5G is approaching the Middle Innings: Industry Voices — Lowenstein
Last week, I attended the 5G Americas Analyst Forum – an annual gathering of leading wireless industry analysts, plus executives from major operators and suppliers across the mobile ecosystem. A range of 5G-related topics are explored, mainly in a series of informal roundtables. Then on Monday, the Wall Street Journal published a special section on 5G Technology, with a lengthy lead article entitled “After More Than Four Years, Has 5G Lived Up to Expectations?” The tone of the Journal article is “no”, although “expectations” aren’t particularly well defined.
So as we head toward mid-decade, I thought it might be a good idea to offer my own take on where are we with 5G.
Still in the Early Innings
I would say that we are in the latter stages of the early innings with respect to 5G. These first four years have centered on building out 5G nationwide — including the important mid-band — and getting a critical mass of devices out there that support the major 5G bands. In the United States, nearly half of wireless users have a 5G-capable device, and about 60% of traffic is now over 5G. Outside North America, only South Korea and China are in this league. Notably, 5G penetration in Europe is only 13%.
The one game-changing application of 5G that’s seen good adoption so far is fixed wireless access (FWA), with nearly 6 million subscribers between T-Mobile and Verizon. This has been largely enabled by the extra capacity enabled by the mid-band buildout. But I’m in the camp that sees a finite market for FWA, given average usage is north of 500 GB/month, and growing.
Outside FWA, the main benefit of 5G has been enhanced mobile broadband (EMBB). Many of my analyst and media colleagues dismiss this as not being game-changing, but I think they’re missing something. Wireless networks are now consistently delivering speeds as good as or better than what most people get on home broadband networks. These networks are supporting 30-40% CAGR in data traffic, at prices to consumers that haven’t changed much. The ability of operators to support this traffic growth at the same ARPU levels is due to the significant improvements in spectral efficiency of 5G: 8/3 bits per second per HZ on the downlink/uplink, respectively, compared to 2/1 on LTE. Put simply, mobile networks are able to support pretty much anything that people want to do on their mobile devices.
What Will the Middle Innings Look Like?
I think we’re going to start entering the middle innings of 5G in the 2024-25 timeframe. This is enabled by the completion of the mid-band build, taking full advantage of the major MNOs’ 100-150 MHz of nationwide capacity, plus some re-farming of the lower bands to 5G.
Another key requirement is deployment of 5G standalone (SA). This enables capabilities such as network slicing and lower latency. T-Mobile has already deployed SA across its network. Verizon and AT&T haven’t committed to specific timeframes, but I think they should be mostly there over the next 12 months or so.
What to expect from this next phase of 5G? It depends on one’s perspective. For those looking at 5G to replicate the 4G experience, in terms of growth, innovation and game-changing use cases, I think it will be different this time. Remember, it was only in the middle innings of LTE, circa 2014-2015, that we first experienced true mobile broadband, supporting video and other experiences similar to home broadband networks. The magic was combining mobile broadband with location and other unique capabilities delivered by smartphones.
The 5G experience, from a consumer perspective, is more of a seamless transition from the later stages of LTE. Put simply, the phone is just better at doing what you want it to do. The network experience for video and other bandwidth-intensive applications is faster, more consistent, has less buffering and is nearly ubiquitous.
5G networks over the next 2-3 years will be better equipped to support next-gen experiences, such as AR/VR/XR, or cloud gaming. However, the ball is in the device and developer community court to deliver the applications and experiences that will drive demand.
Much of the incremental opportunity from 5G, especially in terms of revenue potential, will come from the enterprise. This will look very different, and will not be as dramatic, as what we experienced with 4G, which was driven by the explosive growth of video traffic and mobile applications such as Uber that enjoyed widespread adoption.
The enterprise market (with the exception of Blackberry!) moves more gradually and more deliberately. There are no must-haves that enterprises are waiting for that will trigger a hockey stick-like spike in growth. In this way, the enterprise segment looks more like the IoT market, where growth has been steady. Lots of base hits, but few triples or home runs. It’s also more complicated: longer sales cycles, a broader and more fragmented ecosystem and debates over who pays.
The Late Innings
The later innings of 5G will kick in later this decade, bleeding into the early 2030s. This is when some of the capabilities of 5G Advanced, at least those in 3GPP Release 18 and Release 19, will start to be commercialized. This will include much more precise positioning, improvements to MIMO that will enhance performance at the cell edge, greater attention to the uplink, and enhancements to non-terrestrial network support. The fast-moving train of AI/ML will figure prominently in 5G Advanced, particularly in advanced beamforming, spectrum sharing and other elements of network optimization. The applications that will take advantage of these capabilities are still to be defined, but the theme seems to be that the network will be better equipped to handle whatever AR/VR/XR throws at it.
The latter stage 5G discussions will also start to bleed into the early stages of 6G. This happened with 3G (remember HSPA?) and 4G (remember 5G Evolution?). Proof in the pudding: The 10th edition of the Brooklyn 5G Summit, taking place October 31-November 2 in New York, is rebranded as the Brooklyn 6G Summit, "creating the foundation for 6G."
