With 5G NR now a reality and preliminary estimates indicating that 5G NR comprises a tangible portion of the overall RAN market, some reflection to better assess how the vision and projections have changed as the 5G narrative has evolved is now in order.
A review of our 5G coverage over the past couple of years reveals that the overarching vision has not changed significantly. Though 5G was initially driven by Fixed Wireless (FWA) and Mobile Broadband (MBB) (Figure 1 & 2), the gap between the two has clearly surprised on the downside. Predicated on the assumption that IoT would continue to rely on the 2G-4G network, the belief has been that Massive IoT (mMTC) using 5G chipsets would take longer to materialize and be more of a post-2025 event for the early adopters—the main caveat here being that NR MTC might be a possible topic contender for Rel-17, implying that 5G mMTC could accelerate at a faster pace than initially expected.
The thematic underpinnings are easy to conceptualize and have remained relatively constant, with 5G initially being driven by improved cost efficiencies for MBB applications, though admittedly we might at first have been a bit too optimistic about the near-term uptake of new use cases, including AR/VR and industrial automation.
And even though the 5G narrative has morphed somewhat with the technology now initially being primarily just another “G” delivering improved capacity and cost efficiencies for the use cases we are familiar with today, the vision that 5G over the long-term has the potential to be a game changer—paving the way for new applications and use cases that will alter the way humans and machines communicate, and have a significant impact on the wireless based economy still holds. But clearly the industry has come to terms with the fact that it will take some time to realize the full potential with 5G (Figure 3)
Although the fundamental building blocks within the long-term vision have not changed, the forecast has been revised. First and foremost, the 3GPP standard and the ecosystem has developed at a faster pace than we originally projected. More specifically, our 2014 5-Year RAN forecast did not anticipate that operators in South Korea and Switzerland would offer nationwide 5G NR by the end of 2019. Nor did the original 5G NR analysis project that BTS shipments would accelerate at a significantly faster pace than has been the case with any other technology (Figure 4).
The mmW journey has been fascinating to say the least with the industry sentiment fluctuating about the role the technology will play for mobile applications. Initially viewed with skepticism, industry consensus turned more optimistic as the engineers brought the technology out of the labs into the field while operators began accumulating mmW spectrum. Then in 2017, one of the leading equipment suppliers shared simulations suggesting the mmW business case needed a reality check – SINR in excess of 15 dB is required to realize consistent Gbps performance resetting expectations that mmW would deliver Gbps up to a mile and instead the baseline was recalibrated to hundreds of Mbps over hundreds of feet resulting in challenging near-term cost per GB economics relative to the mid-band Massive MIMO configuration in urban areas with larger inter-site distances. Not to worry, around the same time, Qualcomm came to the rescue publishing simulations suggesting that co-siting 5G NR mmW equipment on existing macro infrastructure could yield 50% to 80% coverage in urban areas. But the Italian auction put a bit of a damper on the mmW economics after Vodafone Italy paid 1685 M Euros for 80 MHz of Cband spectrum and 33 M Euros for 200 MHz of 26 GHz spectrum. After all, if Qualcomm’s simulations were correct, why would there be a ~130x delta per MHz comparing the C-Band with the 26 GHz spectrum. The sentiment turned more upbeat again in 2019 and one of the main takeaways from the MWC 2019 event was that it is still early days but mmW was now real, there was even talks about deploying the technology indoor one day, phones are coming to the market, there will of course be some kinks initially but in general there was strong consensus mmW NR shipments would accelerate in 2019.
Even though deploying 5G NR in the mid-band spectrum using the existing macro grid will yield the best ROI for some time for operators seeking to optimize cost per GB and average speeds, our view has always been that mmW economics will improve over time as the inter-site distances shrink and the technology will play an extremely important role over the long-term (10+ years). Admittedly we were initially more in the sceptics’ camp when it comes to assessing the near-term upside with an initial forecast that mmW would drive less than 1% of the cumulative 5-year RAN capex. However given the incredible progress with mmW technologies working years ahead of expectations surprising even the most ardent sceptics, an upward revision was past due resulting in a more favorable near-term outlook (Figure 5).
In short, the 5G forecast has been adjusted to reflect the fact that the technology has accelerated faster than most everyone expected. And even as the 5G narrative and near-term technology drivers have evolved with 5G initially being just another G, the long-term vision that 5G will be more than just a faster and bigger pipe still holds.
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