Overview
Wireless technology is central to interactions with families, friends and coworkers, so we expect our devices and networks to be there when needed. In this pandemic, questions are already being asked: When consumers abruptly changed locations and traffic patterns, were the networks ready so that people could stay in touch?
As new demands highlight system capabilities and potential limitations, the current financial and business instabilities impact how operators and network manufacturers may choose to move forward with 5G deployment. What are we learning about the need for 5G, the priorities, and the future?
Responding to the pandemic
In 2018, 52.2% of global website traffic was generated through mobile phones—a remarkable increase from less than 15% five years earlier. *1 When information or communication is needed, a customer will first turn to their mobile device. 5G is projected to further this trend: More bandwidth yields better performance and new applications, delivering even more customers—a virtuous cycle.
The onset of the COVID-19 pandemic would only seem to accelerate this demand. By causing millions of wireless consumers to stay at home, away from schools, employers or public places, a profound shift in consumption of wireless service was abruptly mandated. Logic would have suggested network chaos: Bandwidth limitations or even outages, with consumers unable to connect.
However, this is NOT what has happened so far. To the contrary:
“Based on reports from operators like Verizon and AT&T, it appears that traffic spikes related to the new coronavirus are primarily affecting wired networks, not wireless networks. That’s likely because Americans are staying at home – and using their wired network – instead of traveling and relying on their cell phone’s connection.” *2
But at the same time, wireless consumer behavior has clearly shifted, and radically:
- T-Mobile experienced an 86% increase “in subscribers with limited mobility”—those using only a single cell site, while Verizon had a 27% decrease in mobile handoffs network-wide in a week.
- AT&T. Almost a 40% increase in wireless voice minutes, with the average call 33% longer than normal. The wired data network saw 29% increase in traffic from a month earlier, with WiFi calling minutes up 78%.
- T-Mobile and Sprint saw texting increase by about 25%. *2
The outcomes:
- More device usage: Talk & text way up
- Much less mobility: People are staying in one place
- Increased load on wired / WiFi networks
But the data increase isn’t showing up on wireless! However, this only tells part of the story.
The fixed wireless situation
Fixed wireless customers depend solely upon wireless for data. For these customers, increased numbers of people staying at home immediately impacts network performance. Redzone Wireless, a fixed wireless provider in Maine, saw a 43% increase in daily data consumption after the stay-at-home order was announced in mid-March, with significant shifts in network utilization rates by time period. *3 Increased usage can quickly lead to congestion, poor performance and dropped data sessions.
The fixed wireless market is significant: Over 6 million subscribers—over 5% of all households–and growing at up to 20% per year even as wired broadband is largely flat. Today over 2000 operators serve mostly rural and low-population density areas with data rates up to 30 Mbps. *4
The all-wireless customer: Enabled by 5G
The stay-at-home orders from this pandemic accentuate the challenges for operators. To continue growth, they must attract and keep growing the number of All-Wireless Customers. And increasing this number, whether fixed or mobile, dramatically highlights the inadequacies of the current 4G networks and the need for 5G. Without 5G, we are stuck with the current limitations.
This migration to All-Wireless also impacts competition and consumer costs. While fixed wireless is available today for much of the population, it has neither the performance nor the capacity to compete with wired service. The result is that consumers see continued annual increases in the price of broadband since there is inadequate competition. 5G changes this by giving customers—for the first time—true competition in their broadband service. The result will be not only superior service, but also costs contained by competition.
5G network slicing: Adaptability
A clear lesson from the pandemic is that networks must be able to quickly and efficiently respond to rapid changes in traffic patterns and usage. In March, within just one week, the traffic profile on Verizon’s data network shifted wildly: Gaming traffic +75%; VPN use +30%; web traffic +20%; streaming +12%. *5 This puts severe demands on network elements not matched to usage and load.
5G is introducing network slicing technology to respond to changes in application and demand. The basic concept of slicing is to introduce virtual independent sub-networks that can be “orchestrated” to meet service requirements. Rather than manually configuring additional network elements and capacity, a 5G network slice can expand and contract aligned with traffic needs. This enables efficient resource adaptation in response to changing demands that in the past would have led to deteriorating performance. *6 The variable traffic we have seen with this pandemic or a natural disaster mandates that future wireless networks possess the robustness and flexibility promised by advanced network slicing.
Impact on investment
The deployment of next generation technology is typically expensive, and 5G is no different: Verizon plans for over $18 billion in CapEx spend in 2020, most of this due to the cost of implementing 5G. At AT&T, CapEx in 2020 will be over $20 billion. *7 *8
Businesses are still reacting to virus-induced disruptions. While not yet indicating any change so far regarding 5G rollouts, Verizon said that they will likely RAISE CapEx spend in 2020 by $500 million, and AT&T has cancelled a $4B share repurchase. *9 Some of the key fallout may be upon the device makers, as it has been estimated so far that the COVID-19 virus could cause a $42 billion revenue gap for smart device vendors over the next nine months. *10 As a result, a major handset vendor is aggressively marketing the launch of a new lower-cost phone to reflect how customers have been economically affected by business shutdowns.
The financial impacts of the shutdown continue to be evaluated, with keys factors yet unknown:
- Strength of consumer spending for communication services and devices
- Financial market attitudes towards operator 5G outlays
- Consumer demand for higher performance wireless service
- Operator desire to spend for quick pursuit of new market segments and revenue
The path forward: 5G is a winner…and necessary
Today, the wireless industry supports over 4.7 million jobs and contributes at least $475 billion annually to the American economy. *11 Expectations for the impact of 5G are immense with almost half of all connections projected to convert to 5G by 2025, driving growth in jobs and an increase of GDP of several hundred billion dollars per year. *12 Regardless of the short- and immediate-term economic impacts of the economic shutdown in spring 2020, the wireless industry is unlikely to jeopardize the benefits of 5G, now becoming tangible and significant within the next one or two years, by cutting back on deployment. Further, they cannot afford to, as their projected financial results and their major customers, the service providers, rely upon 5G as a major growth engine, powering key sectors of the economy beyond the wireless industry.
The results from the pandemic have shown why it is critical to continue aggressively deploying 5G. While wired data networks delivered admirable levels of service as demand increased, our future communication systems will necessarily be increasingly wireless, and therefore must be ready for the uncertain, changing environments we have recently seen. To examine how the pandemic is already shaping the future of communications, IEEE has published an excellent analysis of the demands placed wireless networks with support for applications such as connected healthcare, online education and connected supply chains. *13
With capacity, bandwidth, low-latency and reliability, 5G delivers capabilities that consumers need, while at the same time providing operators—and governments—the security of a flexible, robust communication platform for growth:
- Greater capacity for the overall data system, with lowest cost per bit
- Superior flexibility for rapid demand fluctuation
- Expanded delivery of fixed wireless service for greater coverage and consumer choice
- Maximum bandwidth and lowest latency for the widest range of applications
A pandemic yields time to reflect. We have seen how communication technology of all kinds have allowed people around the world to connect and keep life moving even while quarantined. We can see what is working today, and where there are opportunities to build things much better for the future. 5G technology shows that the wireless path forward builds the best way to deliver and secure our communications.
- dailywireless.org/internet/usage-statistics/
- lightreading.com/4g-3g-wifi/us-wireless-networks-are-holding-up-to-covid-19/d/d-id/758446
- mainebiz.biz/article/redzone-shows-43-increase-in-data-use-in-main
- multichannel.com/blog/fixed-wireless-101-what-rivals-need-to-know
- realmoney.thestreet.com/investing/stocks/in-this-stay-at-home-environment-verizon-shares-could-rally-15271324
- 5g.co.uk/white-papers/the-challenges-and-benefits-of-5g-network-slicing/
- sdxcentral.com/articles/news/verizon-maintains-5g-virtualization-spend/2020/01/
- fiercewireless.com/operators/where-s-beef-2020-capex-major-u-s-wireless-carriers
- fiercewireless.com/operators/at-t-decides-now-s-not-a-good-time-for-share-buybacks
- businesswire.com/news/home/20200326005035/en/Juniper-Research-Coronavirus-42-Billion-Revenue-Gap
- ctia.org/the-wireless-industry/wireless-industry
- gsma.com/mobileeconomy
- comsoc.org/publications/ctn/wireless-communication-and-pandemic-story-so-far
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