How Much Change, How Fast, from 5G or 6G?

There is plenty of room to debate how fast new applications might arise in the 5G era, but some believe commercialization of new applications in the 5G era could be faster than in the 6G era, as enterprise use cases will dominate in 6G, while consumer apps might still lead the way in 5G, albeit not everyone agrees. 

Many believe lots, if not most, of the new use applications in 5G will come from business-to-business or enterprise settings. 

But we might all do well to recall that new innovations often are heralded too soon, and then dismissed too quickly. That pattern of overestimating early adoption, and underestimating longer-term impact, is quite common for technology products. 

We see less change than expected early on, but more change than we expected later on. So we face early disappointment and then extrapolate into the future at a “slow change” expected rate. But successful innovations then wildly exceed our expectations. 

source: InvestorPlace 

The take-away is that no matter what we presently think, big changes will not come as fast as we think, in the early days of either 5G or 6G. But the actual benefits could exceed what we can presently imagine, after a decade or two have passed. 

And no matter how accurate we might eventually be proven to be, in terms of the scope of changes, we still are likely to be surprised by how people and organizations take advantage of either 5G or 6G. Nobody expected text messaging to become a big hit in the 2G era. 

Nobody expected 4G smart phones to create a new ridesharing industry, as few probably saw the impact of turn-by-turn navigation apps as 4G launched. 

What we initially expect is the blue line, shown below. What we actually experience is the red line. Less than we expected at first, more than we expected longer term. 

source: PartSolutions 

Consider that pattern a consequence of Martec's Law, which states that technological change is exponential, while human organization change is linear. One practical implication is that humans can predict vast changes, which seem stubbornly slow to develop. So we overestimate the early impact. 

source: chiefmartec

Then disillusionment sets in, and we discount the potential impact, as we do not seem to reap the expected benefits. Then, at some point, there is a catalyst, or a change in adoption rates, that shifts behavior beyond the incremental pace we had come to expect. 

That would help explain the “less change than you expect early, more impact than you expect later” phenomenon. 

As humans change in a linear way, so our expectations about the future oscillate between  overly-optimistic early expectations and linear extrapolations when big changes are not seen early on. 

source: Medium 

The Law of Accelerating Returns is another way of explaining our perceptions. Even if we expect the exponential orange curve, we overestimate the time to get there. 

source: Ray Kurzweil 

The point is that we often we often overestimate what can be done near term, but underestimate the long term impact of important technologies or trends. That is why so many trends are an S curve or Sigmoid function. 

Complex system learning curves are especially likely to be characterized by the sigmoid function, since complex systems require that many different processes, actions, habits,  infrastructure and incentives be aligned before an innovation can provide clear benefit. 

source: Rocrastination 

So it is reasonable enough to argue that the creation of popular new 5G or 6G applications and use cases will follow suit: less innovation near term; more innovation longer term.

How Fast is MVNO Market Really Growing?

By some estimates, the global mobile virtual network operator business will grow at rates close to eight percent per year through 2028, close to the growth rate seen over the past few years. 

But there is one important caveat: most observers consider third party MVNOs not owned by the major mobile operators, as well as alternate brands owned by mobile operators, to be “MVNOs.” 

To be sure, “true” MVNOs are growing, but nowhere near as fast as it might seem. 

source: Markets and Markets 

Some of us use a different definition, considering a firm to be an MVNO only when it is not owned directly by an underlying mobile operator, using its own assets to create a different brand. It that view, “ownership” matters more than “business model.” 

Subsidiary brands directly and fully owned by a mobile operator are simply ways of increasing direct market share while maintaining brand image. In this view, such  brands are not MVNOs. Also, some consider “resellers”  of mobile brands to be “MVNOs.” Some of us do not put resellers into the MVNO category. 

To be sure, true MVNOs are gaining subscribers globally, in part because more people are becoming mobile users. As 10 percent of mobile subscriptions are supplied by “true MVNOs,” the number of subscriptions naturally grows as total subscriptions grow. 

Contributing to such growth are policies in some nations favoring wholesale mechanisms helpful for MVNOs. MVNOs also are not lawful in a majority of countries, so we could see growth if rules are changed. 

Generally speaking, MVNOs are lawful in countries that are saturated, with virtually 100-percent use of mobility services. If that pattern holds, we should eventually see moves to legalize MVNO operation as more countries reach mobile saturation. 

By some estimates, as much as 47 percent of all MVNO subscriptions are provided by a mobile operator that fully owns the account. 

GSMA Intelligence, for example, tracks eight separate categories of MVNOs, namely discount, telecom, media/entertainment, migrant, retail, business, roaming and M2M variants.

"Discount" and "telecom" categories (provided by an MVNO that forms part of a range of telecom services such as fixed phone and broadband) are the most prominent types of operation, accounting for 47 percent  of the global MVNO market.

About 18 percent of MVNO market share is held by companies from adjacent industries (retailers, banks, TV or media organisations).

About 35 percent of the market is held by specialized providers (third parties) focused on segments such as business, migrant, M2M and roamers. 

The point is that about half the “MVNO” market belongs not to independent third parties but is directly owned by the underlying telecom and mobile companies. Over time, a greater share is likely to be taken by the underlying mobile operators as they consolidate smaller brands in their markets, or make acquisitions of independent firms outside their core markets. 

So  “true” MVNOs will keep growing, if more countries allow them to operate; as more markets become saturated (and governments use MVNOs to increase competition); and if mobile operators fail to acquire the larger independent operations to gain market share. 

But it is a complicated analytical matter. The market appears to be bigger if one lumps all mobile brands--irrespective of ownership--into one “MVNO” market. It is much smaller if one subtracts the market share actually held by connectivity and mobile incumbents. 

In some markets telecom incumbents themselves are the firms gaining the most market share (fixed network telcos or connectivity providers). In some markets the leading mobile operators are acquiring the biggest third party providers. 

The point is that “true” MVNOs are not growing as fast as it often seems, and in some markets, connectivity providers are acquiring the greatest portion of market share themselves, though often using subsidiary brand names. 

In a few markets the “true” MVNOs” might be losing share.

Metaverse Drives Edge Computing

The name change from Facebook to Meta illustrates why remote computing and computing as a service are incorporating computing at the edge. 

“The metaverse is a shared virtual 3D world, or worlds, that are interactive, immersive, and collaborative,” says Nvidia. 

Facebook says “the metaverse will feel like a hybrid of today’s online social experiences, sometimes expanded into three dimensions or projected into the physical world.”

As 3D in the linear television world has been highly bandwidth intensive, so are metaverse applications expected to feature needs for lots of bandwidth. As fast-twitch videogaming has been reliant on low latency response, metaverse applications will require very low latency. As web pages are essentially custom built for each individual viewer based on past experience, so metaverse experiences will be custom built for each user, in real time, often requiring content and computing resources from different physical locations. 

That also explains the developing notion that 5G networks will play a part in at least some edge computing use cases, as the stringent latency requirements are hard to meet any other way. Even using local servers and fast processing, some apps may additionally require very fast local communications to end user devices, and especially when the devices are untethered. 

5G will in some cases be fast enough to support regional or metro-area edge computing when other wireless connections cannot. 5G also might be useful on premises for the same reason, possibly including latency performance assurances that 5G supports. 

As with other earlier 3D, television, high-quality video conferencing apps and immersive games, metaverse experiences also require choices about where to place compute functions: remote or local. Those decisions in turn drive decisions about required communications capabilities. 

Those choices  always involve cost and quality decisions, even as computational and bandwidth costs have fallen roughly in line with Moore’s Law for the last 70 years. 

source: Economist, Whats the Big Data

As low computational costs created packet switching and the internet, so low computational costs support remote and local computing. Among the choices app designers increasingly face are the issues of latency performance and communications cost. Local resources inherently have the advantage for latency performance and also can be a material issue when the cost of wide area bandwidth is added. Energy footprint also varies (local versus remote computing).  

On the other hand, remote computing means less investment in local servers. The point is that “remote computing plus wide area network communications” is a functional substitute for local computing, and vice versa. When performance is equivalent, designers have choices about when to use remote computing and local, with communications cost being an integral part of the remote cost case. 

Metaverse use cases, on the other hand, are driven to the edge (local) for performance reasons. Highly compute-intensive use cases with low-latency requirements are, in the first instance, about performance, and then secondarily about cost. 

In other words, fast compute requirements and the volume of requirements often dictate the choice of local computing. And that means metaverse apps drive computing to the edge. 

source: Couchbase

Will Open RAN be the Default by 2030 or So?

Open radio access networks have faced some commercial skepticism from service providers that typically need “bulletproof” infrastructure and find current open RAN platforms incomplete, not fully vetted and tested. 

Reduced cost and complexity are among the hoped-for advantages, but at least early on, integration costs and chores could be substantial, undermining the  business cases. There is a cost to integrate hardware and software elements from many suppliers, while still achieving the same performance and time to market as an integrated, single-vendor network. 

Also, at least some mobile operators have moved far enough down the path of deploying their 5G radio infrastructure, with need to get commercial fast, that switching to open RAN approaches mid-stride is not viewed as wise. 

source: STL Partners 

Perceptions are likely to change as the platforms achieve the necessary completeness, are stress tested and gain support even from legacy suppliers of radio infrastructure, ensuring that interoperability is not an issue. 

Still, at the moment, only a couple of operators--Rakuten and Dish Network--have gone all in on open RAN. Some analysts think most open RAN deployments will be driven either by private 5G networks or small cell and indoor situations. 

source: Ericsson, Analysys Mason

The reason for that thinking is that mobile service providers invest most of their radio capital investment in the outdoors coverage network, and the substantial portion of that capex will still use legacy approaches.

 Private 5G network operators will be less concerned about multi-vendor radio interoperability, and will often be able to use open RAN, but all from one supplier. That eliminates issues caused by use of multiple suppliers on a single network. 

For incumbent infrastructure suppliers, open RAN means potential loss of some market share to different or new suppliers. The converse is true for new suppliers, which expect to gain share from the incumbents. 

source: Ericsson, Analysys Mason

And while cost savings are a key driver of open RAN, lower capex is not the only attraction. 

source: Ericsson, Analysys Mason

Still, given time, such issues are likely to be resolved. So it might not be incorrect to argue that the flourishing of open RAN--when it is the standard way to deploy public networks,  could happen with 6G networks, as the deployment issues will have been resolved by that time.

AT&T Expects to LIght Up C-Band by End of the Year

AT&T expects to have 80 MHz of mid-band spectrum acquired in the C-band auction ready for commercial deployment by the end of 2021, which should have really-important ramifications for 5G user experience. 

Up to this point, AT&T has primarily had to rely on low-band spectrum for 5G, which has meant user experience not so different from 4G. “By the end of next year (2022), we expect to cover 70 million to 75 million people across the U.S., and up to 200 million in 2023,” said Mo Katibeh, AT&T SVP. 

To be sure, AT&T is gradually introducing high-capacity millimeter wave services in high-density and high-traffic areas. But the C-band will really help differentiate 5G experience, compared to 4G, for most consumers.

What to Do About Skyrocketed Data Demand?

In the smartphone era, some version of this graph showing capacity and data demand always holds. All else being equal, the capacity of an existing data network eventually is exhausted by demand growth which is faster than supply can be increased. 

source: Mobile Experts 

The key conditioning clause is “all else being equal.” All else never is equal. Given a sufficient pain point, remedies are found. For 50 years, for example, communications and computation have been substitutes for each other. 

Remote cloud computing essentially substitutes communications for local processing. Edge computing substitutes more-local computing for communications cost. That has been the case since the time of mainframes. 

There are all sorts of solutions for data demand that exceeds network capacity. 6G replaces 5G because it supports 10 times more capacity. Processing is shifted locally so WAN transport demand is lessened or not required. Caching gets more use, as is the case for video streaming services and most heavily-used consumer-facing applications. 

In other words, given sufficient cost pressure, it always makes sense to alter inputs in ways that actually reduce the strain on either computing or communications resources.

5G ARPU is Higher in Some Markets

5G networks might well lead to increases in mobile customer average revenue per user, but often for reasons only indirectly related to 5G. Many mobile operators globally boost 5G ARPU by pricing 5G access tiers of service higher than 4G. 

source: Bell Labs Consulting 

Often, however, the actual pricing mechanism is based on higher or unlimited data allowances, not 5G as such. In other words, 5G is a value that comes with an unlimited-usage plan.

5G Millimeter Wave Value Often is Not What You Think

The paradox of 5G value is that actual commercial value might be said to be one thing, but actually is something else, on many occasions. Though much is made of 5G millimeter wave speed (gigabit per second or higher) and low latency, the actual practical value for mobile operators and customers often is predictable bandwidth at times of peak usage in areas of high network demand. 

As some might argue, the value of 5G over 4G might sometimes be its support for ultra-low latency internet of things applications. At other times it might be the gigabit-per-second speeds that allow the mobile network to become a substitute for fixed network access. 

source: Bell Labs Consulting 

But the business value of 5G for mobile operators also is the ability to supply customer bandwidth demands at prices those customers are willing to pay. In other words, 5G allows mobile operators to supply more bandwidth at lower cost per bit. 

In tests, Nokia Bell Labs has found that at crowded locations such as train stations, it is not so much customer bandwidth demand that is so high, but rather the sheer number of users to be supported at a location. 

That is in accord with the realities of mobile network demand generally, where a small number of base stations and cell sites account for a disproportionate share of end user demand. T-Mobile, for example, has pointed out that 20 percent of cells carried half of all traffic. 

source: T-Mobile

Likewise, Ericsson says five percent of cell sites support 25 percent of total traffic.  About a quarter of sites handle half of all traffic, while 70 percent of sites are required for 25 percent of total traffic. 

So the value of millimeter wave is the ability to support demand at the highest-usage cell sites. 

source: Ericsson

Ericsson Time-Critical Communications for 5G IoT

Time-Critical Communication is designed to resolve lags and interruptions in 5G mobile networks supporting internet of things use cases highly dependent on low latency and is based on the 3GPP-specified ultra-reliable low latency communication (URLLC).

Introduced in 3GPP release 15 to address the requirements of ITU-R M.2083, the underlying use case is support for dense sensor grids of IoT endpoints, especially for manufacturing, energy transmission, transportation and healthcare. 

With the need to support end-to-end latencies as low as 5 milliseconds, the delay budget for individual interfaces can be as low as 1 ms or less (140 microseconds). URLLC prioritizes traffic and optimizes connections for latency performance rather than bandwidth. 

How Much Incremental Connectivity Revenue from Edge Computing?

Connectivity services earned by mobile and fixed network operators will get a boost from edge computing. What remains unclear is the magnitude of the boost.

Software and services suppliers likewise see significant revenue opportunities, as do suppliers of computing infrastructure. Connectivity services could be in the range of $50 billion globally by about 2023, according to one KPMG analysis.

Generally speaking, most analyses of connectivity revenue--as a percentage of total edge computing activity--is about 10 percent to 11 percent. A new $50 billion revenue opportunity is significant, when it develops over only several years. 

source: KPMG

To be sure, much of the connectivity could be earned by fixed network providers supplying backhaul to regional or metro area computing centers. But a substantial amount of on-premises connectivity could be earned by other suppliers of local connectivity (Wi-Fi, Bluetooth, others) capabilities.

A significant portion of local area backhaul connections could be earned by low-power wide area networks rather than mobile or fixed services suppliers.

The general point is that connectivity as such is a 10-percent opportunity divided among several industry segments. About 90 percent of the edge computing opportunity lies elsewhere: hardware, software and services.

The issue is “how big” the revenue upside might be, for computing and connectivity providers. We cannot tell much right now, as edge computing service revenues are too small to note. Nor can we determine the ultimate range of roles connectivity providers might assume. 

Right now, all revenue earned by all connectivity providers in any way connected directly with edge computing is quite small, by global standards. Basically, access providers might have roles as real estate providers (racks, huts, space); connectivity providers (5G and fixed); actuall suppliers of compute services; system integrators; platform providers or application providers. 

source: STL Partners

Connectivity providers might hope to operate as the actual providers of edge computing services (compute cycles, for example). More complicated roles as platforms are feasible. Most complex of all are applications that might be created and owned by the connectivity provider. Simplest are traditional connectivity services roles.

It simply is too early to know how much success connectivity providers will ultimately have in the edge computing ecosystem, or what roles will prove most successful.

Value of 5G: You Might Have to Try it to Determine its Value

At least according to one survey by Morgan Stanley, few customers presently  think 5G is important enough that they would switch service providers to get it. In part, that is probably because, in most markets, 5G is provided by all service providers, or will be. 

Switching behavior is likely to happen only when the incumbent 4G supplier does not offer service plans that fit the actual needs of particular users, when those users actually want to buy 5G. As always, the essential requirements are satisfactory value-price relationships and expected network coverage. 

source: Morgan Stanley 

All that noted, consumers might find that the advantage is speedier internet access, though for most consumers, the advantage might not be as valuable as speedier home broadband access. 

In principle, a 5G phone has only a single user, where a home broadband account might have multiple users. Also, most users spend most of their time within range of a Wi-Fi connection, at home, work or school. 

Mobile access provides its unique value only when customers are out and about, and then only when not driving or engaged in any other other activity requiring their focused attention. Faster app performance might be noticeable using 5G, compared to 4G, but the value is proportional to the amount of time and number of operations that are conducted while on the go, compared to usage in fixed settings. 

“New 5G applications” should eventually become important, but that faster loading is--up to a point--the present advantage of 5G, compared to 4G. 

All that noted, the relative value of “faster loading” on a mobile device might not be as great as in a fixed network setting (home broadband, Wi-Fi access). On the other hand, users on unlimited plans might sometimes find the 5G experience faster than their Wi-Fi experience, for any number of reasons. 

If 5G is typically twice as fast as the most-used Wi-Fi connection or typical “on the go” 4G experience, then 5G should have fairly high value for those users. 

The bottom line is that for some users, faster 5G app loading and performance will provide significant value. Users who spend most of their time on faster Wi-Fi connections, or who move about in areas with good 4G speeds, might not see advantages that are significant. 

The problem is that there is no way to know for certain until 5G is experienced in one’s actual use settings.

Verizon Fixed Wireless Now Significant Financially

Verizon now says it will pass 15 million homes with its fixed wireless services, using both 4G and 5G, while total fixed wireless accounts at the end of the third quarter 2021 were 150,000, of which 55,000 were added in the third quarter alone. 

In the past Verizon has talked about a fixed wireless footprint of about 50 million homes as a planned-for goal as the C-band assets are turned up, possibly by the end of 2021. 

Most of that coverage will occur in areas outside the Verizon fixed network territory. At the moment, about half the Verizon fixed wireless customers represent new accounts, while half are existing Verizon customers. 

“I would say, there are probably, roughly, half and half,” said Hans Vestberg, Verizon CEO. “Half meaning coming from our existing base and half we're taking from other suppliers.”

Significantly, Verizon also reports that fixed wireless average revenue per user is “similar” to a mobility account. That suggests that most of the installed base is on 4G or lower-speed 5G at the moment, and also suggestive of pricing suggesting that most customers also use Verizon for mobility service ($40 a month for Verizon mobility customers, $60 for non-customers). 

Some of us would expect ARPU to begin climbing as more of the customer base adds services using millimeter wave and mid-band spectrum. The pricing for those plans runs from $50 a month (Verizon mobility customers) up to $70 a month (non-mobile subscribers). 

As will be the case for 5G generally, Verizon fixed wireless might come in three flavors. Some customers might only be able to buy 4G versions, which are the most speed-constrained, and generally topping out somewhere between 25 Mbps and 50 Mbps. 

Most customers will be able to buy mid-band 5G fixed wireless, which likely will be able to support the 100 Mbps to 200 Mbps services most households buy at the moment. Some lesser percentage of locations will be able to buy the wireline-equivalent millimeter wave services operating up to a gigabit per second or so. 

Over the last year, though the fiber-to-home footprint grew by 500,000 locations, the fixed wireless footprint added 11.6 million locations. 

In fact, fixed wireless now accounts for about 41 percent of Verizon’s home broadband passings. 

source: Verizon 

It remains to be seen how many customer accounts will be driven by fixed wireless, to be sure. In the past, many observers have suggested fixed wireless suppliers can get take rates in the 15 percent to 20 percent range.

In a saturated market, those gains largely represent market share taken from another supplier. So the market share implications are quite significant, representing a change between 30 percent to 40 percent in overall share. 

The expansion of millimeter radio and C-band radio assets will be important. Roughly half the U.S. home broadband base has been content to buy service in the 100 Mbps to 200 Mbps range. 

C-band will help boost fixed wireless into those ranges, while millimeter wave will enable speeds approaching the top tier of consumer demand (gigabit service).  

Such lower-speed home broadband might appeal to customers content to purchase service operating at the lower ranges of bandwidths at or below 50 Mbps. That still represents 10.5 percent of the market, according to Openvault. 

Notably, the third quarter 2021 earnings report was the first ever when Verizon actually began reporting fixed wireless subscriber growth. That is normally an indication that a firm believes it has an attractive story to tell, with volume growth expected.