Full Mobile Substitution for Fixed Networks is Coming

It is easy to miss the way that new 5G platforms are going to transform the telecom business landscape. Yes, we are accustomed to the idea of mobile substitution for fixed services. That already has happened for voice services. 

The new reality is that mobile networks are going to compete head to head with fixed networks, and displace use of those networks, just as mobile networks have been a substitute for fixed networks for voice. 

But we now seem to be building towards similar changes in video entertainment and even internet access spheres. And to the extent there is new incremental demand for access capability, that growth likely will center on ambient sensor apps with different latency requirements.

In other words, new internet of things apps will rely on a mix of access platforms, only some of which are likely to generate new demand with revenue upside. If one assumes that perhaps half of all IoT sensors can use existing access modes (cable modem, fiber to home, digital subscriber line, fixed wireless, Wi-Fi, satellite internet, Bluetooth or other short-range access, there is very little incremental revenue to be earned in those instances.

Some incremental bandwidth will be required, but is likely to be so minimal that existing retail plans need not be replaced by higher-priced alternatives. 

But some new applications, illustrated best by autonomous vehicles, will require new capabilities (ultra-low latency) that will likely drive new subscription revenue. In other words, there are some new use cases that will add demand beyond the existing use of mobile networks for smartphones and other human-centric devices (smartwatches, PCs, tablets). 

At the same time, we might well see substantial mobile substitution--as has happened in voice services--for video entertainment and internet access. 

As fantastical as that might sound, huge changes in architecture, plus gobs of new spectrum, plus improved technology, are coming. Consider small cells. 

In 2017, 62 percent of Verizon’s wireless deployments were small cells. Verizon believes next generation networks will require an order of magnitude (10 times) to two orders of magnitude (100 times) more antenna locations than previous 3G and 4G networks.

AT&;T says that the U.S. mobile industry will deploy more small cells in the next three and a half years than the number of macro cells deployed in the last 35 years.

Some argue the industry cannot afford to deploy so many small cells. That ignores the price changes for such cell sites. Where a macrocell might cost $300,000, small cells mountable on light poles, for example, might cost two orders of magnitude less than a macrocell.

Just a few years ago, at lower volume, such small cells might have cost an order of magnitude less than a macrocell, but volume always matters.

So here’s the quantum change possibility: 5G networks will, for the first time, allow consumers to choose a mobile solution for internet access, with no penalty in terms of access speed, usage limits or cost.

“Our research indicates that 5G networks have the potential to leapfrog the capacity of cable operators’ HFC networks,” said Peter Rysavy, Rysavy Research principal. “5G technology is a threat to cable operators” because 5G capacity and performance will meet or exceed that provided by a hybrid fiber coax or even optical fiber connection, in most cases.