The year 2020 will certainly go down in history as a remarkable one for Wi-Fi, as the industry is being awarded massive increases in spectrum.
On April 23, the U.S. FCC voted to make available 1,200 megahertz of spectrum in the 6 GHz band for Wi-Fi. This is a very big deal, as the amount of spectrum available to Wi-Fi will increase from approximately 400 megahertz, the most significant increase in over 20 years. We expect Europe to follow, as the European Commission evaluates releasing 500 megahertz of the 6 GHz spectrum to Wi-Fi.
Only the newest Wi-Fi products will be able to operate in this spectrum, as the previous generations were not designed with 6 GHz. That’s like driving down the freeway during COVID-19—no traffic!
How much of a premium would people pay for that privilege? Observing both wired and wireless enterprise network equipment market pricing over the past 25 years, the sweet spot for price premiums in which users generally opt for the new technology has been in the range of 20-to-25 percent. Business cases will emerge that make price premiums, which result in revenue acceleration for manufacturers, a no-brainer. .
Dell’Oro Group estimates 10-15 percent of worldwide enterprise class Wireless LAN (WLAN) market access point unit shipments have been at the highest end. We surmise this percentage will increase—possibly doubling—with the advanced features and capabilities that 6E will enable. We anticipate significant innovation, with low-latency, high-definition video transmission capabilities.
The Commission also voted on the rules associated with managing Wi-Fi devices within the 6 GHz spectrum, which determines the rate at which equipment can be deployed. The ruling allows indoor low-power access points to be deployed through similar channels as prior versions of Wi-Fi. Indoor Wi-Fi equipment have comprised the majority of the enterprise class WLAN market. We therefore anticipate that 6E access points will be deployed rapidly, with shipments possibly by year end, meaning that manufacturer revenues could result in an acceleration in 2021. This would certainly be welcome, given the new lower level of the WLAN market, as enterprise offices are restaffed after COVID-19.
The Commission ruled that standard-power devices must be managed through an automated frequency coordination system, to prevent interference with incumbent services operating in the spectrum. This will hamper the rate of deployments, but will likely impact outdoor deployments, which have comprised about 5 percent of market units.
Questions we need to investigate include:
- Will the higher frequency require increased density of access point deployments? (Higher frequency signals degrade faster than lower frequency.)
- Will users be allowed to purchase spectrum? For example, similar to the situation with private LTE/5G, will users be able to purchase a designated radius, legally preventing interference with Wi-Fi 6E bands?
Background on 6 GHz
Opening up 1200 megahertz of spectrum in the 6 GHz band to Wi-Fi would address the growing need for capacity on the existing Wi-Fi spectrum. There has not been new mid-band spectrum made available for Wi-Fi and other unlicensed uses in more than 20 years, yet the use of Wi-Fi technology has increased on a massive scale. The additional capacity would enable faster data throughputs and lower latency—in effect turbo-charging Wi-Fi 6 and fortifying its competitiveness with cellular in the enterprise. The FCC chairman has announced his intention for a 6 GHz unlicensed spectrum auction to start sometime in 2020.
The 6 GHz spectrum is currently occupied by microwave products for utilities, public safety, and wireless backhaul. Utility companies and the U.S. Federal Energy Regulatory Commission are expressing concerns about possible interference with reliable operation of the nation’s grid. Utility companies own and operate their own telecommunications systems to update, repair, and restore their services that provide resources such as energy and water, to critical industries (e.g., railroads).
About Tam Dell’Oro
Tam Dell’Oro is the founder and president, and a senior analyst of Dell’Oro Group, a research and consulting firm that specializes in business planning and strategic competitive analysis in the networking and telecommunications industry. Ms. Dell’Oro is responsible for Wireless LAN market research program. Ms. Dell’Oro has published articles and has been cited in various industry. Ms. Dell’Oro is a frequently speaker at industry conferences, and events.
