How do mobile service providers handle the shifting economics of 5G (Reader Forum)

With the advent of 5G, mobile service providers (MSPs) have an estimated 50% bandwidth growth requirements, yet mobile/wireless is only about 10% of all global bandwidth. There conservatively needs to be a 2x growth in data capacity to support 5G, yet that currently linearly equates to a 2x growth in cost to the operator. So, how can MSPs decouple their need for the radical bandwidth growth needed to support 5G from the towering cost of delivering it?

The 5G era will usher in a requirement for MSPs to fundamentally reassess the underlying economics of data traffic transport. 5G will require high-bandwidth, low latency data communications, but the worry is that if MSPs don’t reassess their economic model for data transport, 5G itself will become less viable and compromises will need to be made.

If that happens, enterprises will lose lifeblood revenues, consumers will become disillusioned about the promise of 5G, and MSPs will in turn suffer serious setbacks in their drive to make 5G profitable for the long term.

What’s important is that as the world disconnects from cables and ‘goes wireless,’ and wireless access points in the network move closer to the user, the need for fiber connectivity supporting that grows substantially – especially for many of the poster child use cases for 5G. These include streamed gaming, video monitoring, automated equipment and machinery, and fixed wireless access for businesses unable to take advantage of traditional fixed networks.

With 5G, there’s an undeniable need for greater bandwidth to support new use cases, as well as the ability of the network to deliver this with minimum latency in diverse locations. And that costs money – on top of the investment MSPs have already made into the radio and mobile network equipment itself, fixed connectivity really counts.

So, MSPs are focused on the cost of mobile front- and backhaul, where traffic is delivered over a terrestrial fiber network, to and from the mobile network, to the user or consumer.

Strategic 5G investments to date

MSPs have invested a lot in the future of 5G. According to the GSMA, MSPs will invest about $1.1TN over the next five years to build out technology that will catalyze the next great step forward in mobile communications. The main investment areas of 5G are next-generation network equipment, site and power, front- and backhaul fiber/technology, and also spectrum. But without corresponding next-generation data transport for mobile traffic, those investments could fall on stony ground.

Unlike the other costs, front- and backhaul costs are subject to a different economical model. MSPs are not just buying equipment, they’re also paying for fiber routes (physical location) across their footprint, and bandwidth/guaranteed data rate/ultra-low latency (network performance), so it’s a very strategic investment.

The difference here is that front- and backhaul investment is subject to the laws of supply and demand. The cost is lower where there’s a high fiber density and more convenient routing, and vice versa. The result is that the geographic or logical routes under most pressure are priced at a premium.

A contributing factor is that historically traditional fixed backhaul has been a leased services model, where an MSP pays a fixed amount to lease 1Gig, but when they want 2Gig, then it’s two times the cost. The increase in expense has been linear. In the case of fronthaul then because it’s based on leasing a piece of fiber (or an optical fiber wavelength on that fiber).

The new 5G architecture

In terms of architecture, enterprises and MSPs require a network that offers deep fiber density in metropolitan locations, combined with connections into the key central and edge data centres where much more of the processing will take place

This type of architecture is based on moving the compute function to the edge of the network, nearest to the consumer of the service. Where fiber already exists, MSPs obviously want to take advantage of that underlying power. But in a lot of instances, the fiber simply doesn’t exist in enough quantity or in the right place to support 5G densification, and therefore needs to be built out or densified. 

Making the cost of 5G manageable

A significant way to reduce the cost to MSPs of necessary network densification is by allowing them to share connectivity while maintaining individual service level agreements (SLAs) for each of their applications. This new focus on ‘per-application’ versus ‘per physical fiber or wavelength,’ offers much more flexibility and freedom, and an agile network that places resources where they’re most needed at any given moment.

Fortunately, the industry has seen this coming, and we’re investing in segment routing and Ethernet VPN amongst other technologies to reduce the cost of bandwidth delivery and provide network scalability for the 5G era. Segment routing is a new way of routing that makes the network more flexible and scalable, where in technical terms, MSPs don’t need to maintain a per-application state and per-flow state. Simply put, the network is made to bend to the will of the service and provide the requisite service guarantee, rather than the other way around.

Network providers are not just thereby resetting the base point for pricing. We believe this approach is sustainable, and everyone can benefit regardless of their own specific requirements. Historically, this is not without precedent, and in fact, market pricing resets have taken the price down every time there’s a new technology which enables that dynamic to come into play.

The next episode in the 5G story will see MSPs able to draw down as much bandwidth as they need, wherever they need it, in near real-time – and that in itself has several benefits that could lower costs too. We see a bright future for 5G if MSPs are allowed to properly capitalize on their investments by having a front- and backhaul networks that takes advantage of this new economic model.

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KT to develop in-flight VR entertainment service

The in-flight VR service will begin with international routes before the end of this year

While many of us still remain earthbound, unable or unwilling to board a plane, South Korea’s largest telecom company, KT, is making plans to develop an in-flight virtual reality (VR) entertainment service for air passengers. KT is working with Jin Air and Hanjin Information Systems & Telecommunications (HIST).

Jin Air, which has already introduced a pilot project of in-flight VR service, is a low-cost airline and so its interest in the collaboration comes from its desire to offer an alternative to personal video screens, which are becoming the norm for many airlines and which it does not offer. VR headsets would, of course, fit the bill.

For Kang Kook-Hyun, head of KT’s Business Group, this is an opportunity for users to “enjoy a new experience of entertainment based on VR,” not just in the home, but also while traveling.

The in-flight VR service will begin with international routes before the end of this year and passengers will be able to borrow VR headsets for the duration of the flight to view movies in ultra-high resolution, as well as additional entertainment content like travel and sports programs in 360-degree images.

Further, all In-flight public announcements and communications will also be sent via VR to those passengers wearing headsets.

KT has been focused on delivering the benefits of VR for some time and earlier this month, the company teamed up with competitor LG Uplus to build economies of scale and competitiveness in 5G VR content. Specifically, the mobile carriers agreed to share 50 to 100 VR pieces of content related to sports, leisure and health on their platforms as early as this month.



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PALs auction: $3 billion and counting – RCR Wireless News

The Priority Access License auction has raised $3 billion in bids after 34 rounds. The number of licenses that are still seeing competitive bids is now at about 256 counties out of the more than 3,200 counties in the U.S. and its territories.

According to analysis by Sasha Javid, COO at the Spectrum Consortium and former chief data officer and legal advisor on the FCC’s Incentive Auction Task Force, the average price per megahertz/POP was at $0.147428 after the 34th round of bidding. Comparatively, the last three millimeter wave auctions stacked up with nationwide price per MHz/POPs and totals raised of:

  • Auction 101 (28 GHz): $0.0113 MHz/POP, $702 million raised
  • Auction 102 (24 GHz): $0.009112 MHz/POP, $2 billion raised
  • Auction 103 (upper 37, 39 and 42 GHz): $0.007110 MHz/POP, $7.5 billion raised

Auction observers Rick Engelman and Ari Meltzer at law firm Wiley noted in a blog post that as of round 31, “excess demand has been trending downward, with a 32% drop on Friday and a 40% drop on Thursday” of last week. “As prices continue to rise, we expect to continue to see bidders reduce their bids in high priced markets more quickly and, perhaps, shift some demand to less expensive markets. Eventually, this will lead to a narrowing of the aggregate excess and a slowing of the growth in gross proceeds and overall average bid prices,” they concluded.

The PALs with the highest prices as of the close of Round 34 are:

  • Los Angeles county, CA: $45.7 million
  • San Diego county, CA: $14.45 million
  • Orange county, CA: $14.08 million
  • Kings county, NY: $11.7 million
  • Cook county, IL: $11.3 million

On the basis of demand, as of Round 34, the most hostly contested counties and the number of bidders competing for the 7 PALs in each county are Maricopa county, AZ and San Diego county, CA, each with16 bidders competing for 7 licenses. In New Haven county, CT, Clark county, NV and Jefferson county, AL, 15 bidders are in competition. Another six counties have 14 bidders vying for the seven licenses. Of the 11 counties with the most demand as of Round 34, all but three have populations less than 1 million.

The auction will continue until demand is equal to or less than the supply of available PALs.

The auction could see fresh enthusiasm among the  271 qualified bidders on news from the White House and Department of Defense that contiguous spectrum at 3.45-3.55 GHz will be opened up for terrestrial 5G wireless service, with an auction potentially happening as soon as late 2021.

The CBRS Priority Access License auction, known as Auction 105, makes available 22,631 PALs  in the CBRS band at 3.5 GHz. That figure breaks down to seven PALs per county-based license area across the United States: the highest number of licenses that the FCC has ever made available in a single auction. Each PAL consists of a 10 megahertz unpaired channel at 3.55-3.65 GHz. Entities can bid on up to four PALs per license area and aggregate them; in addition to PALs, 80 megahertz of the 150 megahertz band is available for use under the General Authorized Access (GAA) tier of the CBRS spectrum-sharing framework. If PALs are unsold at the close of the auction, the spectrum can be assigned for GAA use.

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