What will be the impact of 5G on the telecoms sector? · LTE-A (carrier aggregation) has had an...

MENA Summit 2014 © Analysys Mason Limited 2014

What will be the impact of 5G on the telecoms sector?

MENA Telecoms Summit 2014 Achieving success and innovating

in an age of disruption

10 December 2014

What will be the impact of 5G

on the telecoms sector?

Rupert Wood



5G promises to be nothing less than a universal access network – but how far will it live up to that promise?

2

5G

Real-time performance

Critical infrastructure

Massive capacity IoT and M2M

Virtualised infrastructure


What will be the impact of 5G on the telecoms sector? 3

When will we be ready for 5G?

The vision for the next generation

Which deployment scenarios will be the most important?



LTE is expanding, and 3G is not going away tomorrow

4

Network deployments by type, worldwide, 1Q 2008–3Q 2014

0

100

200

300

400

1Q 2008

3Q 2008

1Q 2009

3Q 2009

1Q 2010

3Q 2010

1Q 2011

3Q 2011

1Q 2012

3Q 2012

1Q 2013

3Q 2013

1Q 2014

3Q 2014

Nu

mb

er

of n

etw

ork

s

HSPA+ DC-HSPA+ LTE LTE-A

See Analysys Mason’s Wireless networks tracker. Available at www.analysysmason.com/WNT.



0%

20%

40%

60%

80%

100%

2013 2014 2015 2016 2017 2018 2019

Pe

rce

nta

ge

of tr

affic

LTE’s technology advantages are driving rapid roll-out, subscriber take-up and traffic growth, but …

5

See Analysys Mason’s Wireless network traffic worldwide: forecasts and analysis 2014–2019. Available at www.analysysmason.com/WNTF-2014.

4G’s share of devices (excluding M2M), by region,

2013–2019

4G devices’ share of traffic, by region, 2013–2019

DVAP EMAP MENA NA WE World

0%

20%

40%

60%

80%

100%

2013 2014 2015 2016 2017 2018 2019

Pe

rce

nta

ge

of d

evic

es

SSA



… ignoring Wi-Fi means ignoring most of the usage

6

Distribution of total smartphone traffic across all panellists

Source: Analysys Mason and Nielsen. For historical data, see Consumer smartphone usage 2014: mobile data; n = 1081 for 2011 and 1596 for 2013.

The 2019 figure is for 3G/4G handset traffic in Western Europe from Wireless network traffic worldwide: forecasts and analysis 2014–2019.

59%

41%

of total smartphone traffic

was carried over the

cellular data network


was carried over Wi-Fi

2011




2013

19%

81% of total smartphone traffic


2019

16%






84%



Mobile data has to be placed in the context of overall data traffic

7

Data traffic (excluding linear TV) by type, worldwide, 2013–2019

Includes on-net content (non-Internet).

0

500

1000

1500

2000

2500

2013 2014 2015 2016 2017 2018 2019

Tra

ffic

(exabyte

s p

er

year)

Mobile

Public Wi-Fi

Private Wi-Fi(handsets and tablets)

Rest of fixed

Mobile

7%

Mobile

4%

CAGRs 2013–2019:

Mobile: 46%

Fixed: 32%

Year-on-year

growth 2013:

Mobile: 78%

Fixed: 47%



0%

20%

40%

60%

80%

100%

France Germany UK USA

Pe

rce

nta

ge

of

sm

art

phone u

sers Use Wi-Fi

(3G and 4G users)

Use Wi-Fi(4G users only)

Use 4G

4G users are reducing relative usage of public Wi-Fi, but still use private Wi-Fi heavily

8

The decline is not vastly greater in a

much more mature market (USA), which

indicates a potential limit to this trend.

About 90% of Wi-Fi traffic is generated

on a home SSID (where SSID can be

identified).

Is the ‘big bundle’ model sustainable in

the long term for a mobile-only player?

High level of cross-subsidy required to

sustain it if users have fixed broadband

Fibre cheaper for multi-device @home

Source: Analysys Mason and Nielsen, data from 4Q 2013

Wi-Fi usage among 3G and 4G smartphone users

Share of home SSIDs among smartphone users

88% 92% 94% 92%

0%

20%

40%

60%

80%

100%

France Germany UK USA

Pe

rce

nta

ge

of

sm

art

phone u

sers

–4 –5 –8

+2 = change in

percentage points



South Korea demonstrates the diminishing importance of carrier Wi-Fi and the effects of LTE-A

9

South Korea’s traffic growth is broadly

linear – not exponential.

Carrier Wi-Fi in very advanced LTE-A

market represents just 6% of wireless

traffic.

We would assume that private Wi-Fi’s

share is much higher, but lifestyle and

workday factors indicate it is probably

lower as proportion of smartphone traffic

than most of the rest of the world.

LTE-A (carrier aggregation) has had an

effect on 2Q/3Q 2014 traffic levels and is

substituting carrier Wi-Fi.

Wireless data traffic and carrier Wi-Fi’s share of this

traffic, South Korea, March 2012–September 2014

Source: Korea Communications Commission

0%

2%

4%

6%

8%

10%

12%

14%

0

20

40

60

80

100

120

140

Mar-

12

Jul-12

Nov-1

2

Mar-

13

Jul-13

Nov-1

3

Mar-

14

Jul-14

Perc

enta

ge o

f tr

affic

Tra

ffic

(peta

byte

s p

er

month

)

Traffic Carrier Wi-Fi's share



LTE-A carrier aggregation has many years to run

10

There is a superabundance of

low-power spectrum.

Integration of 5GHz unlicensed

spectrum onto one network – is

this 4.5G or 5G?

Spectral utilisation will improve

significantly only with densification

of cell sites – this is the key to

unit-cost reduction and data

traffic growth.

Without densification, LTE-A

carrier aggregation creates a

significant marketing advantage

for players that have access to

the most spectrum.

Frequency band A

(for example, 800MHz FDD)

Frequency

band B

(for example,

2.6GHz FDD

or TDD)

Frequency

band C

(for example,

5GHz unlicensed)

Inter-band

Non-contiguous intra-band

Contiguous intra-band

LTE-U



The decline in unit costs is a greater driver of network usage than network speed

11

A key factor in willingness to pay is also

willingness to give up fixed broadband

connection and savings that could be

made

But substitution can work both ways….

Average monthly usage of YouTube on Android

devices by plan and network type, USA, 2012

Sub-2GB

plan

2GB plus

plan

4G

×2.1

×2.3

×1.2

Source: Broadband Stakeholder Group (UK), Mobidia

71MB 165MB

133MB 34MB ×3.9 3G

Willingness to pay

(1 – (decline in unit cost))

Traffic

growth =



Mobile traffic cannot be sole justification of new RAN generation

12

‘Natural’ limits to out-of-home mobile

Internet usage:

willingness to pay

time spent in public outdoor spaces, or

at home

human eye’s ability to see differences in

screen resolution

battery life.

Accelerated decline in unit costs of mobile

traffic is required to make further inroads.

How to increase the value of data

independent of traffic levels?

How to economically exploit huge

private Wi-Fi usage?

Annualised growth rate for mobile data traffic,

selected major markets, 1H 2010–1H 2014

0%

50%

100%

150%

200%

1H

2010

2H

2010

1H

2011

2H

2011

1H

2012

2H

2012

1H

2013

2H

2013

1H

2014

Annualis

ed g

row

th r

ate

France Germany Hong Kong

Italy Japan Nordics

Poland Russia Singapore

South Korea Spain Turkey

UK USA



The vendor 5G vision is for higher performance, virtualised and service-driven networks

14

The vision for 5G is revolutionary, but is

also a ‘wish list’ for improvements to

nearly all aspects of telecoms and service

delivery, including:

virtualised infrastructure,

cloud-oriented, SDN for lower-cost

flexible and scalable networks

service-driven networks, driven by

user experience, offering telco-grade

reliability

real-time performance, supporting

voice and interactive video, ultra-low

latency

everything connected, incorporating

M2M and IoT as well as smartphones

and other devices.

5G

Real-time performance

Critical infrastructure

Massive capacity IoT and M2M

Virtualised infrastructure

Gigabit data rates

High-quality coverage

Multi-spectrum service

Many more

connected devices

Deep indoor coverage

Signalling efficiency

Software-defined

network

Scalable, low-cost

systems

Fast response time

Low jitter, latency and delay

High availability

High reliability

Priority access

Very wide area

coverage



Seamless connectivity between different spectrum environments is expected

Dedicated (for example, 700MHz)

Pooled between mobile network operators

15

Shared (by mobile network operators,

others and primary users)

Unlicensed (for example, 5GHz or more)

Band Bandwidth available Merits Spectrum potential

Fibre

wireless

70–80GHz Up to 5GHz Performance similar to 15GHz Similar to 15GHz

28GHz Up to 500MHz Performance similar to 15GHz Similar to 15GHz

15GHz Up to 500MHz

Supports high speeds (5Gbps

demonstrated), and limited signal

range is ideal for dense access

networks

Using 100MHz channels,

supports dense, very high-speed

data services and multiple

operators

Gigabit

mobile

5GHz Up to 300MHz – will be

considered at WRC-15

Likely to be licence-exempt and could

be used for various technologies (such

as LTE-U and Wi-Fi)

Almost 800MHz available by

combining established and new

allocations

3.4–3.8GHz Up to 400MHz, paired

or unpaired

Larger channels could be used (for

example, 100MHz)

Scope to accommodate multiple

operators with 100MHz channels

Diverse e.g.

700MHz

Varies widely by

country, but generally

2×30MHz to 2×45MHz

Ideal for wide area coverage as well

as in-building penetration

Expand wide area coverage,

improved quality of coverage,

better indoor coverage



5G could be the most complex standardisation challenge the telecoms industry has experienced

Will 5G be a new radio interface, or an evolved 4G radio interface with new capabilities?

Or both?

Massive MIMO systems will require new and innovative antenna designs, and will

probably attract concerns from local residents about environmental exposure to radiation.

Virtualisation of the architecture presents structural, support, interworking and operations

challenges.

High-band spectrum requires new engineering expertise for access deployment

scenarios.

Many more players want to influence, direct and control 5G technology.

It will be expensive: ROCE on mobile is low at the moment, and 5G will have to justify

itself over the next few years.

16



5G specifications are expected to start being introduced in 2015, but few commercial deployments this decade

17

Timeline for the development of mobile technology standards, including tentative dates for 5G

LTE introduction

(3GPP Release 8)

First LTE-A

standard

(3GPP

Release 10)

3GPP

Release 12

Global projects

underway for 5G vision

ITU report

on future

technology

trends

ITU

WRC-15

ITU

report on

IMT vision

3GPP study for 5G

(Release 14 onwards)

Spectrum

harmonisation

Technology

consensus

WRC-18

Spectrum

licensing

Network

implementations

2008 2010 Beyond

2020 2015–2020 2014



3.5G 4G 4.5G

FMC business

case

FMS business

case

New revenue business

case

The use cases for 5G will have to expand beyond ultrafast personal mobility

19

Fibre-

wireless

Ultrafast and hyper-

dense mobile

Diverse use case

Software-defined and data-centre-based network



Ultrafast mobile in hyper-dense topologies: mass market densification will come at the end of the decade

Evenness of mobile experience across

wide areas, dynamic spectrum access

from sub-1GHz to 3.5GHz bands.

When will demand-side scale for a

successful hyper-dense network

business case?

20

Cost and access to backhaul favours

integrated operators.

Infrastructure sharing will be necessary to

achieve the required density of small cells

envisaged in urban areas.

Concession holders can create

bottlenecks.

Convergence of access and backhaul is

key for pure mobile plays to overcome

cost issues.

Aided by mesh and horizontal network

structures.

Role of E-band (70-80GHz) for

backhaul, fronthaul and even device

Device ecosystem may develop after

more specialised use-cases

Ca

pa

city

Co

ve

rag

e

Enterprise

Events

Notspots, cell edge, rural

Now In 3–5 years

Stadiums

Mass-market

metro

densification



Fibre-wireless: 5G could be last 50m alternative for MDU fibre

21

4.5G (CA, LTE-U) and 5G could be an

inexpensive alternative to fixed

connections in dense deployments.

High cost to connect, low conversion

rates, for FTTH/GPON, and G.fast

unproven.

Pure Wi-Fi lacks any QoS.

5G mmWave with massive MIMO:

10Gbps +.

5G standardisation with NG-PON2.

Picocell deployments in-building (but not

in-home) more ‘monetisable’ than pure

fibre/Wi-Fi solution for FTTB.

Inside-out model is difficult for pure

mobile network operators to replicate.

Potential fibre-wireless (fibre to the radio)

deployment in MDU

PON splitter

NG-PON2

FTTP

customer

(on demand)

Fi-Wi

customer

Fi-Wi

customer

Mobile

customers

Mobile

customer

Mobile

Mobile

customer



The diverse use-case: 5G will enable new services and devices and create new types of customer

22

4.5G C-A/MIMO

5G

2.5G GPRS/EDGE

3.5G HSPA/HSPA+

2G GSM

3G WCDMA

4G LTE/OFDMA

Digital mobile

telephony for everyone

(roaming) and SMS

Packet-switched

data

Foundations of

mobile multimedia

and smartphones

Mobile

broadband

IP-based mobile

broadband

More bandwidth

and devices

Beyond smartphone, ‘multi-user,

multi-stream connections’, many

different device types and varying

target performance levels

5G will enable mobile operators to target different industry verticals and price their services according to

their needs (for example, in terms of speed, quality, availability and number of connections).

From supply-push to demand-pull paradigm: demand-attentive networking (DAN).



Is 5G worth the trouble if use-case diversification is the main driver?

The story of broadband and IP is the story

of the triumph of cheap best efforts over

premium-priced prioritisation:

the failures of ATM, DiffServ, MPLS as

retail services outside niche or carrier-

internal markets

It’s a brave prediction that goes the other

way now for retail services

23

Why do we always believe that the

opportunity for service/price diversification

is just around the corner?

3G was meant to have differential QoS

services

4G has QoS classes, but few are ever

used in practice.

Ethernet CoS rarely used in consumer

fixed broadband either.

• Could new market structures make it happen this time?

• Are there genuine new applications?



Semi-autonomous and autonomous cars could require exclusively 5G specifications for control

24

Semi-autonomous and fully

autonomous cars will be

entertainment hubs

Control may require new very low

latency performance target needs,

even if the capacity required is not

great.

5G: 1ms = 3.33cm at 120km/h

4G: 25ms = 83.3cm

3G: 100ms = 333 cm

Only 5G, with full coverage, will be

flexible enough to supply both

content and control.

Mid-2010s

Connected vehicles

Mid-2020s

Semi- autonomous vehicles

2030 and beyond

Fully autonomous vehicles



A single use case may not justify the effort and expense in isolation, but together they could

25

3.5G 4G 4.5G

FMC business

case

FMS business

case

New revenue business

case

Fibre-

wireless

Ultrafast and

hyperdense mobile

Diverse use case

Software-defined and data-centre-based network



1 LTE has not yet run its course and is the cornerstone technology

for mobile network operators

LTE is the technology for multi-spectrum and multi-technology operators looking to reduce

costs and increase efficiency. Wi-Fi will remain a key connection technology, and pure mobile

operators need to substitute or onload the vast amount of data that bypasses mobile networks.

2 Cellular network operators have to address use cases and business

models beyond mobile capacity and traffic monetisation

The mobile case will benefit from cost-saving aspects of 5G, but is unlikely to tap much new

revenue. Operators should use 5G as a means of developing inside-out fixed–mobile

convergence approaches and B2B business models for diverse connectivity and service needs.

3 In combination, the three broad approaches may be enough to justify

the investment in 5G

Operators and network equipment manufacturers should explore how best to converge fixed

and 5G networks. They should explore what innovative services the performance targets of

5G could offer, but not overestimate the potential for price differentiation based on QoS.

Key takeaways



Contact details

27

Rupert Wood

Principal Analyst

[email protected] Cambridge

Tel: +44 (0)1223 460600

Fax: +44 (0)1223 460866

[email protected]

Dubai

Tel: +971 (0)4 446 7473

Fax: +971 (0)4 446 9827

[email protected]

Dublin

Tel: +353 (0)1 602 4755

Fax: +353 (0)1 602 4777

[email protected]

Johannesburg

Tel: +27 11 666 4786

Fax: +27 11 666 4788

[email protected]

London

Tel: +44 (0)20 7395 9000

Fax: +44 (0)20 7395 9001

[email protected]

Madrid

Tel: +34 91 399 5016

Fax: +34 91 451 8071

[email protected]

Milan

Tel: +39 02 76 31 88 34

Fax: +39 02 36 50 45 50

[email protected]

New Delhi

Tel: +91 124 4501860

[email protected]

Paris

Tel: +33 (0)1 72 71 96 96

Fax: +33 (0)1 72 71 96 97

[email protected]

Singapore

Tel: +65 6493 6038

Fax: +65 6720 6038

[email protected]

Boston

Tel: +1 202 331 3080

Fax: +1 202 331 3083

[email protected]

Manchester

Tel: +44 (0)161 877 7808

Fax: +44 (0)161 877 7810

[email protected]

What will be the impact of 5G on the telecoms sector? · LTE-A (carrier aggregation) has had an...

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