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5G Depends on America’s Carriers

By Demri Scott | October 23, 2018

5G will revolutionize our lives whether it’s through IOT technologies such as telemedicine, or automated vehicles, the opportunities are endless.

But, the switch to 5G will require providers to make fundamental changes in spectrum use and infrastructure, while implementing softwarization.  A new report released by MIT economist Dr. William Lehr details these changes and explains that companies will need to invest in a massive amount of financial, technical and operational resources to make 5G technologies available in the near future.

5G will require Mobile Network Operators to have a combination of high, mid and low band spectrum assets. In the past, MNOs have relied on licensed spectrum and build up their spectrum assets through auctions and mergers. Access to spectrum helps consumers the most as it leads to lower cost and higher quality of service. 5G requires a lot of spectrum and in order to remain competitive in the market, MNOs will need to have enough spectrum to deploy 5G.

Since spectrum is a scarce resource, and 5G requires a lot of spectrum, MNOs will need to be efficient by using small cells. Splitting an existing cell into multiple small cells allows the same spectrum to be used multiple times. While previous generations relied on large cell towers, 5G will require a dense concentration of small cells to cover a particular area.

5G is also incentivizing softwarization, which is a shift from hardware to software solutions. Softwarization reduces costs and increases flexibility of networks by allowing for remote control of systems. This process, called de-localization, allows for a system to be controlled remotely, away from the physical location of where the service is actually performed. With the help of virtualization, which simulates the operations of different hardware and software, ultimately softwarization helps improve a system’s security since all functions don’t have to be performed in the same location.

Importantly, 5G will incentivize competition within the broadband marketplace. While there is already a move towards the convergence of wired and wireless services, 5G will expedite this convergence as it will be more attractive for facilities-based networks to support new Mobile Virtual Network Operators. The report explains that the move to 5G holds an analogous process to the convergence of legacy telephone providers and cable television companies, which will create more competition within the market.

5G is expected to bring more demand for entertainment and edge providers, which will also bring more competition into the market. Intensified competition with entertainment content and edge providers as a result of 5G will create incentives to manage more control over the user experience at the network level. The report explains that in order to support the demand for these services, competition at the network level will strengthen.

5G technology holds huge potential, but deployment will require much more resources than today’s 4G LTE. The report explains that it will cost up to $200 billion per year in the US to deploy 5G over the next five to ten years.

Ultimately, 5G deployment is dependent on the carriers who are willing and able to invest in new technologies. Fewer but stronger competitors with the tools to deploy in the market would ensure that there is a healthy growth towards 5G technology, while also encouraging innovation. The proposed T-Mobile Sprint merger, under the New T-Mobile would allow for this future vision of a competitive 5G landscape to become a reality.

If the merger is successful, New T-Mobile would have the financial, business resources to compete with leading incumbents in the market that are already preparing for 5G. As for spectrum, T-Mobile would be able to combine their lower frequency spectrum with Sprint’s high frequency bands to help deploy 5G. The merger would also incentivize the New T-Mobile to compete aggressively to gain new customers by using all of its network offered by today’s Sprint and T-Mobile.

Unless T-Mobile and Sprint can achieve greater economies of scale on their own to catch up with the two leading incumbents, the two leaders will continue to pull away further in the lead from other players in the market. The new T-Mobile plans to invest nearly $40 billion between 2019 and 2021 to construct its post-merger 5G network—three times as much as what T-Mobile could invest by itself.

The merger would enable three strong choices for consumers in 5G service, as opposed to two choices if the merger is not successful.

In order to expand into the next generation of broadband capability, players in the market will need to invest in expanded capacity to handle the increased data flow of new technologies. A merger between T-Mobile and Sprint means that they would be able to share software, personnel and spectrum assets to deploy 5G.

It is estimated that 5G will bring $275 billion in telecommunications investment, creating 3 million jobs while adding $500 billion to GDP. 5G will bring new innovations that will change our lives, but only if the government gets out of the way and allows companies to provide the best service they can.

The proposed T-Mobile Sprint merger would give consumers a third viable 5G provider in the market while providing the new T-Mobile with the tools it needs to compete with incumbents in the market. The merger should be viewed as pro-competitive and approved quickly to help get 5G to market.

Digital liberty submitted comments in support of the T-Mobile Sprint merger. Click here to read Digital Liberty’s comments.

To read the entirety of Dr. Lehr’s report, click here.

Photo Credit: CG Dibujo