**William Hare**, Practice Leader – Service Provider Markets Europe
Swiss operators have achieved near-universal 5G coverage using DSS, and uptake is among the highest in Europe.
India has been slow to get started with 5G, but the sector is poised to take off with the first launches due by October 2022.
The recent 5G spectrum auction in Brazil brought several new players alongside the existing operators.
5G is booming in Taiwan, driven by government investment and a favorable regulatory environment.
Regulatory support - 5G rollout is expensive, and operators can reduce costs by sharing infrastructure or through consolidation. But this requires approval, and regulators have to balance the benefits of reduced costs versus loss of competition.
Access to network equipment - Supply chain issues for chipsets and network equipment have been exacerbated in some regions by restrictions on the choice of vendors for political/national security reasons. This can make 5G deployment slower and more expensive.
Dynamic Spectrum Sharing (DSS) - DSS enables operators to deploy 5G rapidly using existing 4G frequencies. Compatible antennas switch dynamically between LTE and 5G according to demand, enabling the use of 5G without switching off 4G.
Private networks - Dedicated private 5G networks for enterprise customers (e.g. for large industrial campuses) are a key new revenue opportunity. Spectrum ownership is crucial and may allow vendors/enterprises to bypass the established network operators.
Core network investment - The 5G radio access network (RAN) is only part of the 5G ecosystem. Early 5G deployments are built on existing core infrastructure, but the more interesting 5G use cases depend on standalone 5G deployments, with a whole new core supporting the RAN.
The ownership of 5G spectrum licences is critical to all aspects of the 5G industry. Governments and regulators have a key role to play in ensuring that frequencies are made available and allocated optimally. Delays to spectrum auctions have inhibited 5G rollout and uptake in a number of countries (e.g. Portugal), with knock-on effects for the whole digital economy. A well-designed auction will ensure that the largest players have sufficient spectrum to deliver high-quality national coverage, while opening the market to competition from newer innovators. 5G private networks also require spectrum licences, which can be owned by a variety of players – network operators, vendors or enterprise users. A secondary market for spectrum can lead to more efficient use of this scarce resource.
Although its superior headline speed has been 5G’s key selling point, in reality its benefits are much more complex. For most existing users, the speeds offered by 5G are more than adequate. But 5G offers several other advantages over 4G – e.g. lower latency, greater energy efficiency, and support for a much greater number of connections. These characteristics will facilitate new use cases, notably in industrial IoT and AI. But to realize these benefits, operators must undergo a full transformation of their existing networks. The aim should be to accelerate the decommissioning of inefficient legacy systems and platforms, which will deliver significant OpEx savings through reduced maintenance, lower energy costs and headcount reduction. These benefits will be critical as the impact of high inflation takes hold.
In the early stages of 5G deployment, operators were able to charge users a premium for the service, which was targeted at high-end tech-savvy customers. This is no longer the case as 5G reaches the mass market, and because of competitive forces keeping prices down. Operators seeking to increase ARPU with 5G must instead use it as a means of persuading users onto a higher tariff band, with larger data allowance and/or more bundled services. 5G device affordability also presents challenges, but operators can counter this with well-designed subsidy models.
Governments and regulators have several vital roles to play in establishing a flourishing 5G market. In particular they need to strike a balance between ensuring markets remain competitive, and making sure 5G rollout is efficient, cost-effective and secure. This applies in many areas – in the allocation of spectrum, in authorizing network sharing schemes, in approval of M&A activity, and in regulation of the network equipment market. Restriction of the use of “high-risk vendors” for reasons of national security will increase costs and delay rollouts.
"Governments and regulators have several vital roles to play in establishing a flourishing 5G market."
Source: Omdia
William Hare Practice Leader – Service Provider Markets Europe william.hare@omdia.com