5G fixed–wireless: the investment case for operators

analysysmason.com

RESEARCH STRATEGY REPORT

5G FIXED–WIRELESS: THE INVESTMENT CASE FOR

OPERATORS
RUPERT WOOD

© Analysys Mason Limited 2017

5G fixed–wireless: the investment case for operators

About this report

This report analyses operator investment cases for 5G (or rather GEOGR APHICAL COV ER AGE CASE STUDIES
pre-standardised 5G) fixed–wireless network roll-out. It describes
the early work being carried out by vendors and operators on  Global, but with an emphasis on  AT&T
economically-developed
mmWave 5G fixed–wireless and highlights the drivers and  Google Fiber
markets, particularly those with
inhibitors of the technology. It offers investment models for two high infrastructure barriers.  Verizon
types of operators: a fixed incumbent without last-furlong fibre
access, and a mobile operator with limited fixed network
infrastructure.
The report provides recommendations for operators considering
pursuing this approach. It is based on two sources:
 Analysys Mason’s internal research
 interviews with industry stakeholders.

K EY QUESTIONS ANSW ER ED IN THIS R EPOR T W HO SHOULD R EAD THIS R EPOR T

 How does 5G fixed–wireless access (FWA) work, and what will be
required to make it work as a substitute for next-generation wired
broadband?
 What type of operators stand to benefit from 5G FWA and to what sort of
geographical and economic environments is it most suited?
 How dependent is 5G FWA on future mobile services to achieve ROI?
 What is the incremental cost for different types of operator?
 Executives in operators’ strategy offices who are responsible for network
strategy, as this report provides a view of the commercial shortfalls and
benefits of 5G FWA.
 Executives in vendor product strategy departments, as the report
highlights where the best opportunities for this sort of approach lie.
 Regulators that want to see what a 5G fixed–mobile convergence
landscape might look like and the attendant market concentration risks.

 How does 5G FWA compare to GPON and G.fast?

 What are the critical factors determining whether operators will invest in
the technology?

© Analysys Mason Limited 2017 2

5G fixed–wireless: the investment case for operators

CONTENTS

EXECUTIVE SUMMARY

NETWORK PERFORMANCE

FINANCIAL IMPLICATIONS

APPENDIX

ABOUT THE AUTHOR AND ANALYSYS MASON

© Analysys Mason Limited 2017 3

5G fixed–wireless: the investment case for operators

Executive summary

5G FWA could speed up some ultrafast broadband roll-outs by Figure 1: Total cost of ownership of an mmWave small cell supplying FWA for an operator
fixed operators, and it represents an opportunity (albeit an pursuing self-build and for an operator using a third-party provider
expensive one) for mobile operators to tap into the multi-play
sector, especially where there is no effective wholesale layer.
Pre-standards 5G FWA potentially addresses two problems. Firstly,
individual customer FTTP connections in developed economies are
both costly and time-consuming. Secondly, mobile network
operators (MNOs) need better ways to enter the multi-play market.
Early 5G will use a mix of spectrum. 3.5GHz will be used by many
operators, but there are a few obvious additional benefits of ‘5G-
flavoured’ 3.5GHz over 4G for FWA. mmWave 5G FWA is being
trialled by a number of operators (mainly in the USA) and this
option looks more promising, as it matches the performance of mmWave FWA has the potential to allow MNOs to compete
fibre and cable in some ways. effectively against fixed next-generation access (NGA) in some
types of location and in some competitive environments. However,
mmWave spectrum facilitates massive MIMO and beamforming.
the gains are marginal, not radical: cost and cost structure is
This means that 5G FWA using mmWave should be able to provide
comparable to fixed NGA and is emphatically dissimilar to mobile.
equivalent capacity to the best-in-class fixed access, unlike 4G
Most of the cost is in backhaul and site access. A further use case
FWA. However, there are question marks over its actual range in a
will be urban point-to-point connections between multi-dwelling
built-up environment and building penetration loss (BPL), both of
units (MDUs), but not inside MDUs. This could incur a lower cost
which adversely affect costs. The cost benefits of FWA will be
than horizontal dig or duct access for fibre.
small if the technology is too dependent on external antennas
(which require an engineer visit), or on more or taller towers than MNOs may justify the investment as a way to kick-start mobile 5G,
are available. but it is not at all obvious that the optimal locations for FWA will be
the same as those for 5G mobile.

© Analysys Mason Limited 2017 4

5G fixed–wireless: the investment case for operators

MNOs look to 5G as a way to enter the home and business broadband

market and compete profitably against wired incumbents
Many MNOs see home and business broadband as an attractive Figure 2: Three key hoped-for benefits of mmWave FWA
new market and hope that mmWave will help them win market
share at a low cost.
Mobile service revenue has peaked and retail fixed–mobile
convergence is gaining ground. Most operators will need to be
able to offer their customers services for the home, as well as for
mobile. However, many MNOs are unable to enter the home
broadband market, because FTTP is too expensive, or regulated
wholesale is too undifferentiated, or the opportunities for fixed–
mobile–TV M&A have decreased. Historically, MNOs have
sometimes attempted to use fixed–mobile substitution to address
this market, but with no great success. Simply put, 4G LTE has
never been able to challenge cable or telco for the home
broadband market: achievable speeds on wireless networks are
too variable and average fixed data usage continues to grow faster
than FWA can adapt to meet it.
Pre-standards 5G services (particularly those using mmWave
spectrum) appear to offer MNOs a new route into the home
broadband/video market, which they have previously struggled to
address. However, significant questions remain over the likely
performance of these emergent technologies, which will spill over
into additional costs. Moreover, the scale of overall cost is not well
understood, especially the dependence on and cost of fibre
backhaul.

© Analysys Mason Limited 2017 5

5G fixed–wireless: the investment case for operators

5G FWA could compete effectively with wired technologies, but only if it

can enable outdoor-to-indoor coverage
The usefulness of mmWave FWA will be restricted to certain Figure 3: Indicative CPPC for FTTP and nearest equivalents for G.fast and mmWave FWA
types of premises and certain market conditions if it cannot
deliver outdoor-to-indoor coverage.
The first part of this report focuses on why mobile operators are
re-examining FWA. This section begins with a brief discussion of
using the 3.5GHz band for FWA (which we believe still has
significant constraints), then goes on to discuss the potential
benefits and drawbacks of mmWave. The key benefit is spectral
utilisation, which should make gigabit service per user, rather than
per sector, possible. The key drawbacks all derive from the poor
propagation and range of mmWave.
The second part of this report focuses on financials. CPPP for 5G
mmWave FWA is not lower than for other gigabit network
deployments. 5G mmWave fixed–wireless networks will be more FWA infrastructure can, of course, be used for 4G mobile cell
dependent on line of sight (LoS) than those at lower frequencies densification and for future mobile version of 5G, even if the
(despite the very wide bands available) and will suffer from very technology turns out to be only equivalent in cost to fixed
high BPL. Operators will therefore need to spend on truck roll to solutions, or even marginally more expensive. However, operators
install external antennas at a proportion of properties. However, need to be cautious in expecting much overlap between optimal
CPPC can be lower for some types of premises and would be siting of FWA cells and mobile small cells. The optimal use case
significantly lower than most FTTP (and even lower than some for 5G FWA is likely to be suburban, whereas the optimal use case
G.fast) if reliable-enough outdoor-to-indoor transmission could be for 4.5G/5G mobile small cells will be dense urban.
achieved. Whether this reduction in cost can be achieved for
sufficient premises to offset the cost of the cell is a critical
uncertainty.

© Analysys Mason Limited 2017 6

5G fixed–wireless: the investment case for operators

Recommendations

1
Operators should view 5G FWA as an access solution for specific locations or competitive environments.
5G will not replace existing fixed NGA. The commercial case for competitive 5G FWA will work best where the costs
of customer connections or first-hop aggregation for fibre are too high, where access to wholesale NGA services is
restricted, or where home broadband ARPU is high. There could also be a good commercial case for 5G FWA
where there is demand for mobile cell densification. However, FWA will be a capex drain unless there are good
cases for both technologies at the small cell locations.

2
FWA must supply effective outdoor-to-indoor coverage if MNOs are to use it to compete against fixed
incumbents.
Operators need to avoid installing external equipment at customer premises for FWA – the cost and inconvenience
of engineer visits and installation are the main reasons for not selecting FTTP for home broadband. There are
several unknown aspects to the real-life performance of mmWave FWA, but operators should not embark on major
roll-outs if the state of radio technology means that the majority of customers cannot self-install.

3
Operators need to explore ways to exploit customers’ premises for transmission.
The full value of using a customer’s rooftop for transmission has not yet been fully explored. Some operators are
exploring the possibility of using mmWave for point-to-point links between large MDUs. Operators should explore
technical and commercial ways to implement this for smaller buildings, but in larger volumes.

© Analysys Mason Limited 2017 7

5G fixed–wireless: the investment case for operators

CONTENTS

EXECUTIVE SUMMARY

NETWORK PERFORMANCE

FINANCIAL IMPLICATIONS

APPENDIX

ABOUT THE AUTHOR AND ANALYSYS MASON

© Analysys Mason Limited 2017 29

5G fixed–wireless: the investment case for operators

About the author

Rupert Wood (Research Director) is the lead analyst for our Fixed Networks and Wireless Networks research programmes, and his research
focuses on next-generation networks and convergence. Rupert regularly contributes to the international press on a wide range of telecoms
subjects and has been quoted by The Times, The Economist, Business Week, Telecommunications Online and Kommersant. Rupert has a PhD
from the University of Cambridge, where he was a Lecturer before joining Analysys Mason.

© Analysys Mason Limited 2017 30

5G fixed–wireless: the investment case for operators

Analysys Mason’s consulting and research are uniquely positioned

Analysys Mason’s consulting services and research portfolio CONSULTING

 We deliver tangible benefits to clients across the telecoms
industry:
 communications and digital service providers, vendors,
financial and strategic investors, private equity and
infrastructure funds, governments, regulators,
broadcasters, and service and content providers.
 Our sector specialists understand the distinct local challenges
facing clients, in addition to the wider effects of global forces.
 We are future-focused and help clients understand the
challenges and opportunities that new technology brings.
RESEARCH
 Our dedicated team of analysts track and forecast the
different services accessed by consumers and enterprises.
 We offer detailed insight into the software, infrastructure and
technology delivering those services.
 Clients benefit from regular and timely intelligence, and direct
access to analysts.

© Analysys Mason Limited 2017 31

5G fixed–wireless: the investment case for operators

Research from Analysys Mason

We provide dedicated coverage of developments in the telecoms, media and technology (TMT) sectors, through a range
of research programmes that focus on different services and regions of the world.

PROGRAMMES
Mobile Services
Mobile Devices
Fixed Broadband Services PROGRAMMES
Convergence Strategies Large Enterprise Voice and Data Connectivity
PROGRAMMES
Video Strategies Large Enterprise Emerging Service Opportunities
Network Investment Strategies
Research Network Traffic
Spectrum
Small and Medium Enterprise Strategies
IoT and M2M Solutions

portfolio
IoT Platforms and Technology
Enterprise
and IoT

Consumer
PROGRAMMES Network services
Service Assurance investment PROGRAMMES
Service Delivery Platforms strategies Digital Economy Strategies
Next-Generation Wireless Networks Future Comms
Network Orchestration Digital
Software-Controlled Networking economy
Digital Experience
Customer Care
Revenue Management Telecoms Regional
PROGRAMMES
Global Telecoms Forecasts
Analytics
Service Fulfilment
software markets Asia–Pacific
Telecoms Software Market Shares and Middle East and Africa
Software Forecast and Strategy networks European Country Reports
European Core Forecasts
European Telecoms Market Matrix
www.analysysmason.com/research

© Analysys Mason Limited 2017 32

5G fixed–wireless: the investment case for operators

Consulting from Analysys Mason

For 30 years, our consultants have been bringing the benefits of applied intelligence to enable clients around the
world to make the most of their opportunities.

EXPERTISE EXPERTISE
Performance analysis Radio spectrum
Technology optimisation auction support
Commercial excellence Radio spectrum
Consulting Transformation services
Performance
management

portfolio improvement
Spectrum
EXPERTISE policy and
Policy development and response
Margin squeeze tests
auction
Analysing regulatory accounts
support
Expert legal support Regulation Transaction
EXPERTISE
Media regulation support Market research
Postal sector costing, pricing and regulation
Regulatory economic costing Market analysis
EXPERTISE
Business strategy and planning
Net cost of universal service Commercial due diligence
Strategy Market sizing and forecasting
Regulatory due diligence
Technical due diligence
and Benchmarking and best practice
planning National and regional broadband
strategy and implementation

To find out more, please visit www.analysysmason.com/consulting

© Analysys Mason Limited 2017 33

5G fixed–wireless: the investment case for operators

PUBLISHED BY ANALYSYS MASON LIMITED IN JANUARY 2017

Bush House • North West Wing • Aldwych • London • WC2B 4PJ • UK
Tel: +44 (0)20 7395 9000 • Email: research@analysysmason.com • www.analysysmason.com/research • Registered in England No. 5177472
© Analysys Mason Limited 2017. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise – without the prior written permission of the publisher.
Figures and projections contained in this report are based on publicly available information only and are produced by the Research Division of Analysys Mason Limited independently of any
client-specific work within Analysys Mason Limited. The opinions expressed are those of the stated authors only.
Analysys Mason Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been made to indicate them by the
normal UK publishing practice of capitalisation. However, the presence of a term, in whatever form, does not affect its legal status as a trademark.
Analysys Mason Limited maintains that all reasonable care and skill have been used in the compilation of this publication. However, Analysys Mason Limited shall not be under any liability for
loss or damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this publication by the customer, his servants, agents or any third party.

© Analysys Mason Limited 2017