With the U.S. C-Band auction on track to approach or surpass $70 billion, the question is not so much about the investment thesis but more about what this means for future mobile bands. After all, global mobile data traffic has advanced roughly 1,000-fold since the 3G smartphone was introduced. And even though traffic growth rates are slowing, operators need to consider the potential of another 20x of growth over the next decade. Expanding the available capacity will remain essential objectives for any operator that wants to remain competitive.
The upper mid-band in combination with massive MIMO radios will provide a significant amount of incremental capacity but likely not enough to meet the capacity demands of the next decade. Preliminary C-Band auction results are renewing the focus on what is next -- what will the operators do once they exhaust the incremental capacity offered with the upper mid-band?
And there is no magic. Operators have three basic tools at their disposal including leveraging more efficient technologies, deploying more cells, and using more spectrum.
So in addition to increasing the reliance on small cells, operators will, from a licensed spectrum perspective, have three high-level options once the upper mid-band has been exhausted to deliver the next most economical and sizeable capacity boost, including FDD massive MIMO, millimeter wave (mmWave), and 6425 MHz to 7025 MHz (changes to the CBRS power limits could also make the CBRS spectrum a more viable capacity option for U.S. operators).
While it is no secret that FDD-based massive MIMO has not gained the same mass market acceptance as TDD-based massive MIMO, partly because of technical challenges with the FDD spectrum and practical limitations due to the required antenna size with typical FDD frequencies, operators and suppliers appear to be warming up to the idea that there is a role for FDD-based Massive MIMO solutions in future roadmaps.
mmWave investments are growing rapidly with total shipments on track to surpass 0.1 M units in 2021. But the baseline is still small relative to the sub-6 GHz installed base, and operators are not planning to use this technology for broader city-wide coverage any time soon simply because the cost per GB economics relative to the upper mid-band sub-6 GHz spectrum is not compelling at this juncture.
Despite improving market sentiment for both FDD-based massive MIMO and mmWave technologies, the broader business case is not assured. As a result, the interest with the 5.925-7.125 GHz spectrum is growing. The FCC has made the decision to make the entire 1200 MHz of spectrum in the 6 GHz available for unlicensed use, however, other countries/regions and the GSMA are considering a more balanced approach between the unlicensed and licensed spectrum allocating possibly up to half or 600 MHz for licensed use.
While the higher operating frequencies will undoubtedly challenge the link budgets, there is growing optimism that macro based EIRP power levels combined with further massive MIMO and beam forming advancements will minimize the number of incremental sites required to realize equivalent city-wide coverage relative to the upper mid-band and ultimately become a compelling option in the overall capacity toolkit.
More countries will make their decisions about their 6 GHz plans in 2021. It is not trivial. On the one hand, Wi-Fi is a major success story and remains the de-facto connectivity technology for enterprises and consumers not just for the MBB use case but also for IoT usage scenarios. And the unlicensed spectrum is increasingly congested. On the other hand, we are still in the early days of 5G and while it remains unclear exactly how much of the 5G vision will be realized over the next decade, there are few signs that cellular data traffic growth will slow enough to obviate the need for more valuable spectrum. NR-U is an option but there is a reason operators believe the C-Band spectrum is 15x to 20x more valuable than the CBRS spectrum – there is no magic around the EIRP delta.
In other words, all eyes are on the C-Band auction for now. But it won’t be long before operators will need to go back to the shed and open up the toolbox.
Stefan Pongratz is a vice president at the Dell’Oro Group. He joined Dell’Oro in 2010 after spending 10 years with the Anritsu Company. Pongratz is responsible for the firm's Radio Access Network and Telecom Capex programs and has authored advanced research reports on the wireless market assessing the impact and the market opportunity with small cells, C-RAN, 5G, IoT and CBRS.
"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of the editorial board.