The real excitement over 5G is more business/industrial oriented, than it pertains to the mobile consumer. Technologies such as edge cloud computing, industrial IoT (Internet of Things), autonomous driving, telemedicine, etc. stand to benefit the most. For mobile consumers, 5G will enable augmented/virtual reality use cases, along with online gaming where low latency is imperative. Many things that 5G promises don't even exist yet.
TERMINOLOGY:
5G encompasses a wide range of qualities that vary based on purpose and coverage area, which is determined by the frequency of spectrum.
5G can come in 3 different forms-
1) Low-band - highest coverage, lowest speeds (slow)
2) High-band- lowest coverage, highest speeds (currently extremely rare)
3) Mid-band- blend of coverage and speeds (currently non-existent)
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| DATA SPEED & COVERAGE COMPARISONS FOR DIFFERENT SPECTRUM |
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| COMPARISON OF PERFORMANCE QUALITIES FOR LOW AND MID-BAND SPECTRUM |
Low frequencies (low-band) do not provide the speed and latency of the higher frequency mid-band spectrum, and the amount of low-band spectrum currently licensed is most likely not adequate for wide carrier signal (100MHz) channels required for high data speeds.
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| MID-BAND SPECTRUM (above 3GHz) WILL ALLOW FOR 100MHz CHANNELS |
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| COVERAGE AREAS FOR DIFFERENT 5G SPECTRUM BANDS |
INTRODUCTION:
This report includes a brief primer on 5G wireless technology along with my expectations for 5G smartphones/service in the US over the next couple years. The main thesis here is that I don't expect performance for 5G smartphones will be noticeably different/better than advanced versions of LTE early on. 5G will not be be "must have" feature for smartphones. The 5G that smartphone users will encounter in the US isn't fully 5G because it is unlikely carriers can meet the 100MHz channel size defined by 5G standards. Nor will US carriers use new, higher frequency spectrum (Sub-6GHz) in early stages. T-Mobile and Verizon have only around 100MHz most markets. AT&T has 1.5x to 2x that in some markets, but for all carriers the spectrum is broken into small blocks and spread across many bands. In addition, carriers still have to allocate spectrum to their legacy LTE and 3G networks.
The addition of mid-band spectrum along with minimum100MHz channels are major factors in 5G performance that will be absent in the early stages. 5G will increase capacity which boosts data speeds, but it is when those efficiency gains are combined with more high frequency bandwidth that results in large throughput increases.
As 5G networks and mobile handsets begin rolling out this year, I do not expect 5G network coverage will be widespread for at least two years. The 5G currently being deployed will not provide the full potential that 5G envisions. This "Early 5G" as it pertains to smartphones is more of an evolution of LTE. "True 5G" is many years away. The real promise of 5G is sub-millisecond latency, or delay, which enables such use cases such as a virtual reality and autonomous vehicles. Low latency and multi-gigabit speeds are possible from EHF spectrum, or millimeter waves, which is broadcasted from small cell sites having a several hundred meter radius. Millimeter wave 5G coverage will be limited to a small number of locations.
LTE TO 5G:
5G and LTE have similarities as number of standards have been introduced in LTE-Advanced (Pro) and carried over into 5G. LTE evolves into 5G opposed to being discrete like 2G, 3G, and 4G. 5G is built on top of a LTE core network which is possible since this is the first time a new wireless generation uses the same waveform and multiple access as its predecessor- LTE and 5G use OFDM. The range of spectrum (mid-band) where smartphone data speeds could be considerably higher (due to wider channels and wavelength) is currently assigned to other radio services.
LTE continues to evolve. Initially peak data speeds for LTE were thought to be 100Mb/s. versus 2Gb/s possible today. Telecom execs have mentioned that years ago they never fathomed that LTE could deliver the speed and performance it does today. LTE has been able to continue improving by adopting 5G technology. A number of 5G standards, such as carrier aggregation, 256-QAM and Massive MIMO, (and others) are being introduced on LTE networks, as they evolve to becoming a "5G" network. The real distinction between LTE and 5G is the RAT (radio access technology)- the air interface or 5G radio at the cell site and modem in the mobile device. 5G enables wider carriers and scalable sub-carrier spacing. Devices will be connected to the same network as calls and signaling are always handled by LTE and data by 5G, if available.
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| DATA SPEEDS CONTINUE TO INCREASE FROM ADVANCES IN LTE |
5G SMARTPHONES:
Several 5G smartphones will be introduced this year, but the iPhone will not be one of them. There have been rumblings that Apple risks being late to the 5G game. IDC stated Apple could face a tough 2H19 due to the coming 5G and foldable devices from its competitors. I find that to be a ridiculous statement; we've seen how the foldables hype has unfolded, and there is no appeal for a 5G smartphone given the lack of 5G networks.
I am not convinced a 2020 5G iPhone is truly necessary. If 5G coverage is sparse, performance is questionable, and iPhones cost more, then it undoubtedly makes little sense to add 5G connectivity until those drawbacks subside.
Tim Cook would not talk specifics, but did say (paraphrasing) Apple is always looking at different technologies and selects the right time when those things come together, especially from a cost point of view. There are a lot of added costs for handsets to support 5G due to the need for more RF content and increased antenna complexity. Historically, battery and connectivity performance has been poor for early versions of new generation wireless technology.
Will consumers buy a higher-priced device with potential connectivity/battery performance issues coupled with the likelihood 5G coverage will be limited? And, especially given that initial 5G speeds will not be significantly better than advanced versions of LTE? And, how much to users value higher data speeds? For web browsing, most often it is browser processing power and server-side factors affecting speeds, especially when a webpage is stuffed with ads.
The are considerable challenges for implementing 5G in smartphones due to the huge number of spectrum bands and unprecedented bandwidth requirements, and this is compounded by the need to support simultaneous 4G LTE and 5G connections. Smartphones will need to make space for the added 5G components. Dual LTE/5G connectivity needs two primary antennas which requires an additional DC converter. MIMO requires 4 antennas to support 4 receive paths, and the vast range of spectrum bands that must be supported increases the RF content in a device. I would think shrinking the battery foot print would be the easiest solution to free up real estate. Of course, this comes with the sacrifice of battery life which is less than ideal given the power consumption obstacles 5G adds. Premium handsets incorporate envelope tracking with power amplifiers minimizing power consumption, but ET's are only expected to 60MHz of bandwidth which will increase PA voltage for wideband 5G transmissions. The impact on iPhones is likely less, given iPhones already support multiple antennas along with possessing power consumption excellence.
The 5G networks that currently exist in the US are the millimeter wave variety suited for Fixed Wireless Access. It is unclear when Sub-6GHz 5G for smartphones will be available in the US. US carriers won't be in any hurry to light up their networks until they can get 5G smartphones in their customers hands. This will likely revolve around the timing of a 5G iPhone considering nearly half of US smartphones are iPhones.
5G NETWORKS- NSA 5G NR (vs SA):
The 5G network in current development is termed NSA 5G NR which stands for Non-Standalone 5G- New Radio. Non-standalone indicates that its not a new/separate network, but rather a new radio with 5G technology standards attached on top of an existing network. NSA networks use for LTE for the network core.
The other type of 5G network is SA, or standalone, where the network is its own entity- a "True 5G" core. Standards for SA 5G are still being finalized so it will be years before standalone networks exist. NSA represents an intermediate step on the path to full 5G service.
The industry has decided on the diagram in the middle illustrated below- NSA to EPC (LTE)
The industry has decided on the diagram in the middle illustrated below- NSA to EPC (LTE)
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It's hard to know how big an improvement Sub-6GHz 5G in the US will be versus the advanced versions of LTE because - advanced LTE is a lot like 5G and the major differentiator- mid-band spectrum with 100MHz channels - won't happen in the US near-term. That said. I do not expect mobile 5G in the US will be dramatically better than LTE speeds currently possible today.
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| 5G SPEEDS DEPICTED ARE FOR mmWAVE- LOW-BAND 5G SIMILAR TO LTE-A |
5G TYPES:
There are two types of 5G service classified by their frequencies. They are drastically different. Data speeds increase as frequencies increase.
2) Sub-6GHz-
There are two types of 5G service classified by their frequencies. They are drastically different. Data speeds increase as frequencies increase.
1) mmWave (Millimeter waves)
mmWave is located on the EHF band (extremely high frequency) which are frequencies above 20GHz and capable of delivering data speeds as high as 20Gb/s. This requires using large blocks of spectrum to construct channels as wide as 1000Mhz. AT&T and Verizon have significant high-band spectrum holdings and both have installed mmWave service in several markets. Despite its mind-blowing speeds, mmWave 5G is of limited use due its very short range (several 100 meters) and poor propagation qualities requiring line-of-sight transmission. It's likely it will be used solely for fixed wireless access. Typically antennas are installed on utility/light poles every several hundred meters. In essence, mmWave networks are a collection of glorified WiFi hotspots.
According to a Google study, it would cost over $400B to install antennas on 13 million light poles for covering less than half the US population. To put this in perspective, The Big 4 US carriers collectively spend less than $50B annually on wires capital expenditures. Some of that spending is for maintenance capex- replacing worn out and malfunctioning equipment.
High-band spectrum is relatively plentiful since it's of little use other than in outer space. Radio waves at such as high frequency are absorbed in the atmosphere limiting the range to several hundred meters. Within range, they require clear line-of-sight from base station transmitter to receiver on user equipment.
mmWave is located on the EHF band (extremely high frequency) which are frequencies above 20GHz and capable of delivering data speeds as high as 20Gb/s. This requires using large blocks of spectrum to construct channels as wide as 1000Mhz. AT&T and Verizon have significant high-band spectrum holdings and both have installed mmWave service in several markets. Despite its mind-blowing speeds, mmWave 5G is of limited use due its very short range (several 100 meters) and poor propagation qualities requiring line-of-sight transmission. It's likely it will be used solely for fixed wireless access. Typically antennas are installed on utility/light poles every several hundred meters. In essence, mmWave networks are a collection of glorified WiFi hotspots.
According to a Google study, it would cost over $400B to install antennas on 13 million light poles for covering less than half the US population. To put this in perspective, The Big 4 US carriers collectively spend less than $50B annually on wires capital expenditures. Some of that spending is for maintenance capex- replacing worn out and malfunctioning equipment.
High-band spectrum is relatively plentiful since it's of little use other than in outer space. Radio waves at such as high frequency are absorbed in the atmosphere limiting the range to several hundred meters. Within range, they require clear line-of-sight from base station transmitter to receiver on user equipment.
Sub-6GHz 5G is subdivided into two types:
- Low-band spectrum- (600MHz - 2.3GHz US) currently used by 3G & LTE.
- Highest propagation and range
- Slowest data speeds ~200Mbps
- Mid-band spectrum- (3.5GHz -5GHz)
- supports urban areas
- high speeds ~2Gbs
Sub-6GHz 5G is what mobile devices will use due to its longer range which provides a much wider coverage area. 5G radios can be installed on existing cell sites opposed to mmWave requiring a massive number of micro-sites. Sub-6GHz 5G will use mid-band spectrum somewhere in the 3.5-5GHz range. Current wireless networks use low-band spectrum- frequencies between 600MHz - 2.3GHz. 5G carriers (broadcast signals) are supposed to have 100MHz channel widths compared to 20MHz possible with LTE. Advancements in wireless technology has allowed LTE to increase bandwidth beyond 20MHz through a method called carrier aggregation which combines several 20MHz carriers.
Since mid-band spectrum is not available to deploy in the US yet, AT&T and T-Mobile are refarming low-band spectrum in the 600-700MHz range for 5G. This will serve as an anchor due to its superior range and coverage qualities, however data speeds will be inferior.
The US needs to find a solution to its shortage of mid-band spectrum. The 150MHz of MB spectrum expected by 2020 won't get it done, especially if it's split among 2,3, or 4 carriers.
There are some creative ways to boost bandwidth by sharing unlicensed spectrum that LTE-LAA, LTE-U and 5G are able to take advantage. There has been a debate about sharing 5GHz band which is currently used by wifi.
Many countries have 100's of MHz of mid-band spectrum in contiguous blocks that can provide wideband channels. This will give them the edge in data speeds for the early stages of 5G service.
Since mid-band spectrum is not available to deploy in the US yet, AT&T and T-Mobile are refarming low-band spectrum in the 600-700MHz range for 5G. This will serve as an anchor due to its superior range and coverage qualities, however data speeds will be inferior.
The US needs to find a solution to its shortage of mid-band spectrum. The 150MHz of MB spectrum expected by 2020 won't get it done, especially if it's split among 2,3, or 4 carriers.
There are some creative ways to boost bandwidth by sharing unlicensed spectrum that LTE-LAA, LTE-U and 5G are able to take advantage. There has been a debate about sharing 5GHz band which is currently used by wifi.
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| FREQUENCIES FOR MID-BAND SUB-6GHz 5G |
5G FREQUENCIES- ALL BANDS:
US 5G OUTLOOK:
TMUS and AT&T claiming to have nationwide coverage (Sub-6GHz) by the end of next year. Currently, the US lacks mid-band spectrum which is the global standard for Sub-6GHz 5G service. The FCC is working on freeing up mid-band spectrum by relocating incumbents. This process has been slow and doesn't appear it will conclude in the near future. In the meantime, Verizon and AT&T have been deploying 5G on their high-band spectrum (mmWave), used for fixed wireless access, in very select locations.
Mobile coverage supplied by Sub 6GHz 5G is being rolled out by AT&T, T-Mobile, and Sprint on their current low-band spectrum - primarily in the 600MHz to 850MHx
T-Mobile stated that its 5G service will improve average speeds from 30 Mb/s to 60-70 Mb/s, and expect that in two years average speeds can increase to more than 100 Mb/s. They expect in 5 years real-life speeds will reach 300 Mb/s. LTE is capable of delivering the same performance. I don't think AT&T 5G will be significantly higher provided that it won't use mid-and spectrum with wider channels.
Mobile coverage supplied by Sub 6GHz 5G is being rolled out by AT&T, T-Mobile, and Sprint on their current low-band spectrum - primarily in the 600MHz to 850MHx
T-Mobile stated that its 5G service will improve average speeds from 30 Mb/s to 60-70 Mb/s, and expect that in two years average speeds can increase to more than 100 Mb/s. They expect in 5 years real-life speeds will reach 300 Mb/s. LTE is capable of delivering the same performance. I don't think AT&T 5G will be significantly higher provided that it won't use mid-and spectrum with wider channels.
There are a couple reasons to expect an unremarkable speed boost. First, data speeds are not as fast for low-band compared to higher frequency spectrum. Second, and most important, US carriers don't have a ton of low-band spectrum to begin with. Verizon has a little more than 100MHz and AT&T little more than 150MHz in most markets; that's insufficient for the 100MHz carriers that 5G standards call for. The quantity of spectrum and channel bandwidths are the major determinants of data speeds.
AT&T:
AT&T is using band 5 (850MHz) and band 12 (700 MHz) for 5G. As shown in the maps below, AT&T only has 10MHz blocks in most markets. AT&T's total 5G spectrum holdings amount to around 50MHz for 700MHz Band 12 and 25MHz for the Band 5 (850MHz). Band 12 is used for LTE as well, thus I doubt AT&T will be using all of it for 5G. My guess would be with Carrier Aggregation AT&T likely use 40MHz carriers (4 x 10MHz).
Stated many times before, the real secret sauce is a single, wideband 100MHz channel, not a bunch of narrow channels lopped together. The guard bands separating aggregated channels consume spectrum leading to the inefficient use of spectrum.
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| MULTI-CARRIER 5G IS SIMILARLY INEFFICIENT AS LTE CARRIER AGGREGATION |
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| 10MHz CHANNELS FOR OF MAJORITY MARKETS (Memphis has 15!) |
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| 10MHz CHANNELS FOR OF MAJORITY MARKETS |
VERIZON:
Verizon appears to be solely focused on mmWave 5G as it has given little indication it is actively pursuing Sub-6GHz 5G. I assume this is due to the lack of spectrum VZ currently licenses. VZ management did comment that they expect new technology allowing LTE and 5G to share the same spectrum will be available next year. This would eliminate the need to take spectrum away from its LTE network to solely dedicate to 5G. However, VZ management appears to be more focused on enhancing its current LTE network.
VZ's 5G efforts are focuses FWA (Fixed Wireless Access) that delivers gigabit broadband to the home. Verizon has a fiber broadband product- Fios. However, typically the last leg of th FTTH (fiber to the home), from the street to the house- is not economical when it involves digging up driveways/yards and running wires above ceilings and through walls. Cable broadband providers have an incumbent advantage from the long-existing coax cable connections found in virtually every residence. Eliminating the need to run fiber to the home allows FWA carriers to compete with cable companies. Verizon is also targeting businesses which it says are the majority of its FWA subscribers.
To justify the investment in 5G, carriers are looking for ways to monetize the service. FWA provides those opportunities especially regarding businesses which are less price sensitive.
It is hard to envision how smartphone 5G service could be monetized because I don't think mobile users would pay a premium for faster data speeds when they are already fast.
It is hard to envision how smartphone 5G service could be monetized because I don't think mobile users would pay a premium for faster data speeds when they are already fast.
I've read reports that propagation has been much better than expected, as well as reports that it's terrible. An analyst at BTIG tested Verizon's 5G network in the few hundred feet that it covered, and he was very unimpressed. While it appears mmWave is Verizon's sole focus,
SPRINT:
Sprint has the best prospects for early 5G service. It has nearly 200MHz of 2.5GHz spectrum, with as much as 180MHz in many markets. 2.5GHz is capable of higher speeds than the low low-band frequencies the other carriers are using. Management has stated its intentions of using the 2.5GHz for 5G, but their plans will depend on whether the T-Mobile merger is approved. Sprint hasn't posted a profit in over a decade. Sure, that's an accounting profit which includes depreciation and Sprint does have positive operating cash flow but that's wiped out with capex. Sprint is saddled with debt, and when maintenance capex requirements are considered, its investment capacity is constrained. Luckily, 5G doesn't require much investment beyond that required for upgrading LTE, which I think Sprint is pretty far along.
T-MOBILE:
TMUS is using 600MHz for its 5G network. The carrier only has average of 31MHz per market, with some having 40MHz, which is rather paltry. That explains why management only expects speeds to double to around 70Mb/s, as performance gains would be entirely due to 5G RAT given low channel bandwidth.
If TMUS and Sprint are allowed to combine, its 5G network has the potential to be more robust. It's unclear if T-Mobile's comments regarding expectations 100Mb/s speeds in two years were based on assumption of receiving regulatory approval for the merger. TMUS has 200MHz of mmWave spectrum, but appear to be focused on low-band rollout.
AT&T AND 5G E:
Last year, AT&T pushed out "5G E" network indicator on devices capable of connecting to its upgraded LTE service. AT&T's use of "5G" erupted in criticism and controversy, prompting a lawsuit from Sprint because those devices are not equipped with a 5G chip. AT&T's justification was that when users are connected to 5G E network they can receive much higher data speeds and that this network will be the foundation for 5G service, hence the "5G." and the "E" signifying the evolution to 5G. Sure, it's misleading but I it's not entirely far-fetched when considering that advanced LTE networks include 5G technology. In addition, without mid-band spectrum and capacity for 100MHz channel widths in the early stages, having a 5G radio does not lend significant advantage compared to advanced LTE- a primary thesis of this report. So it's likely that "5G E" won't be terribly inferior to AT&T's 5G in the early innings.
I have been pondering the reasons why AT&T would do this-- what this implies about the company's plans and expectations for its 5G service as it relates to smartphones. It is surprising (and telling) that AT&T would display 5G on 4G phones, a move that limits its potential to promote/sell 5G devices and service in the near future. Many subscribers will think they already have 5G because it says so on their phone.
The whole sales approach is based on emphasizing what the consumer does not have and why he/she needs what this new product/service does have. Product differentiation is key. The LTE indicator is a constant reminder to users they do not have 5G. Yet, now that some see 5G, it is challenging trying to sell folks something they believe they already have. Of course, this works both ways as it makes it harder for AT&T's competitors to gain these users' attention.
AT&T's "5G E" ploy suggests the company's expectations for its 5G service are pretty low in the near-term. Given that the majority of AT&T's subscribers are iPhone users, fall 2020 would be the earliest point AT&T would have a 5G device with broad appeal.
This would also confuse iPhone users, thus it is surprising Apple would go along with it. Apple could use 5G as a proposition for accelerating upgrades. However, it is less surprising if a 5G iPhone is not imminent. In addition, I am certain that Apple's 5G marketing communications will clear any confusion surrounding the not real "5G E."
CONCLUSION:
In the US, 5G networks won't offer significant improvements on smartphones for some time given the amount & frequency of the spectrum. The challenges of building 5G into smartphones raise questions about performance and create a scenario of more expensive smartphones. For me, I would just rather have advanced LTE and prefer the carriers use spectrum for it, opposed to taking from it to dedicate to 5G.
The carriers have to start somewhere with 5G, and they are starting to dip their toes in the water. The pace of the rollout will be gradual opposed to the more aggressive pursuits we observed with 3G and 4G.
For the iPhone-
Not having 5G in 2020 is a risk because carriers will only promote devices that can run on their new network service, and won't recommend the devices that can't. I am not sure how strictly that will apply for the case of 5G (opposed to 3G & 4G). It's hard to know how far along carriers will be on 5G in a year's time and how confident they will be in its service. In addition, carriers might not be aggressively promoting their 5G service if they are not charging more for it. The lack of promotion wouldn't cause a loss of iPhone users, but it could limit the ability to attract new users as well as spur upgrades if carriers aren't offerings promotional deals.
All of this could be a different case internationally.
There is a risk of having a 2020 5G iPhone. Users may delay upgrading if 5G iPhones are more expensive and have less battery life, along with other performance questions that typically surround the introduction of new generational wireless devices. And, if 5G coverage is sparse and data speed improvements aren't exceptional, there would be even less impetus to buy the first 5G iPhone.
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