The Road to 5G: The Inevitable Growth of Infrastructure Cost

The fifth-generation (5G) technology is bringing so much uncertainty close to its inception. The
research says that the network cost could increase two times as operators struggle to meet the
demand for increased capacity and deployment of 5G. So there are some queries related to 5G
infrastructure and deployment. One of the main questions is related to telecom operators and the
future of their investment in 5G infrastructure. Will they be able to maintain the profit?

The road to 5G: The inevitable growth of infrastructure cost

Background:

There is a widespread belief that every generation of technology brings new opportunities for
telecom operators. But there is a slight twist.  When 4G was launched in 2009, telecom and
mobile operators didn’t experience the same triumph as they witnessed at the time of the
predecessor, 2G and 3G. Although there were substantial investments in 4G infrastructure, profit
generated from 4G was not that impressive. Even in some regions like Europe and Latin
America, revenues also dropped after the advent of 4G. Due to these events, there is uncertainty
prevailing among operators related to investment in 5G infrastructure.

Current scenario regarding 5G technology:

On the other hand, the 5G technology is under final stage of testing. If normal circumstances
prevail and the threat of coronavirus pandemic fades then 5G is poised to launch in some markets
later this year. There is a mixed reaction from mobile operators. Both optimism and pessimism
vary among the telecom operators. A handful of them is preparing while some are retreating
from investment. The ones who are anticipating know that it will create opportunities to attain
value from the new 5G use cases and an entrenched adoption of the Internet of Things (IoT).
Also, they are pretty much aware that they’ll have to increase their infrastructure investments to
a whole new level in this technology.

The increase in infrastructure cost raises essential questions about the investment strategy and
future profits for telecom players. So, in this article, we will emphasize on the infrastructure
investments required to enable 5G technology.

Rise of new and innovative cases:

There are many things on the road to 5G, which are dubious. But it isn't hard to envision the rise
of new and innovative use cases. To understand how these will change infrastructure
requirements, we grouped them into three domains: enhanced mobile broadband, Internet of
Things IoT, and mission-critical applications. These three use cases will need network
performance to grow 10-fold over current levels across all the network parameters, as measured
by latency, throughput, reliability, and scale. To reach that milestone, telecom operators will
need to invest in all network domains, including the spectrum, radio access network (RAN)
infrastructure, transmission, and core networks.

An evolutionary approach to infrastructure investment:

Several attributes of current 5G technology are built on 4G networks, rather than a complete
departure from the former generations. It implies that mobile and telecom operators can take an
evolutionary approach towards 5G infrastructure investment. For example, operators could start
by upgrading the capacity of their existing 4G network by repurposing a portion of their 2G and
3G spectrum, or by acquiring additional spectrum when available. By the help of this
mechanism, we can delay investments in 5G by evolving to LTE-and LTE-Pro features, such as
4×4 or massive MIMO (multiple inputs, multiple output technology). Such an evolutionary
approach will be the natural path for most telecom operators, which will allow them to minimize
investments. But still, the incremental revenue potential of 5G remains uncertain.
The network domains which I mentioned above in new and innovative cases will further
elaborate on the range of investment in 5G infrastructure. I will explain them one by one.

Spectrum:

The low spectrum is still coming to auction in low bands in several countries, but the majority of
the countries will basically use them for increasing 4G traffic. Mobile and telecom operators are
testing spectrum from 3.5 gigahertz to 80 gigahertz for 5G. At this point, most of the countries
are emphasizing on acquiring 3.5 gigahertz bands over the short-to-medium term, which would
be followed by 26 gigahertz and 28 gigahertz bands.  These new spectrums will provide telecom
operators with greater bandwidth and an increase in air capacity. Lets take the European Union,
which is now releasing up to 400 megahertz bandwidth on 3.5 gigahertz. These kinds of steps
can cause capacity issues. Even if a new spectrum is available, mobile operators will need to
increase their infrastructure investment exponentially to overcome certain kind of limitations.
For instance, high-frequency spectrum offers extra capacity but also comes with much greater
propagation limitations. Trials of 3.5 gigahertz spectrum indicate that its range falls to about 400
meters outdoors, which has been considered a very low range. So when the new spectrum is
introduced, telecom operators will need to improve radio interfaces and antennas in order to
increase the efficiency of the new spectrum.

Radio Access Network (RAN):

In rural and suburban regions, as well as along the roadways, telecom operators can handle the
increased traffic easily by densifying existing networks with macro sites. But in several highly
populated urban areas, they will need to depend on small-cell solutions for a couple of reasons: a
higher concentration of traffic, as measured by traffic load per square kilometre, and also the use
of higher spectrum bands. These small cell solutions include hyper-dense deployments which
also contributes to growing 5G infrastructure investment.

Transmission:

For 5G deployment, the Fiber-only transmission will become essential. For improving
transmission lines, telecom mobile operators have to undertake full-scale fiberization efforts. The fiberization is also compulsory for supporting small-cell deployment in urban areas. The fiberization process will increase the investment cost.

Core Networks:

Core networks have been upgrading from circuit switching and packet switching to converged
structures, like the IP multimedia subsystems (IMS). The core networks have benefitted from
broader IT advances, such as network function virtualization and software-defined networking.
These core networks will also add to the investment costs.

The inevitable growth of infrastructure cost:

The cost and investments related to 5G, will vary over time and also depend on domestic
conditions. The telecom operators have a couple of options. The first includes a lean-in strategy
in which they give priority to 5G investments to accelerate commercial prospects.
The other involves a conservative approach in which they delay 5G investments as long as
possible while existing networks are updated.

Check out? MediaTek Dimesnity 820 5G is Ready to Take On Snapdragon 765G

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