The road to 5G: The inevitable growth of infrastructure cost

Background:

There is a widespread belief that every generation of technology brings new opportunities for telecom operators. But there is a slight twist.  When 4G was launched in 2009, telecom and mobile operators didn’t experience the same triumph as they witnessed at the time of the predecessor, 2G and 3G. Although there were substantial investments in 4G infrastructure, profit generated from 4G was not that impressive. Even in some regions like Europe and Latin America, revenues also dropped after the advent of 4G. Due to these events, there is uncertainty prevailing among operators related to investment in 5G infrastructure.

Current scenario regarding 5G technology:

On the other hand, the 5G technology is under final stage of testing. If normal circumstances prevail and the threat of coronavirus pandemic fades then 5G is poised to launch in some markets later this year. There is a mixed reaction from mobile operators. Both optimism and pessimism vary among the telecom operators. A handful of them is preparing while some are retreating from investment. The ones who are anticipating know that it will create opportunities to attain value from the new 5G use cases and an entrenched adoption of the Internet of Things (IoT). Also, they are pretty much aware that they’ll have to increase their infrastructure investments to a whole new level in this technology. The increase in infrastructure cost raises essential questions about the investment strategy and future profits for telecom players. So, in this article, we will emphasize on the infrastructure investments required to enable 5G technology.

Rise of new and innovative cases:

There are many things on the road to 5G, which are dubious. But it isn't hard to envision the rise of new and innovative use cases. To understand how these will change infrastructure requirements, we grouped them into three domains: enhanced mobile broadband, Internet of Things IoT, and mission-critical applications. These three use cases will need network performance to grow 10-fold over current levels across all the network parameters, as measured by latency, throughput, reliability, and scale. To reach that milestone, telecom operators will need to invest in all network domains, including the spectrum, radio access network (RAN) infrastructure, transmission, and core networks.

An evolutionary approach to infrastructure investment:

Several attributes of current 5G technology are built on 4G networks, rather than a complete departure from the former generations. It implies that mobile and telecom operators can take an evolutionary approach towards 5G infrastructure investment. For example, operators could start by upgrading the capacity of their existing 4G network by repurposing a portion of their 2G and 3G spectrum, or by acquiring additional spectrum when available. By the help of this mechanism, we can delay investments in 5G by evolving to LTE-and LTE-Pro features, such as 4×4 or massive MIMO (multiple inputs, multiple output technology). Such an evolutionary approach will be the natural path for most telecom operators, which will allow them to minimize investments. But still, the incremental revenue potential of 5G remains uncertain. The network domains which I mentioned above in new and innovative cases will further elaborate on the range of investment in 5G infrastructure. I will explain them one by one.

Spectrum:

The low spectrum is still coming to auction in low bands in several countries, but the majority of the countries will basically use them for increasing 4G traffic. Mobile and telecom operators are testing spectrum from 3.5 gigahertz to 80 gigahertz for 5G. At this point, most of the countries are emphasizing on acquiring 3.5 gigahertz bands over the short-to-medium term, which would be followed by 26 gigahertz and 28 gigahertz bands.  These new spectrums will provide telecom operators with greater bandwidth and an increase in air capacity. Lets take the European Union, which is now releasing up to 400 megahertz bandwidth on 3.5 gigahertz. These kinds of steps can cause capacity issues. Even if a new spectrum is available, mobile operators will need to increase their infrastructure investment exponentially to overcome certain kind of limitations. For instance, high-frequency spectrum offers extra capacity but also comes with much greater propagation limitations. Trials of 3.5 gigahertz spectrum indicate that its range falls to about 400 meters outdoors, which has been considered a very low range. So when the new spectrum is introduced, telecom operators will need to improve radio interfaces and antennas in order to increase the efficiency of the new spectrum.

Radio Access Network (RAN):

In rural and suburban regions, as well as along the roadways, telecom operators can handle the increased traffic easily by densifying existing networks with macro sites. But in several highly populated urban areas, they will need to depend on small-cell solutions for a couple of reasons: a higher concentration of traffic, as measured by traffic load per square kilometre, and also the use of higher spectrum bands. These small cell solutions include hyper-dense deployments which also contributes to growing 5G infrastructure investment.

Transmission:

For 5G deployment, the Fiber-only transmission will become essential. For improving transmission lines, telecom mobile operators have to undertake full-scale fiberization efforts. The fiberization is also compulsory for supporting small-cell deployment in urban areas. The fiberization process will increase the investment cost.

Core Networks:

Core networks have been upgrading from circuit switching and packet switching to converged structures, like the IP multimedia subsystems (IMS). The core networks have benefitted from broader IT advances, such as network function virtualization and software-defined networking. These core networks will also add to the investment costs.

The inevitable growth of infrastructure cost:

The cost and investments related to 5G, will vary over time and also depend on domestic conditions. The telecom operators have a couple of options. The first includes a lean-in strategy in which they give priority to 5G investments to accelerate commercial prospects. The other involves a conservative approach in which they delay 5G investments as long as possible while existing networks are updated. Check out? MediaTek Dimesnity 820 5G is Ready to Take On Snapdragon 765G