The costs and benefits of 5G

The race to be the first carrier to provide 5g services to consumers is well and truly on.

The costs and benefits of 5G. Should mobile operators stop chasing the pipedream?


The race to be the first carrier to provide 5g services to consumers is well and truly on. But at what cost? Operators intent on implementing a 5G network are faced with a mammoth technological task, including more spectrum, frequency bands and more transmission points and this all means a huge bill to foot. Like most arms race, the operator race to 5G doesn’t come down to direct benefits for industry but instead beating the other guys to the finish line.


The cost to benefit ratio for the mobile industry is questionable and it comes at a time when operators have the opportunity to offer consumers content packages that may make more sense for everybody involved.  


5G Tech Challenges for Mobile Operators


The costs of rolling out 5G lies in the technological hurdles involved in, and the ways mobile operators can overcome them. A survey and report conducted by the Telecommunications Industry Association has named these tech challenges, including spectrum issues, network densification, network slicing and virtualization.


Chris Cave, director of Research and Development for InterDigital, a mobile tech R&D company, says that “most deployments will certainly utilize spectrum below 6 Ghz, where traditional operators are familiar with the technical issues, and where they know how network propagation works. But 5G networks will also exploit spectrum above 6 Ghz. There are significant challenges at those frequency ranges, and existing mobile operators have limited experience working in them.” Beyond the frequency issues, there will also be regional spectrum differences for different devices and costs will vary around the world.


Cave continues that “higher frequency bands means more density is required in the network—more transmission points, more base stations, and smaller cells—which will add significant requirements especially for transport and backhaul networks.” This means that mobile operators will need to introduce highly capable fiber optic connections to ensure they deliver the bandwidth expected from a 5G network.


Perhaps one of the most complex challenges that mobile operators face with implementing 5G is network slicing and virtualization. This means mobile operators optimizing their networks so they deliver the results expected while keeping costs as low as possible.


“There are some different network slicing and virtualization technologies coming into play in this area, which will give operators a lot more flexibility in terms of running their core networks more efficiently. The process of network slicing is very attractive in this context because it allows the operators to be far more flexible in allocating resources to different services as needs change over time,” says Cave.


When successful, the 5G wireless revolution will introduce lightening broadband speeds and shared wired and wireless infrastructure uses but no revolution comes about without casualties and costs.


The Cons of 5G


Just because every operator in town is desperate to be the first to provide 5G isn’t a reason in itself to chase the pipedream. Keeping up with the Joneses comes with its own risks. 5G will mean more bandwidth for users. Most users get about 7.2 Mbps for 3G networks, but demands for streaming movies, listening to music and OTT services meant that 4G had to be introduced. 5G is expected to deliver enough bandwidth to keep up with all of these consumer demands.


But bigger bandwidth means less coverage. Most users are already familiar with the lack of coverage that 4G involves this because the network uses smaller cells known as “femtocells” and “picocells”. Smaller cells are distributed across the same geographical region and although they provide more bandwidth, they are also less reliable. 5G will be no exception.


“The pace of 5G development is already beyond the expectations of many observers,” says Sameh Yamany, CTO of Viavi Solutions. “Now, as the technical delivery of data is starting to coalesce, it is time to think ahead to how future 5G networks can manage the disparate requirements of high data rates, very low latency applications and large-scale IoT services while maintaining Quality of Service.”


Another downside involved with the 5G network is again the issue of spectrum. Miguel Leiva-Gomez says that the “the very limited amount of space in the radio spectrum makes it difficult to apply new technologies to carrier networks. We’ve already overcrowded it, and 5G isn’t going to make things any easier.”


Footing the Bill for 5G


All of these tech challenges means investing a ton of money. The latest GSMA Intelligence report has predicted that by 2020, US mobile operators alone, will spend an estimated USD $100 billion upgrading to 5G. That’s cash that most mobile operators simply do not have.


We’ve already extensively covered the OTT choke on mobile networks and what operators are doing to fight back, but needless to say, mobile operators revenues are tumbling and they don’t have the money to be throwing at 5G networks.


The costs to benefit ratio for mobile operators when it comes to 5G is unclearmany critics argue that the cash strapped mobile operators should be investing in current networks and that implementing the 5G network won’t be beneficial to consumers or mobile operators.


As Webb puts it in his book the 5G Myth: And why consistent connectivity is a better future, “If [mobile networks] were to all critique 5G, pointing out that the costs would lower their profitability and that the services offered were not appealing to subscribers, then this might steer the industry in a more appropriate direction. But if one of them were critical when their competitors were supportive it might be exploited by their competitors, who could show how they were more forward-looking”.


So why does the mobile industry feel such a strong need to be the first to provide 5G? It comes down to the belief that consumers will stick with the big mobile operators who


Mobile operators feel that they will have no other way to raise consumer’s bills. According to a new forecast from research and consulting firm Strategy Analytics “wireless service providers have essentially squeezed all they can out of mobile subscribers, and that past the year 2021 there won’t be any way for such providers to raise customers’ monthly bills.” In this context, mobile operators are under immense pressure to be appear to be the coolest kids on the block, adapting the latest tech innovations even if it is at their own peril.


Why do Consumers Want 5G?


4G was introduced so that consumers had enough bandwidth to stream and download content on their mobile devices. It’s nothing to do with better signal strengths for telephone conversations. It all comes down to data and users want that data so they can consume content.

The logical alternative to investing in a 5G network is to give consumer want they want right now, instead of in 2-3 years at at huge costs. Give consumers access to content by investing in packages specifically designed to cater for their needs. More and more mobile operators are beginning to realize the “why” behind the apparent need for 5G and are offering their consumers an alternative to the messy business of 5G.

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