Verizon is proving to all of us that 5G millimeter wave can effectively replace landlines in many places. The technology works. However, CEO Lowell McAdam is clear the financial case is still to be proven. Rupert Wood of Analysys Mason is an always interesting analyst. He's speaking at the excellent TNO Ultrabroadband Conference June 27. 

In particular, can the cost be brought down enough to make money with a 5G millimeter wave network for fixed wireless? The range today is short, which means you'll need many, many cells with a massive backhaul network. One estimate I've heard is that the U.K. would need a million or so. Building that is so expensive should you go all the way home with the fiber?

Rupert's tentative conclusion: the new 5G entrant would need to "buy/build something like the network you’re wanting to displace." He looks at the question of capital efficiency. (More of his comments below.)

A major overbuild is certainly possible; Verizon is spending $300M on fiber in Boston, where they want to turn off their copper.

Some premises would get fiber direct; others, a millimeter wave network. In other places, the incumbent telco has enough fiber to bring the cost down. Without a doubt, millimeter wave will be the right choice in some places. 

Two claimed technical improvements would make a major difference. Ericsson's Karolina Wikander points out that today's wireless backhaul has very low latency and might work for less expensive backhaul. NTT's CTO Onoe believes that beamforming can improve millimeter wave reach; the short range of mmWave may be a "myth." They are both respected engineers worth listening to, but neither technology is established.

Onoe and almost everyone else doubts millimeter wave for mobile will see volume until well into the next decade. Linley Gwinnapp shared with me a private analysis paper that points to the possible high cost of millimeter wave mobile phones.

"Processing 5G’s wider channels and extreme data rates could require 10x more transistors than in today’s phones; these modem chips will be very expensive even if built in 10nm or 7nm technology. Without Moore’s Law, these chips won’t decline in price over time. Furthermore, the higher data rates operate only in new bands at 3GHz and above, adding RF components and antennas to existing designs.

(Linley has a great headline for the story that Intel is exiting 3G and 4G modem chips because their Atom chip didn't make it: Intel Exits Mobile as Atom Bombs. Intel has lost something like $10B over the years trying to find a niche in communications chips. Will Strauss, another analyst I respect, has a colorful look at Intel's struggles.)

Is Moore's Law dying? Marconi Fellow Henry Samueli has contended for several years that a Moore's Law scaling will become challenging as we approach atomic scale. Most chip engineers agree with him. If you listen to Henry closely, you'll realize he is not saying chip progress is over. The historic performance increase driven by smaller feature sizes needs to slow, but shrinks are unlikely to be the driving force after the next few years. I'm pretty confident that advances like faster stepper motors will continue bringing down chip prices, but I suspect heat and size will be harder to advance. 

  As I wrote this, I came to the tentative conclusion that millimeter wave fixed will be a comparatively modest market until millimeter wave mobile becomes commercial next decade.

Millimeter wave is close to a natural monopoly; two networks cost nearly twice as much to build as one. The four to seven networks normally required for competition to work well seem impossible to me. At the moment, I'm a voice in the wilderness in policy circles saying we need to be ready for competition to become even more limited. Competition as the only solution has become close to religion for most policymakers. Competition is great when it works. Often it doesn't work.

Mike O'Reilly and Jessica Rosenworcel (whom I respected) are burying their heads in the sand because they don't know what to do about weaker competition,

 Here's the note from Rupert Wood. The high capital cost of millimeter wave is challenging.

In thinking about whether 5G is a threat or an opportunity for fibre, I think it’s important to stand back from the raw bandwidth issues, because we don’t know what they’d be in real life for 5G, and think about capital efficiency. FTTH has to be rethought as a shared network with multiple functions, one of which  - still the largest -  is broadband. Having access to an existing dense optical distribution network in the right urban locations, and with sufficient flexibility to deliver multiple services (e.g. with NG-PON2 overlay) including x-haul for small cells/C-RAN/5G, is probably the most capital-efficient way forward.

 

There is no growth in core mobile revenue if mobile cannot find a way to displace fixed NGA connections. 4G/4.5G has proven largely incapable of doing so and mobile remains a tiny proportion of Internet traffic. Mobile data traffic growth is markedly down in mostadvanced markets (though not in the USA if the latest CTIA figures are to be believed), mobile has not been able to address the great indoors in a cost-effective way, and this is leading / will lead to a steady erosion of mobile share of overall telecoms revenue. Moreover, fixed data traffic is growing fast (sometimes faster than mobile) in many of these markets. So line substitution isn’t happening (FBB is still growing), and data traffic substitution is slowing down or even reversing, as in Japan.

 

If 5G is really going to threaten FTTx/DOCSIS3.x, it needs to find a way to deliver on a cost-effective basis, 300-500GB per month to each household (several operators are getting 200GB+/month average on fibre already). This I doubt is possible without buying/building quite a lot of the kind of network you’re wanting to displace. The bulk of the real cost of 5G will be, as with FTTH, in the infrastructure, planning, permissions etc., not the technology. Much would depend on the viability of wireless x-haul (including self-backhaul) for 5G in urban environments, but if FTTH is in place then you’d use it because it is a much faster and more capital-efficient way of proceeding.

 

FTTx/G.Fast probably won’t be enough for x-haul (especially as much of it will be FTTC), and this may be true for HFC/DOCSIS too.

The market structure in the US may deliver different strategies and different outcomes because unusually it has national mobile plays, but only sub-national fixed plays. In long-term, though, the capital inefficiency of outside-in will I think make mobile-only or mobile-first a very tough business to be in.

I’m planning a report this summer on the subject.

dave ask

Newsfeed

The 3.3-4.2 spectrum should be shared, not exclusively used by one company, concludes an important U.S. Defense Innovation Board report. If more wireless broadband is important, sharing is of course right because shared networks can yield far more

It does work! Verizon's mmWave tests over a gigabit in the real world. 
The $669 OnePlus 7 Pro outclasses the best Apples and probably the new Galaxy 10 or Huawei P30 Pro. Optical zoom, three cameras, liquid cooling, Qualcomm 855 and more.
Korea at 400,000 5G May 15. Chinese "pre-commercial" signing customers, 60,000-120,000 base stations in 2019, million+ remarkable soon. 
5G phones Huawei Mate 20, Samsung Galaxy 10, ZTE Nubia, LG V50, and OPPO are all on sale at China Unicom. All cost US$1,000 to 1,500 before subsidy. Xiaomi promises US$600.
Natural monopoly? Vodafone & Telecom Italia to share 5G, invite all other companies to join.
Huawei predicts 5G phones for US$200 in 2021, $300 even earlier
NY Times says "5G is dangerous" is a Russian plot. Really.
Althiostar raised US$114 million for a virtual RAN system in the cloud. Rakuten, Japan's new #4, is using it and invested.
Ireland is proposing a US$3 billion subsidy for rural fibre that will be much too expensive. Politics.
Telefonica Brazil has 9M FTTH homes passed and will add 6M more within two years. Adjusted for population, that's more than the U.S. The CEO publicly urged other carriers to raise prices together.
CableLabs and Cisco have developed Low Latency XHaul (LLX) with 5-15 ms latency for 5G backhaul,  U.S. cable is soon to come in very strong in wireless. Details 
Korea Telecom won 100,000 5G customers in the first month. SK & LG added 150,000 more. KT has 37,500 cells. planning 90% of the country by yearend. 
The Chinese giants expect 60,000 to 90,000 5G cells by the end of 2019.
China Telecom's Yang Xin warns, "Real large-scale deployment of operators' edge computing may be after 2021." Customers are hard to find.
Reliance Jio registered 97.5% 4G availability across India in Open Signal testing. Best in world.

More newsfeed

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Welcome On Oct 1, 2019 Verizon turned on the first $20B 5G mmWave network with extraordinary hopes. The actual early results have been dismal. Good engineers tell me that will change. Meanwhile, the hype is unreal. Time for reporting closer to the truth.

The estimates you hear about 5G costs are wildly exaggerated. Verizon is building the most advanced wireless network while reducing capex. Deutsche Telekom and Orange/France Telecom also confirm they won't raise capex.

Massive MIMO in either 4G or "5G" can increase capacity 3X to 7X, including putting 2.3 GHz to 4.2 GHz to use. Carrier Aggregation, 256 QAM, and other tools double and triple that. Verizon sees cost/bit dropping 40% per year.

Cisco & others see traffic growth slowing to 30%/year or less.  I infer overcapacity almost everywhere.  

Believe it or not, 80% of 5G (mid-band) for several years will be slower than good 4G, which is more developed.