Bell Labs Consulting sees short-term return and revenue increase from 5G mmWave network services
With deployment ongoing or planned in major global markets, 5G mmWave investment is positioned to ramp up in public and private mobile networks, as well as to support fixed wireless access and connect new types of cellular devices. For operators, 5G mmWave strategy should balance providing an enhanced user experience with adding capacity in localized hot zones and creating new service revenue opportunities.
While there are established challenges associated with 5G mmWave deployment, a new analysis by Bell Labs Consulting makes clear that with the right approach operators can achieve a four-year payback and 20% to 30% internal rate of return (IRR) following the payback period.
Bell Labs Consulting Principal Vikas Dhingra framed the issue: “mmWave has challenges, whether it is on propagation constraints, or whether it is on a lack of spectrum. But what we see as the key opportunity for telecom operators is the monetization of additional data traffic.”
Albeit to varying degrees, all three major U.S. operators have deployed 5G mmWave networks both mobile and fixed; the bulk of mobile investment is focused on urban cores, stadiums, airports, and other data-hungry locations. In Japan, all four operators—NTT Docomo, KDDI, Rakuten Mobile and SoftBank—have commercial 5G mmWave offerings. Earlier this year the Australian Communications and Media Authority auctioned off access to the 26 GHz band. And these are just some examples of what is accelerating traction around the world.
In working to realize the attractive payback period and IRR, operators have to think strategically about where to deploy 5G mmWave. “The key is to deploy 5G mmWave in localized, capacity-constrained areas, such as train stations, stadiums, indoor shopping malls, outdoor areas where there is much higher network capacity needs,” according to Dhingra.
Further to the capacity point, industry analyst Prakash Sangam, founder and principal with firm Tantra Analyst, wrote in a contribution to RCR Wireless News: “The straightforward answer to the mmWave skeptics who often point out its small coverage footprint is—it’s not coverage, but capacity! The [Bell Labs Consulting] report rightly points out the typical locations that they call ‘hot zones’ and use cases that are a perfect fit for mmWave.”
By adding capacity in these hot zones, operators can improve quality of experience and steer subscribers into more premium data plans while pursuing new business opportunities like 5G mmWave-based fixed wireless access and data plans for 5G-compatible laptops. This, Dhingra said, could potentially equate to up to an 8% increase in annual revenue.
TIRIAS Research Founder Jim McGregor concluded in a piece for Forbes that, “As with any new technology, the applications typically extend well beyond the initial intentions. It’s up to developers to innovate with the technology. However, there appears to be a clear financial benefit for operators to rapidly deploy mmWave.”
For a deeper dive into this subject:
- Read the Bell Labs Consulting white paper, “The business of 5G mmWave”
- And watch the companion webinar, “The business imperatives of 5G mmWave—A techno-economic evaluation of business attractiveness, revenue potential, and cost-effectiveness”
