
Sprint Corporation 34
  Sprint 5G Deployment Status 35
   Mobile Hardware 36
  T-Mobile and Sprint Merger 37
Dish Network 38
ECONOMICS OF 5G 39
  What Investments Are Involved in Infrastructure? - 39
   Spectrum - 39
   Cell Site Work and Additions - 39
   Transmission - 40
   Network Core - 40
  How Much Will Infrastructure Investments Cost? – 40
  How Much Are the Major Telcos Going to Spend on 5G Infrastructure? – 40
ARCHITECTURE OF 5G 44
  5G Network Cooperation - 45
  5G Frequency Plans - 46
  Various Cell Sizes for 5G Networks - 47
  5G Network Architecture and Application Illustrations - 48
5G INFRASTRUCTURE 50
  Small Cell Antennas 50
   MIMO 51
   MIMO and 5G 51
   Massive MIMO Spectrum Multiplying Advantage 53
  Fiber 54
   Verizon Fiber Plan for 5G 56
  Phones 57
  5G Phones 58
   Android Based Phones 58
   Apple 58
   Samsung 59
   LG 59
   Huawei 60
  Other Customer Access Devices 60
  Radio Equipment Manufactures 60
   Huawei 61
   Ericsson 61
   Nokia 61
   ZTE 62
   Samsung 62
  Chip Set Vendors 62
   Intel 62
   Qualcomm 63
   Samsung 64
   Apple 64
   Huawei 64
Types of 5G 65
   Stationary 65
   Mobile 66
5G FORECASTS 67
Forecast Deployment Scenario 67
   2019 67
   2020 68
   2021 68
   2022 and Later 68
Timeline 69
Capital Forecast for 5G 69
Individual Area Forecasts 71
   Mobile Traffic Forecast 71
   US Mobile Carriers Forecast 73
   5G Penetration Forecast – US 74
   Smartphone Growth Forecast for 5G - the US 77
    5G Phone Introduction Plans 78
   5G US Penetration Forecast - Phones 80
   Major Use Cases of 5G – Penetration Forecast 80
    IoT – Internet of Things – 5G Penetration Forecast 81
    Autonomous Vehicles – 5G Penetration Forecast 82
   Forecast Network Impact of Autonomous Vehicles and IoT 83
   Over-Build Forecast 83
Forecast Summary 84
   Traffic: 84
   US Mobile Carriers: 84
   Phones: 84
   IoT: 85
   Autonomous Vehicles: 85
   Overbuild/ Cross-Boundary: 85
APPENDIX I - HISTORY OF GENERATIONS OF CELLULAR PHONES IN THE USA 86
HISTORY OF CELLULAR PHONES IN THE US 86
What are the Generations? 86
   1st Generation: 87
    1G Standards: 87
   2nd Generation: 88
    2G Standards: 88
   3rd Generation: 89
    High-Speed Downlink Packet Access - 89
    3GPP Long Term Evolution, the Precursor of LTE Advanced - 89
    Evolved HSPA: 89
    3G Standards: 90
   4th Generation: 91
    LTE Advanced – 91
    MIMO – 91
    4G Standards 91
   5th Generation: 92
    5G Standards – 92
APPENDIX II. MAJOR USE CASES FOR 5G: IOT, AUTONOMOUS VEHICLES, OVERBUILD 94
IoT - The Internet of Things 94
   Availability of a Network for Connection – a Major Problem with IoT 95
    Cellular IoT Connections Explained: NB-IoT vs. LTE-M vs. 5G and More 95
    How did Cellular IoT come to Be? 96
    Cellular IoT is meant to meet the requirements of low-power, long-range applications. 97
     Cat-1 97
     Cat-0 97
     Cat-M1/Cat-M/LTE-M 97
    5G as an IoT Connection Solution 98
   How Does 5G Enable IoT? 98
Autonomous Vehicles 99
   Autonomous Vehicles Benefits 99
   Current Versions of Autonomy 99
   Issues with Autonomous Development 101
    Safety 101
    Business Case 102
    Availability of a Network for Interconnection 102
Overbuild - 5G as a Major Competitive Tool 104
   Overbuilding 104
   Cross-Boundary Service 104
Competitive Implications 116
APPENDIX III - LIST OF US CELLULAR CARRIERS 110
   Contiguous US and Hawaii 110
   Alaska 111
APPENDIX IV - TRAFFIC STATISTICS RELATIONSHIPS 113
   SONET/SDH Data Rates 116
APPENDIX V DATA TRAFFIC FUNDAMENTALS 117
INTERNET TRAFFIC CALCULATIONS 117
   Bits and Bytes 117
   Transfer Rate 117
   Busy Hour Traffic 118
   Protocol Efficiencies 119
   Statistical Multiplexing 119
   Peaking 120

Table of Figures

Figure 1, Lightwave Network 10
Figure 2, 5G Capacity Capabilities 20
Figure 3, Theoretical 5G Speed 21
Figure 4, Standards Evolution from 4G to 5G 22
Figure 5, Lower Latency Triangle - 5G 23
Figure 6, IoT Sensing Points Explosion 24
Figure 7, 5G Connection Capabilities 24
Figure 8, US Major Mobile Carriers (Subscribers) 26
Figure 9, Verizon Coverage Map 27
Figure 10, AT&T Coverage Map 30
Figure 11, T-Mobile Coverage Map 32
Figure 12, Sprint Coverage Map 35
Figure 13, Size of Major Mobile Carriers after Merger '000s (end of 2017- 2019 data) 37
Figure 14, Major Telco Capital Expenditures 2013-2018 40
Figure 15, 5G Overall Layout 44
Figure 16, Cell/Technology Cooperation 45
Figure 17, 5G Frequency Allocation – US 46
Figure 18, Cell Types from Macro to Small 48
Figure 19, 5G Pictorial Architecture 48
Figure 20, 5G Infrastructure Applications 49
Figure 21, Different Types of Antennas to be Used with 5G 50
Figure 22, MIMO Multipath Propagation Increases Thru-Put 51
Figure 23, Depiction of Massive MIMO 52
Figure 24, Example of MIMO Antenna 53
Figure 25, 5G Layout Showing Fiber Connections 54
Figure 26, Graphical Illustration of Fiber's Place in a 5G Network 56
Figure 27, Smartphone Growth in US 57
Figure 28, Fixed Wireless 5G 65
Figure 29, 5G Forecast Timeline 69
Figure 30, Capital Expenditure Forecast 70
Figure 31, Major Data Traffic Sources 71
Figure 32, Mobile Traffic Growth 72
Figure 33, US Mobile Phone Data Traffic 72
Figure 34, US Major Mobile Carriers Forecast 73
Figure 35, 5G Penetration - One Forecast 74
Figure 36, 5G Penetration Forecast by Major Application 75
Figure 37, Smartphones as a Proportion of Total US Mobile Phones 77
Figure 38, Landlines are a Dying Bread 78
Figure 39, US Smartphone Shipments 79
Figure 40, Smartphone Penetration Forecast 80
Figure 41, IoT Sense Point Forecast 80
Figure 42, Network Impact of Autonomous Vehicles and IoT 82
Figure 43, Wireless Penetration by Generation and Forecast 87
Figure 44, Network Generations Timeline 93
Figure 45, Conceptual Drawing - Internet of Things (IoT) 94
Figure 46, Cellular Approaches to IoT Connections 95
Figure 47, Goals of 5G 98
Figure 48, Some Current Partially Autonomous Versions 100
Figure 49, Verizon's NOOF FiOS Service 105
Figure 50, 5G Cross Boundary Service Example 106
Figure 51, Fixed Broadband Service Providers - US 107
Figure 52, Fixed Wireless Depiction 108
Figure 53, Traffic/Speed Relationships 113
Figure 54, Example of Various Traffic Sizes 114
Figure 55, Multiples of Byte 115
Figure 56, Wavelength to Frequency Conversion Chart 115
Figure 57, Sonet/SDH Conversions 116
Figure 58, New Transfer Rate Forecast 118
Figure 59, Summary of Concepts 121