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Telcos Will Spend Half On #5G Rollout As Compared To 4G And 3G: Research

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Telcos Will Spend Half On #5G Rollout As Compared To 4G And 3G: Research

There is little doubt that the upcoming 5G network opens up new and exciting opportunities for consumers and maybe even new business models for the telcos. The technology demands ubiquitous coverage and low latency, which opens up a host of new use cases.

However, the recent report by Rethink Technology Research, which was conducted on a number of operators and vendors of the telecommunication industry (majorly Tier-1 and Tier-2), says that telcos plan to spend half of what they spend on 4G rollout during the early years of 5G. So, the contracts which “stimulate equipment vendors and their share price” are going to be few and far between.

According to the report, the various strategies required to effectuate 5G, in between the years 2017 to 2025, are believed to be highly disheartening for telecom vendors who have dived into substantial 5G financial contracts already.

The 3GPP has recently released the first set of standardization. The first deployments are going to be as early as next year. South Korean KT is showcasing pre-standard 5G in the ongoing Winter Olympics.

The report says that 5G is likely to follow a very different pattern to that of the previous technologies, like 3G and 4G. “It will not be a capex windfall for the vendors – operators will prioritize coexistence with 4G and architecture to prolong the life of existing investments,” says the blog on Rethink Technology Research website.

With a mesh of network virtualization, cloudification, heavy cell densification on the RAN side, massive MIMO antenna arrays and mobile edge computing, 5G network is sure to be much more than just a mere update to a 3G or 4G network.

However, telcos will rely much more on outsourcing and open platforms to bring down the cost than they did for 3G or 4G. This essentially means that the telcos will spread their investment over a decade and will look to spend as little as half the capex on 5G roll-out that they did on 4G.

The operators are planning to release these advanced architecture primarily on the existing 4G  networks, to which Rethink stated: “One or two high profile operators plan to upgrade their Macro base stations first with 5G, because they see 5G as a medium-term replacement for 4G. But most will use the new radios to densify selectively while keeping their 4G investment alive, as well as embracing Wi-Fi more aggressively.”

5G is believed to have a distinguished architectural and regional functioning as compared to the 3G and 4G networks. But, if the investments are not going to come with lucrative promises such as reducing TCO of service delivery, better revenue outflow than current 4G services or perhaps a complete market up-gradation altogether, the cellcos wouldn’t really allow a 5G investment to sore their business. The service providers are still struggling to find a business case for 5G. This has been brought into limelight by a number of telcos, including BT. (See: 5G: Hype Vs Reality; Did You Mention Business Case…)

5G Will Herald A Greater Diversity of Telcos

At the same time, the report says that 5G will bring a “greater diversity of operators.” The emergence of shared and dynamic spectrum for 5G; network slicing and emergence of self-contained, virtualized RAN and core will enable this trend.

“For the first time, a new cellular standard will not be the preserve of just existing MNOs. We expect to see heavy industry pressure to accelerate work on 5G-Unlicensed and on multi-operator technologies which enable a wider range of service providers. The speed with which the industry responds will also help decide the role of WiFi in 5G,” says the report.

An MBA who switched working from managing a retail chain to knit a brighter world of writing. Diligent and assertive, Prachi has a Bachelor's degree in Computer Applications.

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