Defying all the naysayers, when ultimately mmWave bands were proven to be well suited for 5G networks, the biggest question on everybody’s mind was, whether they are cost-effective for building large scale networks. GSMA Intelligence (GSMA-I), the market analysis wing of the operator industry body of GSMA has definitively answered that question, after a comprehensive network economics study. Obviously, mmWave bands are not suitable for every purpose, but this study discovered that they are extremely cost-effective when combined with the mid-band spectrum, in many use cases and traffic scenarios that are common among most operators in the world.
mmWave bands are ideal for capacity fortification
As it is very well known now, mmWave bands are not a coverage solution, but a potent capacity solution. And most operators would know, often the biggest challenges in today’s networks are about capacity—the ability to satisfy the insatiable hunger for more data at higher speeds.
The best deployment approach for operators is to utilize all the three spectrum bands—low and mid bands for expansive coverage, and bandwidth-rich high bands for capacity. Although 5G operators might start from different ends of the spectrum, they will ultimately have to use all the bands to realize the full potential of 5G. For example, European, and Chinese operators, who started with the mid-band spectrum are fast realizing the need for mmWave bands and are on track to start using them soon. Here is a glimpse of the amount of mmWave spectrum assigned in various countries, as included in the study.
Where does mmWave shine the most? Hint – capacity
The GSMA-I study looked at the Total Cost of Ownership (TCO) for various (hypothetical) geographies and use cases, utilizing 3.5 GHz only and mixed 3.5 GHz + mmWave configurations, for the duration 2020-2025. The study evaluated a total of six different scenarios: a) two scenarios with the deployment of outdoor sites in a dense urban area in Greater China and Europe; b) three scenarios with the deployment of Fixed Wireless Access (FWA) in urban areas in Greater China, sub-urban areas in Europe, and rural towns in the US; c) one scenario in a typical enterprise office space. The most interesting part of the findings was the sensitivity analysis, which looked at how the comparison changes when either the percentage of connected-users during the peak hour is changed (from 5% to 20%) or the amount of data consumption growth is varied (from a CAGR of 6% to 22%). As can be seen from the charts, in almost all high connected-users and high traffic growth cases, the mixed 3.5 GHz + mmWave configuration is more cost-effective, i.e., cheaper, than the 3.5 GHz only configuration.
Let’s look at some scenarios a little bit closer. In the Dense urban scenario, while the mixed configuration cost is lower, it is reduced much faster in China than in Europe. This is mainly because the population density, technology adoption, and data consumption growth are much higher in China. Also, the mmWave bandwidth availability there is much higher as well (~800 MHz vs. ~400 MHz).
For FWA cases, as expected, the cost of 3.5 GHz + mmWave is lower than 3.5GHz only, as mmWave bands provide the much-needed capacity for higher data consumption, whereas 3.5 GHz is utilized for coverage. With very thin and dispersed population density and demand pockets, especially in the rural US, it might be much more cost-effective to utilize mmWave capacity where needed rather than blanket-covering with 3.5GHz.
The Indoor enterprise deployment case is pretty interesting. We all know that the majority of network traffic is generated indoors, and that is even higher when it comes to enterprises. The difference of TCO between the 3.5 GHz only and mixed configuration boils down to only one thing—capacity! 3.5 GHz’s limited spectrum availability is a big hindrance to address all that traffic demand. Its larger coverage footprint is an even bigger challenge as it increases interference between cells and reduces effective capacity. Hence, there is no surprise that the mixed case is proving to be more cost-effective. The study rightly considers the presence of the enterprise Wi-Fi network and distributes the traffic between that and the indoor 5G network. Additionally, some applications such as AR/VR/XR, mission-critical and latency-sensitive services in the dense enterprise setting, probably would need 5G by default, especially the high bandwidth mmWave 5G.
I highly encourage you to take time and thoroughly read the report. There are lots of detailed analyses and charts in the report. When you look through all of this, it becomes apparent, why many regions and players that were initially not too keen on using mmWave, are now courting the band to solve the almost certain capacity crunch. And that crunch is coming much sooner than expected, considering the pace at which 5G is growing.
Obviously, all this analysis is based on a set of parameters and assumptions stipulated in the report. The exact costs for various operators might be different from these, based on the specific circumstances such as region, spectrum, regulations, and other considerations. However, looking at the excruciating details that the study has considered, I am confident that its findings will hold good for most of the circumstances.
The revenue considerations
The GSMA report only looks at one side of the equation, i.e., cost of deployment (granted that itself is extremely complex!). There is a major consideration on the other side as well—revenue. In countries such as India, where the Average Revenue Per User (ARPU) is extremely low, while population density and data consumption are extremely high, the lower TCO makes the difference between having a 5G network or not. Further, higher population density makes the mmWave bands even more relevant and useful in those places.
When mmWave bands have proven themselves for 5G, and commercial deployments underway, there were still some lingering questions on their cost-effectiveness. GSMA-I’s more than 50 pages long comprehensive study effectively answers that question. The study considers all the relevant parameters that are important for typical operators, identifies the most common deployment scenarios where mmWave will be highly impactful and decisively concludes that mmWave bands are indeed cost-effective when combined with the traditional 3.5 GHz bands to provide both coverage and capacity.
Also, it would be amiss to say that mmWave would be cost-effective in every scenario. They are most impactful when high capacity is needed, which is a basic need to deliver on the grand promise of 5G.
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