Mobile data traffic to pressures market for 5G, spectrum and increased capacity
Editor’s Note: With 2016 now upon us, RCR Wireless News has gathered predictions from leading industry analysts and executives on what they expect to see in the new year.
With the GSMA predicting North American mobile data traffic will grow at a compound annual growth rate of 42% per user between 2014 and 2019, it’s clear operators in 2016 must address the continued surge in capacity demand. However, the GSMA also highlights North American operators are confronted with slowing revenue growth, making it vital they tackle this need for capacity in a way that creates a financially viable business case.
In 2016, it is likely this will prompt operators to turn to emerging opportunities in higher spectrum bands and advanced wireless solutions across both backhaul and the radio access network. In addition, with the first “5G” technology trials set to take place in 2016, the industry will start to undertake the research needed to truly pick up the 5G mantle. With 5G network infrastructure in the U.S. forecast to cost $104 billion, finding an economically viable way to launch next generation connectivity must be at the core of operators’ strategies.
The path to 5G takes shape
With commercial 5G deployment not expected until 2020, we should expect to see the progression of “4G” positioning in the interim, with technologies such as LTE-Advanced leading to “4.5G” or “4.75G” branded services (much like it did with 3G). Although the path to 5G is becoming clearer, 5G still has many unknowns, which the industry will need to address. In 2016, we will therefore see operators conduct essential 5G technology trials and research, some of which will play an important role in enabling 3GPP to undertake their phase one specification. As this research progresses and unknowns become clearer, operators will start to define the new backhaul strategies that will connect the increased number of base stations needed for 5G. In some instances, these base stations will come in the form of outdoor small cells. While the pace of adoption for outdoor small cells has been slower than anticipated for LTE, we expect to see them deployed in much greater numbers as 5G develops.
Operators boost their wireless network assets
With continued growth in mobile and broadband data expected in 2016, we will increasingly see operators utilize wireless technology to build out last-mile fixed business connectivity. In some cases this will involve upgrading legacy wireless networks. In others, we will see a move away from leased fiber, with more independent local exchange carriers, competitive local exchange carriers, cable companies and Internet service providers building their own wireless assets to increase the speed at which they can deploy carrier-grade services. For those looking to gain a foothold in the highly competitive enterprise market, cost-effective wireless solutions can quickly expand coverage and provide an uplift in services to existing customers. This is a trend that has built steadily during 2015 due to its ability to differentiate operators’ services, whilst improving their customer retention and profitability.
One such wireless technology that is enabling carriers to expand their carrier-grade services and improve profitability is licensed point-to-multipoint. Licensed PMP offers a faster time to market and up to 50% total cost of ownership savings compared to alternative carrier-grade technologies, providing a cost-effective means of delivering high-capacity services.
Importance of spectrum management
Operators will have a sharp focus on managing their spectrum as capacity demand rises in 2016, leading to investment in new frequencies that support future services across both the RAN and backhaul.
On the RAN side, constraints on the amount of spectrum owned could drive significant spending on new spectrum if it becomes available, as we saw with the AWS-3 auction at the start of 2015. We may also see a push from operators to utilize unlicensed 5 GHz spectrum, which until now has been the domain of ISP Wi-Fi services. However, while technologies such as LTE-U may provide a solution to capacity concerns in the short term, increased utilization of the 5 GHz band is liable to result in pronounced congestion, making it problematic in the long term. When this happens, we are likely to see increased adoption of licensed bands above 6 GHz. This will be the only viable option for ISPs to guarantee the quality of service and scale capacity of their fixed broadband services.
On the backhaul side, operators will be looking to maximize existing spectrum assets through the evolving portfolio of highly efficient wireless technology that is now available in the U.S. We will also see a growing use of higher microwave frequencies and millimeter wave as new backhaul solutions come to market. As LTE networks develop, facilitating use of these spectrum bands is vital, as they have the capacity and country-wide availability to manage the predicted rise in data traffic, as well as the properties which create more profitable business models.
Changing business models
As we look ahead into 2016, it is clear that operators will need to adapt and change their business models to manage the ever-changing market dynamics and shifting shape of network traffic. Only through doing this will they be able to create vital new revenue streams, while still delivering the capacity their customers require.
To achieve this they will need to harness the innovative solutions coming into the market, as well as develop their understanding of future technologies that will underpin the next generation of connectivity. With the demand for capacity continuing to surge, a new wave of wireless solutions will offer operators a quicker, more cost-effective and scalable means of delivering the services customers demand, both in the immediate and long term.
