INDEX

5G Is Standardized. Now What?

In this blog post, we will be looking at industry activities for 5G, and what these activities will tell us for the large-scale deployment of the new standard.

June 21, 2018, 11:03 a.m.
Dimitris Mavrakis, Research Director

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Last week, the 3rd Generation Partnership Project (3GPP) met and officially froze the first 5G New Radio (NR) specification, including Non-Standalone (NSA) and Standalone (SA) network topologies in 3GPP Release 15 (R15). There is a lot more work being planned for Release 16 (R16). R16 will introduce more improvements and specifications for the Next Generation (NG) Core that include the full description of Services-Based Architecture (SBA), which will enable advanced features, including network slicing and full Control and User Plane Separation (CUPS) decoupling. Clearly there are many outstanding items needed to complete the full 5G specification, but with the completion of R15, a standards-based 5G network can now be deployed by being anchored to a Long-Term Evolution (LTE) packet core (NSA), or a 5G NG Core (SA).

Deployment Plans

Several mobile service providers have announced plans to deploy 5G, and this time, regional variations are much bigger than previous generations. The following regions are arguably the most important ones for early 5G, but there’s a lot of activity behind the scenes. Let’s see what has been publicly announced.

The United States

AT&T is building up its existing infrastructure with LTE Advanced Pro features, including Licensed-Assisted Access (LAA) for unlicensed spectrum, small cells, and gigabit capabilities. The company aims to launch mobile 5G in several U.S. markets by the end of 2018. However, AT&T has not announced what spectrum it aims to use for its mobile 5G deployment; 39 GHz may be a spectrum candidate with a mobile “puck” Wi-Fi hotspot instead of a smartphone hotspot. AT&T has also been conducting Fixed Wireless Access (FWA) trials in several cities across the United States.

Verizon is proceeding with its FWA deployment of 5G TF equipment provided by Ericsson, Nokia, and Samsung and is aiming to launch the new services in three to five U.S. cities by the end of 2018. Verizon is using 28 GHz and 39 GHz in its trials but has not yet announced which bands will be used throughout its early deployments. Rumors indicate that Verizon has requested that the currently deployed equipment (which now conform to Verizon’s 5G TF standard) will need to be upgradable to the official 5G NR specification, so that the carrier can enjoy economies of scale when large-scale deployments kick in.

T-Mobile is aiming to deploy 5G in 600 MHz (for wide coverage) and mmWave frequencies (including 28 and 39 GHz) for dense urban deployments. Its proposed merger with Sprint will make the company the largest holder of radio spectrum in the United States and would provide midband 2.5G GHz spectrum for 5G metro deployments. The combined carrier has not yet announced plans for an FWA service such as AT&T’s and Verizon’s.

Summary: The 5G market in the United States will likely be fragmented, as each carrier will aim to address their own specific priorities with 5G. Compatibility with 5G NR is an issue with Verizon’s FWA early deployment.

South Korea

KT Corporation (KT) and SK Telecom (SKT) have stated their intention to deploy 5G during 2019; both companies have announced March 2019 as a potential launch date for the new network. South Korea was the first market to enjoy nearly 100% population coverage for 4G, and it is very likely that mobile 5G will be deployed in this country most aggressively in the 3.5 GHz and 28 GHz bands. At the recent spectrum auction SKT and KT were both awarded 100 MHz of spectrum in the 3.5 GHz band, with 80 MHz of spectrum awarded to LGU+. At the same spectrum auction, each mobile service provider was awarded 800MHz of spectrum in the 28GHz band. There are also rumors that Samsung is working on its new flagship device, which will include 5G capabilities for these two bands.

Summary: South Korea will be the first market to deploy “true” mobile 5G, perhaps as early as next year.

China

China is a mixed story regarding 5G. Initially, the central government seemed to be positioning 5G as a core component of its “Made in China 2025” strategic plan to upgrade the Chinese industry. This meant that China’s 5G networks would likely be greenfield SA, thus allowing the advanced features that industrial automation requires (including network slicing). However, the biggest mobile service providers in China are rumored to be arguing that they should deploy 5G in NSA mode rather than wait for the NG Core specification to be fully completed in R16. The spectrum environment is also not clear in China, where most mmWave frequencies are held by the military; however, 3.5 GHz is a better candidate for 5G networks.

Summary: 5G in China remains a mystery, and mobile service providers may go with either NSA or SA, but so far SA is the most likely option.

Europe

Europe is described as a single market in several publications, but it is a patchwork of national network capabilities, business models, and levels of broadband penetration. There are more than 100 operators across Europe, contrary to the United States and China, who have four and three mobile service providers respectively. There are a few Tier 1 international operators, including DT, Orange, Telefonica, Telia, and Vodafone, but even these companies operate networks across vastly different markets. A consistent European-wide 5G strategy is not possible, especially when 4G is so densely deployed. However, advanced European markets will see initial 5G rollouts during 2019 and will likely be capacity driven for the next three to five years. These deployments will likely focus on the sub-6 GHz bands, with 3.5 GHz being the most popular option.

Summary: Despite the media frenzy that “Europe is lagging behind,” mobile service providers across the continent will likely start deploying 5G at 3.5 GHz in the next year. We also wrote in a previous blog post that we estimate 5G Intellectual Property Rights (IPR) to be evenly split between China, Europe, and the United States.

Smartphone Chipsets

Fourth Generation (4G) is also advancing and now provides gigabit capabilities, thus creating a foundation on which 5G can build. This is an important factor, as many early 5G deployments will likely be extensions of LTE Advanced Pro networks—for example, in very dense urban areas where 4G networks soon will not be able to keep up capacity to satisfy traffic demand. This 4G foundation is also creating interesting dynamics in the device and chipset market, where gigabit LTE capabilities may become essential to participate in the 5G race.

The 5G chipset race is becoming interesting:

  • Qualcomm was the first to announce its X50 5G modem in October 2017.
  • Intel followed with the announcement of its XMM8060 5G modem in November 2017.
  • Samsung is reportedly working on Exynos 9820, which includes a 5G modem.
  • Huawei announced its Balong 5G01 5G chipset but is positioned toward fixed Customer Preferences Equipment (CPE). The company will not announce a smartphone 5G chipset before the end of this year.
  • MediaTek announced its Helio M70 modem during June 2018.

By now, we should assume that early 5G chipsets will all be single mode dies but will be paired with another die that supports 2G/3G/4G modems. To provide a consistent experience across areas with and without 5G coverage, 5G will likely be paired with the latest generation 4G modem that supports gigabit LTE at the very least, so that the difference in user experience between 4G and 5G is minimized. MediaTek is the only chipset vendor that is still on LTE Category 10 (max 450 Mbps downlink), but its M70 modem supports speeds up to 5 Gbps. Can MediaTek afford to couple a 5G modem with a slower LTE one? And will MediaTek focus on the domestic midtier Android smartphone market with 5G?

All chipset vendors have aggressive strategies for 5G, and it is possible that 5G smartphones may appear in the market as soon as early 2019. It is also the first time there is a large difference between our handset and subscription forecasts for any generation:

  • Our devices team estimates nearly 410 million 5G-enabled devices shipped during 2022.
  • Our subscription forecasts estimate nearly 213 million 5G subscriptions during the same year.

This means that there will be a lot of 5G-enabled devices in the market during 2022 that will not yet be attached to a 5G subscription. If mobile service providers will be able to implement new consumer business models with 5G (e.g., mobile video, higher traffic tiers), this latent capability may potentially translate to a revenue uplift that will act as a breath of new profitability before network slicing and other advanced features are commercialized.