Not too long ago, U.S. cell business commerce affiliation CTIA printed a examine carried out by the financial consultancy NERA. It claimed that releasing further spectrum for full-power 5G wide-area networks would generate a $260 billion uplift in GDP, and 1.5 million further jobs, for each 100 megahertz auctioned. It used this consequence to name for an additional 400 megahertz to be made accessible within the near-term.
Nonetheless, whereas the NERA examine might on the floor seem to undertake a smart methodology, it misses a spread of essential elements that forged vital doubt on its quantitative evaluation and conclusions. Under, we focus on:
- Prices and delays concerned in clearing and releasing spectrum bands
- An implicit assumption that every one midband frequency ranges are equally useful
- Know-how evolution to enhance community effectivity of present spectrum
- Uncertain predictions over new spectrum’s affect on Mounted Wi-fi Entry (FWA) deployment and worth
Prices of spectrum launch
Firstly, the report ignores the prices, time and different penalties of clearing any new spectrum for public sale and cell use. A number of bands beneath dialogue are presently utilized by federal methods, equivalent to army radars and protection communications.
The Division of Protection initiatives clearing CTIA’s desired bands would value a whole bunch of billions of {dollars} and take a few years to specify, check, procure and implement appropriate new army wi-fi gear for different bands — risking disruptions that might probably compromise nationwide safety. These prices should not talked about or offset towards claimed revenues or financial advantages from industrial providers.
Moreover, different new priorities of the present US administration, equivalent to a proposed “Golden Dome” missile protection system, would possible result in elevated utilization of present (and maybe new) federal spectrum bands, making any clearance much less possible or much more delayed, dearer, and maybe strategically ill-advised. The commanding basic of U.S. Northern Command lately warned Congress that his command would wish “full and uninterrupted entry” to DoD spectrum bands to ship on this new directive.
Midband miscalculations and assumptions
Secondly, whereas NERA’s evaluation has averted among the errors in CTIA’s midband frequency definitions, which we highlighted in earlier work, it nonetheless ignores the massive tranche of two.5GHz midband spectrum owned by T-Cellular. It additionally provides in 700 megahertz+ of the 6GHz band to its calculations and comparisons of the US vs. China.
But opposite to CTIA’s frequent claims, this band has not but been made accessible to Chinese language operators, and the scope and timing of its launch stays unclear. No dates got in a current presentation by China’s regulator at an Asia Pacific spectrum convention in Bangkok.
Moreover, frequencies equivalent to 7-8GHz presently being mentioned as doable upper-midband public sale candidates are more likely to have a lot decrease financial worth (and thus public sale value and person affect) than these within the 2-4GHz vary mentioned within the report, as they’ve shorter vary and restricted indoor attain.
The NERA evaluation treats the worth and utility of all spectrum as near equal and doesn’t make a transparent distinction between totally different tranches of midband (as an example, within the vary 3-4GHz vs 7-8GHz) and what that will possible imply for public sale charges, gear procurement, and the claimed financial advantages of higher infrastructure deployment.
Business discussions broadly recommend that 5G bands above 6 or 7GHz will possible be deployed principally within the densest city areas solely, the place capability wants are concentrated. Worse, their poor outdoor-to-indoor efficiency implies that solely the 20-30% of outside utilization of cell networks would see significant advantages for end-user purposes. To not account for these limitations for worth within the report is to disregard the position that the legal guidelines of physics — and the realities of the place cell providers are literally used — play in figuring out the financial worth of spectrum.
These limitations of inherent worth are already beginning to present up in spectrum pricing — which the report asserts is correlated to underlying worth perceived. But, the report conveniently ignores accessible knowledge on pricing for mid-band spectrum. For instance, a current spectrum public sale in Hong Kong yielded far decrease valuations per MHz-pop for 6GHz allocations, in comparison with a set of decrease frequencies within the 2.3GHz vary, offered a few months earlier.
This casts vital doubts on NERA’s calculations of each client surplus and its estimates of “supporting industries that depend on cell connectivity.” Until the FCC really mandated excessive ranges of inhabitants protection as a license situation, maybe together with indoor attain, many new spectrum bands might find yourself confined to very restricted geographical deployment, decreasing any financial advantages for gear suppliers, development corporations and others.
The report as an alternative scales up and adjusts CAPEX and OPEX spend reported for C-band deployment, to its hypothetical 400 megahertz of additional spectrum, with out contemplating that footprints might look very totally different.
This has already been noticed for 28 GHz and different greater bands — U.S. carriers have sizeable allocations of mmWave frequencies which might be presently principally unused, and but additionally appropriate for very high-density deployments. The spend has been a fraction of that seen for C-band networks, as a result of they proved much less helpful and had been simply deployed throughout small areas.
Know-how enhancements
Thirdly, NERA’s examine underestimates the affect of the evolution of wi-fi community expertise, particularly towards a backdrop of falling site visitors development charges. It asserts: “With out further spectrum, networks would ultimately turn into congested.” That is removed from being a cast-iron reality.
Whereas the report discusses the potential for community densification (constructing a denser grid of cell-sites), it utterly overlooks the contribution of different new technical enhancements, equivalent to utilizing newer radios with higher “beam-forming,” in addition to utilizing AI to optimise numerous parameters and features of the community to yield greater spectral effectivity.
Quite a few current and ongoing developments might every yield 20-30% to achievable throughputs with present spectrum. Latest improvements embody utilizing automated tilting antennas, or higher in-radio estimation methods for person mobility or radio interference. AI specialists equivalent to GPU vendor Nvidia, or Open RAN software program provider Cohere Applied sciences, often assert they will allow vital capability features.
These might enhance the capability of present cell-sites and present spectrum — probably sufficient to fulfill even bullish demand forecasts within the examine.
If NERA really believes that incremental community capability immediately interprets to financial advantages, it’s stunning that it advocates for brand spanking new (and costly) spectrum and infrastructure, somewhat than optimising the throughput and knowledge that may be dealt with by present bands.
Industries that depend on cell connectivity
The NERA evaluation additionally makes an attempt to calculate incremental worth of additional spectrum to purposes equivalent to social media and audio/video streaming. It makes use of a convoluted sequence of assumptions to recommend that congested networks impede software site visitors, which might “immediately translate into misplaced gross sales and foregone income,” after which to GDP and employment affect.
There are a number of flaws within the logic and evaluation, each within the advised sequences of cause-and-effect, and the precise numerical metrics and calculations employed:
- It makes use of a 16% development fee of information site visitors all the way in which till 2040, primarily based on an Ericsson projection as much as 2030, which itself appears a big overestimate judging from current developments seen world wide, together with 0% development in China and 7% within the U.Okay. and evaluation by business commentators equivalent to Professor William Webb. The 2040 forecast isn’t life like, particularly for smartphones and excluding fixed-wireless site visitors.
- It additionally reductions the thought of densification or radio community enhancements having an affect on community capability. That is unrealistic too — see subsequent part.
- It focuses on spectrum and due to this fact peak capability, when the limiting issue is usually dependable fundamental protection, particularly in indoor settings reliant on outdoor-to-indoor propagation.
- It ignores application-level evolution equivalent to higher compression, which is a fast-moving area with methods equivalent to AV1 already gaining large adoption.
- It neglects to say that many purposes already supply “knowledge saving” modes, which means it doesn’t affect their income.
Moreover, most non-mobile site visitors for providers equivalent to YouTube and Netflix is delivered over Wi-Fi, usually to TVs, smartphones and laptops within the house. Nonetheless, unlicensed spectrum is additionally usually congested, so the same evaluation would yield even bigger volumes of site visitors foregone and thus lacking worth.
Briefly, the evaluation isn’t rigorous or credible — as additional evidenced by the whole lack of requires further spectrum from the most important content material and software corporations themselves.
FWA market worth
One other part of the report examines the theoretical worth of including spectrum for the aim of fastened wi-fi entry.
A full evaluation of this might simply take up a full-length article of its personal. Nonetheless, a central declare is that “further spectrum will increase protection by increasing the capability of present base stations and rising the profitability of latest ones.”
It is rather laborious to sq. that assertion with the primary deal with underserved (primarily rural) areas by which broadband availability or selection is proscribed. The report analyses broadband protection by population-density decile, and states that “we assume that with a further 400 megahertz of mid-band spectrum, FWA protection in a given nation could be much like as we speak’s protection of a county with 2.05 occasions its density.” Given that almost all rural cells are uncongested as we speak, and sometimes haven’t “lit up” all present operator spectrum, it’s laborious to see how including extra spectrum — particularly in frequency bands with restricted vary — would yield a big uplift in FWA availability or utilization.
Moreover, the carriers’ reluctance to totally exploit different choices equivalent to CBRS, mmWave and even unlicensed variations of 5G for FWA additionally raises questions: why are they “leaving cash on the desk,” if any new spectrum provides enormous worth to the proposition? Whereas not all of those are usable with full energy, they’d nonetheless be capable to add incrementally to the footprint, but are left ignored, for some undisclosed motive, suggesting to exterior observers that their needs for extra excessive energy nationwide unique spectrum is much less about rising capability and extra about conserving the spectrum away from others.
Conclusion
The NERA report is in the end written by an financial consultancy with a deal with spectrum auctions, somewhat than an organisation steeped within the particulars of radio community deployment, utilization and technological advances.
As such, it seems that its report has averted some critically essential questions in evaluating the true potential financial advantages of spectrum, equivalent to the place deployment may be realistically anticipated, how such networks is likely to be used, what the prices and challenges of shifting incumbents is likely to be, and which adjoining developments equivalent to technical effectivity features may supply as alternate options.
In abstract, these essential omitted factors render the NERA report’s evaluation incomplete whereas overstating the financial advantages of additional 5G spectrum and leaving the consequential prices ignored and different mechanisms for acquiring further capability or protection ignored.
