Network Sharing in 5G Deployments

Subscribe To Download This Insight

By Dimitris Mavrakis | 4Q 2019 | IN-5641

It is unquestionably the year of 5G: in 2019, the new cellular technology jumpstarted more dynamically than any previous cellular generation. ABI Research expects around 10 million 5G subscribers globally by the end of 2019, with South Korea already having surpased 2.5 million 5G subscribers. Right now, there are ongoing 5G deployments in city centers, stadiums, factories, universities, train stations, and shopping centers; there is no continent without any 5G activity. Major Mobile Service Providers (MSPs) are actively preparing their future large-scale rollouts and firing up the marketing locomotive behind 5G to try and cut out the largest slice available from the future’s connectivity cake. The advantages of 5G are more or less well-known by a large audience, but the upcoming challenges are less famous.

Registered users can unlock up to five pieces of premium content each month.

Log in or register to unlock this Insight.

 

5G Is Here, but It Will Be Expensive

NEWS


It is unquestionably the year of 5G: in 2019, the new cellular technology jumpstarted more dynamically than any previous cellular generation. ABI Research expects around 10 million 5G subscribers globally by the end of 2019, with South Korea already having surpased 2.5 million 5G subscribers. Right now, there are ongoing 5G deployments in city centers, stadiums, factories, universities, train stations, and shopping centers; there is no continent without any 5G activity. Major Mobile Service Providers (MSPs) are actively preparing their future large-scale rollouts and firing up the marketing locomotive behind 5G to try and cut out the largest slice available from the future’s connectivity cake. The advantages of 5G are more or less well-known by a large audience, but the upcoming challenges are less famous.        

MSPs are faced with record-high 5G-related Capital Expenditure (CAPEX): outstanding spectrum prices, pricy network equipment, and higher-than-ever densification requirements. Besides that, MSP’s Operational Expenditure (OPEX) structure is expected to completely transform based on the changing technical features of the 5G mobile network architecture. Early 5G deployers already started to find out how they can cut cost on 5G. China Telecom and China Unicom, the world’s fourth and fifth largest MSPs based on total subscription, just announced their plan to cooperate on 5G Radio Access Network (RAN) build. The two state-owned giants will co-build one gigantic 5G access network across China, with each MSP taking responsibility for construction in certain regions. China Telecom will have a larger role in the large northern cities and China Unicom will focus on larger southern cities first. Each MSP will be responsible for 5G network rollout in a designated region, as well as for the maintenance and operating cost of the network. Overall, these two Chinese operators will share their access network and 5G spectrum resources while retaining their own core network separately.

It Is Time to Cooperate

IMPACT


The base station-related OPEX can be categorized into four major cost categories: electricity consumption (~40%); site rent (~30%); Operations and Maintenance, or O&M (~20%); and transmission (~10%). New 5G base stations dramatically increase power requirements over 4G, mainly because of their massive antenna arrays, massive Multiple Input, Multiple Output (MIMOs). An average 4G Base Transceiver Station (BTS) is using around 6 kilowatts of power. New 5G cell sites are expected to use close to 10 kilowatts of power, which means MSPs need to have 15 kilowatts of power to cover peak times. Right now, a typical 4G base station uses four transmitter and four receiver (4T4R) elements, while 5G is expected to use mainly 32T32R and 64T64R MIMO arrays.

While energy consumption in a small cell is much lower than in a conventional cell, many more small cells will be needed to cover an area. As 5G will be the most expansive network, MSPs are also trying to share the cost with other MSPs, especially in countries where the direct competition is not that intensive because all the three MSPs—e.g., China Mobile, China Telecom, and China Unicom—are owned by the government. ABI Research expects that MSPs in less competitive markets will consider cooperation first. Countries with two or three MSPs or countries where the government has significant ownership of MSPs will deploy network together (RAN in the first round) and share costs, resources, and spectrum assets.

How to Cut Cost with 5G?

RECOMMENDATIONS


ABI Research expects that resource sharing between MSPs will radically change in the next five years. Deploying and operating 5G large scale infrastructure is probably one of the most significant cost items, especially when enterprise busines smodels are still unclear and mobile service providers will only utilise consumer business models to justify 5G deployments in the next two to three years.

As a first step, MSPs need to accept that electricity consumption will radically change in the new 5G era and their need to realign their cost functions radically. Despite the hype around the advantages of 64T64R, in many scenarios 32T32R and 16T16R could be the optimal solution. MSPs need to consider the trade-offs; choosing 32T32R or 16T16R could significantly reduce deployment or operational costs. ABI Research recommends considering 32T32R and 16T16R arrays in less dense, more rural areas, where the expected speed and the capacity increase is less dramatic. The high power consumption 64T64R will still be a key component of a complex 5G network: 64T64R is needed where MSPs are facing very high capacity demand and where they need vertical diversity, around tall buildings.  

MSPs are also encouraged to consider cooperating with other MSPs, sharing RAN assets, spectrum, and sites. Furthermore, the neutral host can help gain synergy, especially during millimeter wave deployments, in dense urban areas. This is also a huge opportunity for some other players: 5G’s densification requirements and the expected higher energy consumption will disrupt the whole market and open up many opportunities for other players in other markets.           

Utility companies, especially electricity providers, have a promising position in the hyperconnected era. First of all, they are the only ones providing electricity to every cell site. They can offer high-value services to MSPs, such as helping them during 5G network deployments and supporting the dynamically growing number of new small cells. Secondly, utility companies have ownership of street light posts, which have everything an MSP could dream of: stabile, legacy connection to the electricity grid, perfect location which overlaps with their consumer's coverage, and the ideal height for small cells. Electricity provers are encouaged to measure their potential, consider vertical expansion, and even build their own networks in urban areas and became neutral hosts. The deployment time for large and complete 5G networks will not be overnight; ABI Research expects that 4G will remain the largest mobile data conduit until at least 2025. Above all, energy efficiency needs to be a core design principle in order to provide ubiquitous connectivity for billions of humans and machines. MSPs are encouraged to focus on energy consumption and use it as a differentiator. Two new technologies can simultaneously address the increase in energy efficiency in long-term: virtualization and Massive Multiple Input, Multiple Output (MIMO). By centralizing their base-band processing into a centralized data center using Centralized Radio Access Network (C-RAN) technology, air conditioning costs can be significantly reduced. Beamforming can also reduce energy consumption: BTS without beamforming technology is currently waiting for extra energy that is not received by the User Equipment (UE) and just gets absorbed into the environment or even creates further interference for other UEs.

ABI Research expects that wireless network power consumption the related OPEX increase will slow down. Most  5G-related research used to focus on testing, standardization, new features, and new developments. Now, this Research and Development (R&D) capacity will move into cost rationalization, including new materials, power saving techniques, and more efficient equipment in general.

 

Services

Companies Mentioned